Friday, 24th February, 2006

The Working Group on Bribery in International Business Transactions from the Organisation for Economic Co-operation and Development (OECD) was visiting the Australian Federal Police last year when it saw the report on television: several allegations were made about an Australian company's operations in a foreign country, including allegations of the bribery of officials in the foreign country. The Attorney General's Department, which was liasing with the visitors, told them the media report was the work of "a credible investigative journalism program." So what, the working group members asked the Federal Police, were they going to do about it?

Well, for starters, they were not going to investigate it. There would not even be a preliminary investigation based on this media report unless a formal referral of the allegations was made to it. AFP policy was quite clear. It did not, in the words of the OECD report delivered to the Australian Government in January this year, "initiate investigations of foreign bribery on the basis of media reports, regardless of their level of credibility, nor on the basis of other information that came to its attention other than through formal channels (e.g. the making of a complaint directly to the AFP)."

And why was this? " The AFP stated that it felt that media reports were not consistently reliable, and therefore would not respond to them. The lead examiners questioned whether it would not be prudent to at least undertake an evaluation where the report was made by a credible source, but the representative of the AFP stated that this is not the policy."

Little wonder, then, that all the talk over so many years about the AWB paying bribes in Iraq to secure wheat sales did not result in a police investigation. The AFP did not receive a formal complaint in writing.

Not that complaints are easy to make if you are one of those foreign affairs or trade officers who might have picked up some scuttlebutt around the traps. The Overseas Code of Conduct for Australian officials serving overseas includes an obligation and guidance to report breaches of the Code, and misconducts of a criminal nature.

The OECD report says this obligation is, however, quite limited in that it applies only to overseas officials. Furthermore, reports of alleged breaches of the Code are to be made to the Head of Mission, and, possibly, to the First Assistant Secretary, Corporate Management Division, or the Conduct and Ethics Unit. There is no provision for reporting directly to law enforcement authorities, and reference is made to section 16 of the Public Services Act 1999 as regards protection from disciplinary action, which would not apply for disclosure to law enforcement authorities. Finally, the reporting obligation covers only apparent or alleged breaches of the Code. The Australian authorities contend that breaches of Australian law, including legislation on foreign bribery, would constitute a breach of the Code and would thus have to be reported. However, according to the Overseas Code of Conduct, an APS employee who becomes aware of “serious criminal misconduct by another Australian who is not an APS employee” is only encouraged to report the matter to the Head of Mission. Thus, staff of diplomatic missions who discover instances of bribery of foreign public officials would only be obliged to report alleged breaches of Australian law committed by APS colleagues; reporting of similar misconduct by Australian individuals or corporations is only encouraged but not required.

Note: After the OECD mission expressed its surprise about the need for a formal complaint before the AFP would investigate, the "Australian authorities" - presumably the Attorney General's Department - advised that investigations into the offence of bribing a foreign public official may be triggered by any of the following circumstances:

(a) a formal referral of allegations to the AFP;
(b) pro-active intelligence gathering by the AFP;
(c) identification of the foreign bribery offence during the investigation of another criminal offence; or
(d) proactive investigation of persons or organisations where foreign bribery is suspected.

The OECD report continued:

Following the on-site visit, the Australian authorities also stated that there are circumstances where the AFP will review media reports of allegations of serious criminal activity, including the bribery of foreign public officials, where such reports are combined with independent supporting information. The Australian authorities explained that his position also reflects the opinion of the AFP. The lead examiners welcome the new information, and believe that it would be prudent to follow-up whether in practice the AFP depends on formal referrals of foreign bribery allegations.

DIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS

AUSTRALIA : PHASE 2

REPORT ON THE APPLICATION OF THE CONVENTION ON

COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN

INTERNATIONAL BUSINESS TRANSACTIONS

AND THE 1997 RECOMMENDATION ON COMBATING

BRIBERY IN INTERNATIONAL BUSINESS TRANSACTIONS

This report was approved and adopted by the Working Group on Bribery in

International Business Transactions on 4 January 2006 .

The lead examiners recommend
that the AFP undertakes evaluations
where appropriate of the veracity
of allegations of the bribery
of foreign public officials involving
Australian nationals and companies
contained in
(i) media reports from credible sources,
(ii) publicly available court documents
filed in foreign countries, and
(iii) requests to Australia from foreign
countries for mutual legal assistance.