Published on the 10/08/2017 | Written by Jonathan Cotton

Why Australia’s slipping corruption reputation is both challenge and opportunity…

So you’re embroiled in a bribery and corruption scandal. Well aren’t we all?

With this year’s high profile public sector outrages – multiple political travel expense scandals, millions of dollars gifted to politicians from both parties under suspicious circumstances and accusations of impropriety in the Australian Tax Office – it seems anyone who’s anyone has got their snout in the trough to some degree.

Unfortunately for us, people are taking notice.

On the bribery and corruption spectrum, Australia’s reputation has taken something of a battering in recent years.

2016’s Transparency International’s global corruption ladder, an index which ranks countries based on perceptions of corruption in the public service, placed Australia 13th in the rankings. That’s out of 176 countries, so, not too shabby there, but that comes after a four year slide down the list. In 2012 we ranked 8th.

There’s a perception that, as a country, we’re trailing both the UK and the US in terms of effective bribery and corruption legislation, and there’s more than a little truth to this. The same report noted an absence of a federal corruption watchdog and called for protections for whistleblowers to be strengthened. Historically Australia has not been great at executing prosecutions for corruption related offences either, with foreign bribery offences under Australian law rarely result in conviction.

Well, that’s politicians for you. How does this apply to your average business Joe?

Deloitte’s recent Bribery and Corruption Survey shows that many of us who should know better, don’t.

Your average man (or woman) in the boardroom appears to have a rather indifferent position on the issue, with only slightly more than half of the organisations surveyed expecting to implement or upgrade their anti-bribery and corruption compliance framework over the next five years.

Again, perception may come into play. After all, only one organisation in five detected an incident of robbery or corruption in their business within the last five years. (Ignorance is bliss of course – according to the Association of Certified Fraud Examiners, five percent of an organisation’s revenue on average is lost to fraud each year.)

For those in the private sector who are addressing it, what do they see as the way forward?

“77 percent of respondents believe the best way to prevent domestic corruption is to get the organisational culture right,” said Deloitte’s Australian Forensic leader Chris Noble.

“They also selected ‘tone at the top’ (15 percent), followed by getting processes right (14 percent) as the three most important factors organisations in our region need to improve their skills and prevent bribery and corruption incidents.”

According to the report the most prevalent type of domestic corruption is of the ‘grey area’ variety: conflict of interest was most common at 21 percent (up almost 10 percent from 2015), followed by inappropriate gifts and hospitality (13 percent).

Other insights from the report: The most common method for discovery of instances of domestic corruption was tip-offs (around 32 percent in 2017, down from 40 percent in 2015), followed by internal controls process (just under 20 percent in 2017), “by chance” (about 15 percent in 2017) and management review (just under 10 percent in 2017).

Most respondents cited reputation as the biggest risk for their organisations, whether domestic (65 percent) or international (70 percent).

So yeah we’ve got some work to do, but let’s not lose our heads. From an international perspective Australia has relatively low levels of overall corruption and a well-functioning and independent judiciary, so objectively, we aren’t doing that bad in the grand scheme of things.

But perception is a powerful thing, and Australia’s declining reputation here has the potential to cost us economically, if it’s not doing so already.

Reports of this kind often end with a challenge for those at the management/boardroom level to formulate a response of some kind to the issue at hand. Just maybe, in this case, it’s justified.

As every business finds itself in some sort of transformation – or at least a moment of increased uncertainty and change – establishing anti-bribery and anti-corruption programs does make sense. The majority of respondents to the above Deloitte survey cited “organisational culture” as key to preventing corruption incidents, and creating company culture is most often in the jurisdiction of the boardroom.

And when your workforce, suppliers, customers, shareholders and the broader community are unanimously interested in your commitment to keeping things above board, it’s certainly in your best interest to do so.

And it appears that that message may also finally be hitting home in the oft-criticised public sector.

While not bearing fruit yet, the Open Government National Action Plan was finalised at the end of last year, boasting a 15 point plan to “strengthen our democracy and deliver a more agile, innovative and collaborative nation” and promising better protections for whistleblowers in the tax and corporate sectors and collaboration with non-government to release more high-value data.

At least that’s what they say.

Download the Deloitte Bribery and Corruption Survey 2017