Funny money: Submission to Senate Standing Committee on Economics inquiry into foreign bribery

The Australia Institute and the Jubilee Australia Research Centre have made a submission to the Senate Standing Committee on Economics inquiry into Australia’s foreign bribery laws and their implementation. Our submission is based on research conducted by the CAER – Corporate Analysis. Enhanced Responsibility, an independent environmental, social and governance research house.

An increasing number of ASX100 companies have operations in countries with a high risk of exposure to bribery – 59 in 2015 up from 38 in 2006. This has contributed to increasing numbers of companies that have governance arrangements that expressly prohibit bribery.

Governance around facilitation payments has been slower to evolve, however. Of the 59 companies with operations in at-risk countries in 2015 only 32 of them prohibited facilitation payments. While many companies have policies in place, over half of the ASX100 still allow these payments, or at least make no public comment on prohibiting them.

While restrictions on facilitation payments doubled between 2006 and 2011, prohibition of such payments changed by just one per cent in this period, from 15 to 16 per cent of ASX100 companies. There was then a huge increase of companies prohibiting facilitation by 2015, now 44 per cent.

This increase is likely to be largely in response to changes in the UK bribery act relating to facilitation payments. Prohibition of facilitation payments has become an accepted policy approach for an increasing number of Australian corporations, in line with international policy. Action by one country has led to improvements in corporate governance in others. An Australian policy to prohibit facilitation payments would therefore contribute to efforts to stamp out the practice well beyond our borders.

Full report