WHEN 'THANK YOU' DINNERS BECOME CRIMINAL CHARGES: FOREIGN BRIBERY ON THE RISE
Written on the 1 June 2017 by Paris Faint
AS MORE Australian companies continue to do business overseas, one legal expert warns that owners should be watching offshore operations like a hawk, or face being slapped with a foreign bribery charge.
Howard Rapke (pictured), experienced cross-border litigator and managing partner at Holding Redlich Melbourne, says the country is seeing a distinct rise in foreign bribery activity, where Australian companies part with some incentive to gain a commercial advantage overseas.
According to Rapke, the AFP is cracking down on any behaviour which could amount to bribery, even things as seemingly innocuous as extending a foreign official 'too much hospitality'.
"AFP activity in the area of foreign bribery by Australian companies and individuals abroad is becoming a much greater area of focus," says Rapke.
"Using increased resources from the government, the AFP now have specialist investigation teams to deal with foreign bribery matters based in Brisbane, Sydney, Melbourne, Perth and Canberra."
One of the main problems, says Rapke, is that many people don't know exactly what constitutes a foreign bribe under the law.
For example, finalising a deal with an agent or government official often can often involve showing a degree of hospitality or gratitude.
However, the question is: when does a nice 'thank you' dinner become a bribe?
"Companies get into trouble when hospitality becomes a bribe, that can be a real issue if the hospitality is overgenerous and disproportionate," says Rapke.
"When doing a business deal, CEOs need to consider who they are dealing with and whether the payments they are making proportionate and appropriate all those sorts of issues."
Rapke says the number of people being investigated by the AFP is on the rise, namely company CEOs and MDs who fail to recognise that their actions overseas have major repercussions.
"When Australian companies are doing business abroad, they fall into the trap of thinking that what they do overseas doesn't matter and that it has no consequences at home," says Rapke.
"Companies should be much more aware of the fact that if you are to pay a bribe to a foreign public official, or government official, to gain an advantage or retain business that could have real consequences back here."
The AFP said in a recent release it was working on 35 ongoing foreign bribery matters which includes four matters currently with the Commonwealth Director of Public Prosecutions and two matters before the courts.
In one recent case, a UK court heart that Securency International, a subsidiary of the Reserve Bank, allowed a manager to bribe a Nigerian official to gain millions of dollars' worth of business.
CIMIC Group was also implicated when the Australian Securities and Investment Commission began investigating the company for alleged bribery connected with mining activities conducted by its subsidiaries in India.
Rapke believes the best way to avoid any chance of slipping into a bribery trap is to ensure the people who represent companies are well trained and educated on the subject.
"[Executives] have to train their people who are on the ground," he says.
"They have to know that it's not good enough to say, 'because I'm in Malaysia, or Vietnam or India that whatever happens locally I can just shrug my shoulders and whatever happens there's no consequences'."
"They must make sure to have proper training, make sure that that is publicised by way of appropriate manuals which are published on the website, and finally make sure there's open and proper communications about the do's and dont's around dealing with government and local officials."
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Author: Paris Faint