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Breaking news . . . NOT!!

Yesterday, several papers and the 7:30 Report revealed shocking allegations of corporate corruption made to a Senate Committee. Sam Dastayari was “gobsmacked”. Leighton’s had engaged in foreign bribery.

Except this news is four years old and the alleged offence was self-reported by Leighton’s in 2012.

A flurry of audits were carried out by companies prompted by the corruption scandal involving the Reserve Bank that led to its subsidiaries, Securency and Note Printing Australia, and 10 former executives, being charged with the nation’s first foreign bribery offences in 2011.

In February 2012 the SMH published an article titled Leighton alerts police to investigate possible foreign bribes

THE construction firm Leighton Holdings yesterday became the first big Australian company to admit publicly that it had alerted the federal police to a possible breach of anti-bribery laws.

Leighton’s alleged breach involves its Singapore subsidiary Leighton Offshore Pvt and payments to facilitate a wharf construction project in Iraq.

But the Iraq payments are not the only potential corruption case facing the company. Documents from a NSW Supreme Court case last year reveal Leighton conducted an internal inquiry into ”apparently corrupt conduct” involving allegations that a senior employee channelled $500,000 worth of steel to a third party project at the Batam Shipyard in Indonesia.

The matter was also referred to in the OECD’s damning 2012 report into foreign bribery in Australia:

Construction Case

In February 2012, an Australian construction company self-reported allegations that a foreign subsidiary may have made improper payments to facilitate a wharf construction in a third country. EFIC has announced that it provided two performance bonds to the construction company to cover projects in Southern Iraq. The AFP is currently conducting an ongoing investigation.

The Export Finance and Insurance Corporation (EFIC) is Australia’s export credit agency, established in 1991 as a statutory corporation wholly owned by the Commonwealth of Australia. It is part of the Department of Foreign Affairs and Trade and reports to the Trade Minister.

As the Australian Government’s export credit agency, it helps Australian-based businesses to win and finance export, offshore investment and onshore export-related opportunities when their bank is unable to provide all the support they need.

The performance bonds supplied by EFIC to Leighton’s “give the buyer of your product or service assurance that if you don’t meet your obligations under a contract the buyer can call on the bond to reduce its losses.”

One wonders why the government is making itself financially liable for Leighton’s promises, which other companies are receiving similar support, and what sort of judgement they apply in issuing these assurances

One must also wonder why it is taking the AFP so long to investigate a confession.

The 2012 OECD report said:

The Working Group on Bribery has serious concerns that overall enforcement of the foreign bribery offence to date has been extremely low. Only one foreign bribery case has led to prosecutions. These prosecutions were commenced in 2011 and are on-going. Out of 28 foreign bribery referrals that have been received by the Australian Federal Police (AFP), 21 have been concluded without charges. The Working Group thus recommends that the AFP take sufficient steps to ensure that foreign bribery allegations are not prematurely closed, and be more proactive in gathering information from diverse sources at the pre-investigative stage.

In April 2015, JWS published a foreign bribery update:

Australia’s second foreign bribery prosecution

Since July 2011, Australia’s one and only foreign bribery prosecution (arising out of the Securency banknote printing scandal) has been chugging along before the Victorian courts at a slow pace, cloaked in suppression orders.

In late March 2015, the Commonwealth Director of Public Prosecutions (CDPP) commenced a prosecution against John Jousif, Mamdouh Elomar and Ibrahim Elomar, charged with attempting to bribe a foreign public official in order to win certain construction contracts in favour of Lifese Steel Fabrication or Lifese Pty Ltd in Iraq. The press have reported (from ASIC searches) that the company was established in 2007 by Mohamed Elomar (one of Australia’s most-wanted terrorists connected to Islamic State). In addition, the offenders face charges of dealing in and with the proceeds of crime and money laundering. According to newspaper reports, Mr Jousif ran a number of companies from his office in Fairfield (a Sydney suburb), including a construction and a pharmaceutical firm selling products across the Middle East and in China.

As a result of the prosecutions, the Chairman of the Lifese company, John Dowd a former NSW Attorney General and Supreme Court Judge, resigned as Chairman upon being contacted by the authorities and has declined to comment on questions concerning his role as chairman and director of Lifese Pty Ltd, which conducted business in Iraq, a well-known high risk country. The media reports suggest that John Jousif, Mamdouh Elomar and Ibrahim Elomar did not disclose the true nature of the company’s operations to Mr Dowd. No doubt further facts will emerge as the prosecutions of those charged work their way through the Court system.

In addition to these new matters, the Australian Federal Police (AFP) are reported to be close to finalising their investigations into Leighton (and its Iraq oil refining projects) and BHP Billiton (and its Beijing Olympics medal minting contract).

It seems the AFP and the courts can work with lightning speed if you are a union member accused of misusing funds or of accepting a bribe but investigating confessions of foreign bribery by large corporations is just too hard. Interestingly, ASIC, the “tough cop on the beat”, told the Senate committee it is outside their jurisdiction and was the job of the AFP.

 

28 comments

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  1. Jack

    Sam Dastayari is just awesome. He is my contemporary hero.

  2. Kaye Lee

    Sam should have read the OECD report. He should not have been surprised by these “revelations” which were made years ago. He should also look into why James Packer was never investigated.

    “Casino Foreign Bribery Case
    In 2009, authorities in a foreign country brought charges against one of their officials for domestic bribery and listed two projects by an Australian casino company as ‘suspect projects’ in the indictment. According to media reports, indications of bribery included the fact that the casinos were granted land that was originally planned for the construction of a university, and construction began before formal rezoning procedures were completed and recorded. Australia reported to the Working Group that the AFP supported investigations by the foreign authorities, but did not start a domestic investigation.”

    TWO casinos partly controlled by billionaire James Packer’s Crown Ltd have been linked to a major bribery and money-laundering case in Macau.

    Macau prosecutors listed Crown Macau and the City of Dreams among at least 10 “suspect projects” involving bribe-taking and money laundering in an indictment against former Macau public works minister Ao Man-long, according to Hong Kong and Chinese media reports.

    In January 2008, Ao was jailed for 27 years on 57 counts, including bribe-taking and money laundering.

    The City of Dreams development on Macau’s Cotai Strip has been plagued by controversy. The site was originally given to the Macau University of Science and Technology but later allocated for casino use.

    Construction began before formal rezoning procedures had been completed and two years before it had been officially gazetted, according to Hong Kong reports.

    Both casinos are partly owned by Mr Packer’s Crown in a joint venture with Melco, an entity controlled by Lawrence Ho, the son of Macau gambling doyen Stanley Ho.

    http://www.smh.com.au/national/packers-macau-casinos-in-bribes-scandal-20090219-8cqg.html#ixzz46bLzMnnK

    It is astonishing how many times the OECD paper says “according to media reports”. Where are our regulators and our law enforcement bodies?

  3. Anomander

    Federal ICAC now.

  4. Kaye Lee

    From last night’s 7:30 report…..

    Leighton whistleblower Mr Sasse also took the Federal Police and the corporate watchdog to task, saying despite five years of investigation, no-one has been brought to justice; and that the regulators lacked a basic understanding about how corporations work.

    STEPHEN SASSE: Kickbacks to subcontractors; allegations about payments for the procurement of work – so facilitation payments, which fall under the bribery heading. It was almost an overwhelming collection of issues came out of that core RO-RO investigation.

    From Dubai to India, Indonesia and Iraq, Leighton’s are alleged to have paid money to middle-men to secure deals. This contract for $15 million is one of the most serious allegations.

    CONOR DUFFY: Peter Gregg, Leighton’s then chief financial officer, signed off on this deal for a steel contract. Mr Sasse alleges the contract is most likely a sham and the shareholders’ money was being spent on something else entirely. Mr Gregg is now the CEO of Primary Healthcare.

    STEPHEN SASSE: It seems to me that the AFP and, to an extent, the regulator just don’t act with the alacrity that one needs for these kinds of issues.

    SENATOR: You say there’s a lack of a sense of urgency in dealing with the issues?

    STEPHEN SASSE: I think that’s a fair assessment. I think in the case of the AFP, they have not the slightest understanding in my experience of how corporations work.

    GEORGE STOGDALE, SENIOR EXECUTIVE, ASIC: Bribery of foreign officials falls under the Criminal Code Act 1995 and is a law mainly enforced by the AFP, not by ASIC.

  5. Kyran

    Iraq rings a bell for another ‘oopsy’. When we weren’t blowing them back into the dark ages, we were paying them bribes. The AWB saga is still going, two decades after the fact. A $300mil bribe (as defined by the Cole inquiry in 2006) has, as far as I can find, resulted in two fines being issued.

    “Ingleby was fined $10,000 and temporarily banned from managing a company.
    His former boss Andrew Lindberg was ordered to pay $100,000 for his part in the scandal.”

    ASIC, the tough cop on the beat, is still pursuing Flugge.
    “Corporate regulator Australian Security and Investment Commission (ASIC) initially began its civil case against Mr Flugge in 2007, but put the case on hold while it pursued criminal charges.
    These were discontinued in 2010.”

    In 2015 ASIC got really tough.
    “He (Flugge) faces four allegations of breaching his duties as a company director.”

    Yep, that’s tough. His defence?
    “The court heard that Mr Flugge will argue that the Victorian Supreme Court has no jurisdiction to make rulings on international law.”

    http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=0ahUKEwjw6pngrqPMAhULp5QKHasyDSUQFggxMAI&url=http%3A%2F%2Fwww.abc.net.au%2Fnews%2F2015-10-12%2Fex-awb-chairman-trevor-flugge-court-iraqi-oil-for-food-scandal%2F6846396&usg=AFQjCNEjuGg3k5qoo1FTnkHOePFXuRQ3fQ

    But that is probably just a coincidence. Systemic corruption only exists in unions.
    It’s not like the head of the ASX has to resign while his involvement in an alleged $200k bribe for TABCORP in Cambodia is being investigated. Oopsy.

    http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=9&cad=rja&uact=8&ved=0ahUKEwiWycGmrqPMAhXEkpQKHd5kBXkQFgg_MAg&url=http%3A%2F%2Fwww.abc.net.au%2Fnews%2F2016-03-21%2Fasx-chief-elmer-funke-kupper-resigns%2F7264262&usg=AFQjCNHau2Vz8bX4TMaPSVaVy9fcD3BnPw

    Don’t fret though. He won’t starve whilst he’s being investigated.
    “The ASX board decided Mr Funke Kupper would be paid in lieu of the notice period in his contract, his 2016 pro-rata short-term incentives, and short-term deferred incentives for 2014 and 2015.”

    Probably just another coincidence. It’s not like the Australian government pays millions to corrupt regimes and companies for it’s offshore gulags. Wilson Security, Manus, Nauru, Cambodia, Sri Lanka, etcetera. Surely these are all isolated aberrations. It can’t be systemic as none of these entities are unionised.

    It’s not like Transparency International has any concerns about Australia. Oopsy.

    “Australia is now ranked 13th out of the 168 countries included in the Index – down six positions since 2012, and joining countries like Libya, Brazil, Spain and Turkey as big decliners over that period.”
    “As a priority action, Mr Whealy and new TI Australia CEO, Phil Newman, are calling on the Australian Government to commit to enacting long overdue reforms to Australia’s foreign bribery laws before the end of 2016, as a crucial indicator of the country’s seriousness in fighting corruption.”

    http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=0ahUKEwivmeW7saPMAhVFGpQKHQ39DVYQjBAIKDAF&url=http%3A%2F%2Ftransparency.org.au%2Findex.php%2Fmedia-release%2Faustralias-international-corruption-reputation-continues-to-tumble%2F&usg=AFQjCNGjpzdHGlNg_J0Ahw1CrfFySuTS0g

    Nah, nothing to see here. Move along.
    Thank you, Ms Lee. Take care

  6. Kaye Lee

    From the OECD report….

    “Wheat Board Case
    Two unnamed former employees of an Australian grain marketing organisation were alleged to have bribed officials in three foreign countries during the 1990s, and that payments in two foreign countries continued in 2000 after enactment of anti-bribery laws. The AFP closed an investigation into corruption in three foreign countries for lack of evidence, based on the legal advice received from independent Queen‘s Counsel that there was no reasonable prospect of conviction and that it was unclear whether breach of UN sanctions was a crime in Australia. The AFP has assisted in civil proceedings by ASIC against six former directors and officers of the Australian organisation. As of June 2012, two directors of the grain marketing organisation have been found to have contravened the Corporations Act.”

    Re Flugge…

    “When giving evidence to the Cole inquiry, Flugge frequently claimed to have no knowledge of matters discussed at meetings he attended, due to hearing loss.”

    Arfur would be proud.

  7. mark delmege

    don’t mention our mining comp’s in Africa – the bribes or the hits.

  8. Kaye Lee

    mark,

    That has also been mentioned in the OECD report

    “Mining Pit Case
    In 2005, an Australian company operating a mining pit in a foreign country allegedly provided support to the army of the foreign government to quell a rebellion, which resulted in the cancellation of the mining pit contract. The AFP looked into the allegations, but concluded that it did not have enough evidence to open an investigation. One international Mutual Assistance Request (MAR) was made by the AFP to facilitate interviews with witnesses outside Australia. The AFP also sought assistance at a police-to-police level outside the formal MAR process from two other countries. The AFP obtained a number of statements from possible witnesses, including from Non-Governmental Organisations; however, no statements obtained provided evidence to support the allegations.”

    Four Corners reported on it in 2005:

    Tonight’s exclusive Four Corners report reveals that after an uprising last October by a small band of rebels in the town of Kilwa, Anvil provided vehicles and a plane to shuttle in troops from the 62nd brigade of the Congolese army. The company has admitted to Four Corners that the plane made “three or four” trips to the regional capital to bring in 80 to 100 troops.

    According to eyewitnesses, the troops used Anvil vehicles to terrorise the town, killing and beating villagers and looting their houses. A subsequent secret investigation by UN officials documented “more than 100 deaths”. At least 28 of these “might have resulted from summary execution”.

    It took the army just a couple of hours to put down the uprising. But it appears that the crackdown – and Anvil’s logistical assistance – went on considerably longer. The military detained the local priest at the Anvil Mining guesthouse in Kilwa. Six days after the uprising he and the police chief were taken to the local airstrip and flown out on Anvil’s charter plane to be imprisoned at the nearest city Lubumbashi.

    Three days after the uprising at Kilwa, Anvil’s mine re-opened.

    http://www.abc.net.au/4corners/content/2005/s1384238.htm

  9. kerri

    It frightens me that I read a book about the AWB scandal back in 2004/5 (I think?) and there still have been no recriminations for the people involved? The career of Mark Vaille, since then, beggars belief and sticks in my craw every time I see or hear of him.

  10. Hugh Jurgen

    I think we just have to accept that corporate crime is not crime per se, but in this ends justify the mean era merely business. We do have to keep the lid on Unions and Street crime though, just in case they get organised and start using means justify the ends tactics to do the work that the authorities should be doing. Just think which is more effective to get an errant Babcock and Brown executive to reconsider his shonky behaviour – a visit from a team of baseball bat armed Dockies or a Lawyers invitation to play in court for a few years. I’m not sure if D&O insurance effectively covers the pain that broken kneecaps bring.

  11. Kaye Lee

    I would also like to know how much evidence the AFP needs to begin prosecuting Kathy Jackson.

  12. Douglas Evans

    What are the ‘unintended consequences’ Chris Bowen has in mind?
    “Labor continues to hedge about whether it supports a register revealing the identities of the beneficial owners of shell companies following confirmation by the Turnbull government that it will implement the policy.
    The assistant treasurer, Kelly O’Dwyer, revealed in Guardian Australia on Friday that the government would follow the UK in creating a public register to help stamp out tax evasion. But despite campaigning intensively on the problems associated with multinational tax avoidance, Labor has declined to commit one way or the other.
    Asked about the register, the shadow treasurer, Chris Bowen, told the ABC the opposition was ‘open to all proposals that make a genuine improvement in this area’.
    But he said policymakers needed to be careful because some changes could create ‘unintended consequences’.”

    http://www.theguardian.com/australia-news/2016/apr/22/coalition-to-create-public-register-to-reveal-true-owners-of-shell-companies

  13. Mark

    Hugh! Could you expand on “I think we just have to accept that corporate crime is not crime per se, and your linking of street crime and Unions please?

    , but in this ends justify the mean era merely business. We do have to keep the lid on Unions and Street crime though, just in case they get organised and start using means justify the ends”

  14. David

    Leighton/ Thiess/ John Holland may have questions to answer about some contract wins in Mongolia, Vietnam and India as well. Just sayin’!……The self reported cases are certainly not the only ones!

  15. Kaye Lee

    Deloitte Survey

    On 1 April 2015, Deloitte released the Deloitte Bribery and Corruption Survey 2015 Australia and New Zealand: Separate the Wheat from the Chaff.

    The Survey was conducted and received responses from 269 respondents from ASX200 and NZ50 companies, Australian subsidiaries of foreign companies, public sector organisations and other listed and private companies.

    The findings of the Deloitte Survey make for some interesting (and perhaps depressing) reading:
    • self-reporting of suspected foreign bribery and corruption by Australian companies is rarely occurring;
    • out of over 100 investigations conducted by Deloitte in the past 2 years, only a handful have been reported to police;
    • one-third of companies operating in Asia, the Middle East and Africa had uncovered suspected bribery or corruption over the last 5 years; and
    • 40% of respondents (who had an offshore operation) did not have or did not know if they had compliance programs in place to manage corruption risks while 23% with offshore operations had never undertaken a risk assessment and have experienced a foreign bribery and corruption incident over the last 5 years; and
    • many businesses did not have adequate or any anti-corruption procedures.

    One of the most concerning findings in the Deloitte Survey is this:

    Of organisations with offshore operations, 23% said they are not concerned with risk arising from non-compliance with applicable legislation, yet 77% have never conducted a bribery and corruption risk assessment

    This is seriously at odds with corporate cultures that express compliance with the law and high ethical standards as the norm. As the authors of the Deloitte Survey noted “it’s fundamental governance imperative that executives and board members understand that the legislation exists, their organisation’s obligations under it, and what their organisation is doing to manage those obligations”.

  16. Mark

    Attention! Hugh Jurgen
    Your linking of street crime and so called Union thuggery seems to me you have formed an opinion that they are one and the same. Street crime usually forms from a dissatisfied society’ ie lack of stable parenting, Poverty, re poor housing, boredom, alcohol, Fanatical belief systems, Ignorance and testosterone.
    And why isn’t corporate crime a crime per se? I am starting to form an opinion about you.

  17. keerti

    query: Regarding payments to Cambodia to take on our refugees. Anyone who has had a mininimal amount to do with Cambodia knows that the country runs on corruption from top to bottom.They also know that the prime minister Hun Sen is far wealthier than his salary would predict. Stories of corruption abound in the country. It has been detailed in the countries newspapers
    how funds donated from other countries have been “creatively” distributed. It must surely be a function of australian government to be sure that money donated to countries such as Cambodia be traceable and accounted for, especially in such an environment. Given the above, at the very least investigations need to be carried out. If due diligence was not carried out then surely the people responsible in dealing with corrupt polititians and govt. officials are liable for investigation for possible bribery!
    Next, the nbn. The Aim posted an article a couple of weeks ago regarding a theory of muckyduck’s possible involvement in the destruction of the NBN in order to further the interest of his company. There is unlikely to be a paper trail , but putting abbutt in the stocks outside parliament house might yield som useful results!

  18. Garth

    @keerti… good points worth a closer look. I can’t see anything coming of the NBN shemozle but Cambodia is definitely worth a referral to the AFP. Not sure why Labor haven’t done so – they were never fans of that deal despite their other skulduggery regarding asylum seekers.

  19. Kaye Lee

    Peter Dutton doesn’t care who he deals with. He recently hosted General Sok Phal on a visit to Canberra. He was a director of one of a number of secret death squads called A-Teams that infiltrated and subverted groups opposing the country’s now ruling Cambodian People’s Party in the early 1990s, according to a 2012 report by Human Rights Watch, which relied on United Nations reports.

    The United Nations issued a report in 1993 listing dozens of killings, enforced disappearances and torture by groups linked to the party during a UN mission to bring peace to the country after decades of civil war and foreign occupation.

    Human Rights Watch said General Sok Phal has benefited from a culture of impunity for Cambodia’s military elite under strongman prime minister Hun Sen, rising through the ranks to become one of the regime’s most powerful officials.

    The deal with Australia was a long-awaited diplomatic triumph for Mr Hun Sen, who in the early 1970s was an officer in the murderous Khmer Rouge before he defected to Vietnam. Mr Dutton refused to say whether he knew of General Sok Phal’s past.

  20. SGB

    Perhaps the fact that our regulatory bodies are managed by contracted managers and political appointments, might be a bit of a clue?

    Contract Managers need to try and renew their tenure which has a finite time of about 5 years, their actions are always going to be tempered by the knowledge that their contract will need to be renewed to keep their incomes, so rarely make too many waves.
    Political appointees are by and large the highest authority below the responsible Minister, and are similar to the Contract Manager in regard to tenure and continued employment prospects beyond 3 years, but with the added knowledge that it was the Minister who appointed them could un-appoint them anytime if that the pointee is seen by the Minister as not towing the party line.

    The result is that both the appointee and the contract Manager will think twice before making a decision that might see them crossing the Minister in the government of the day.

    Add to this the fact that these Appointees and Managers know that they will have to seek employment, at some point in the not to distant future, in the very industry they are regulating?

    Therefore any expectation that the political appointees and managers would be acting without fear or favour, is lost and thus the common good is buried under the political objectives of the government of the day.

    SGB

  21. cornlegend

    Jennifer, I hope you and all those who had made a submission to the Senates National Integrity Commission Committee Inquiry, which at this stage would be as close as we will get to a Federal ICAC, isn’t all in vain.
    Now with a Double Dissolution election called committees and Inquiries are terminated.

  22. Jennifer Meyer-Smith

    Thanks cornlegend for reminding me of that salient information.

    Pity the website doesn’t inform us of that point. Pity also about the timing! 🙁

    Still, I think it is important that the 18 of us contributors have made our voices heard formally within parliamentary frameworks.

    There is no way any side of Parliament can pretend that there has not been a combined call for an effective and enforceable National Integrity Commission or Federal ICAC now.

  23. cornlegend

    Jennifer,
    Id id read the submissions and there were some pretty powerful and persuasive argument in there ,yours included {see, we don’t squabble all the time :-}}
    Pity that is the way a DD plays out

  24. Kaye Lee

    The election hasn’t been called yet. It will probably be called a few days after the budget. Senate committees are continuing at the moment.

  25. cornlegend

    If he lets Parliament run full term Committees will continue, if a DD is brought on they are done and dusted

  26. paul walter

    Kaye Lee, what sort of budget? Will it be pork barrel and sweeteners later forgotten, or a matter of flogging austerity as a virtue?

  27. Möbius Ecko

    Breaking news that will slip quietly by in the mainstream. Ashby lost his appeal, the judge finding with Slipper.

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