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.
