March 2006 (#72)

In this update:

  • The Emerging Lessons from the Oil-for Food Scandal
  • Australia and PWYP (Publish What You Pay)
  • Make Poverty History: Tackle Corruption
  • East Timor: New Penal Code Criminalises Defamation
  • United Nations Convention Against Corruption

The Emerging Lessons from the Oil-for Food Scandal

A recent TI Australia Background Brief begins: The AWB Royal Commission headlines deliver a clear message for Australian business. Allegations of improper conduct in international business can be extremely harmful to a corporate reputation. Media attention will magnify the impact: investors, customers and analysts will react adversely. Hence it is imperative for all such companies doing business in the region to promptly review again their potential exposure. For them, carrying on business as usual will not be an option. The Board and senior management must guard the company from risk. This will require adequate scrutiny and training of sales staff and managers and sanctions for breaches of internal controls. The process must be driven from the top. The challenge to prevent, detect and penalise evidence of any underhand and corrupting practices is a tough and ongoing governance issue for leaders. Click here to read the full text.

Australia and PWYP (Publish What You Pay)

THE Cole Inquiry into the legality of payments by AWB and BHP Billiton to the former Iraqi regime highlights the need for Australian companies to publish what they pay to resource-rich countries. It also demonstrates the benefits of legislation that regulates the conduct of Australian companies abroad. Revenue transparency is essential if citizens are to be able to hold companies and governments to account. This current case illustrates the inherent dangers facing Australian companies that fail to accept the benefits of publishing all payments they make to developing countries. Many companies resist the push for transparency because they believe it provides an unfair advantage to less reputable competitors and is therefore not good for business. But it is clearly not good business for the company to have its reputation shredded at a public inquiry into payments to an abusive regime. A commitment to transparency in corporate payments staves off attacks to reputation. It also contributes to the creation of an investment environment in which the rule of law prevails and in which project risks are lower, profits more stable and investment returns greater. Most importantly, transparency is in the best interests of the citizens of the countries concerned. Revenue that is generated from natural resources in developing countries can contribute to poverty alleviation and economic growth. Oil, gas and mining companies make legitimate payments to governments in the form of royalties, bonus payments or taxes. However, the citizens of many developing countries often have no access to information relating to those payments and ultimately cannot demand the benefits of those funds. About 1.5 billion people living in resource-rich countries survive on less than $US2 a day. Tragically for these people, in many instances the riches generated from oil, gas and mineral deposits end up in the hands of a corrupt elite. This is the so-called resource curse, where countries blessed with an abundance of natural resources are blighted with poverty, corruption and conflict. For this reason, Oxfam Australia and 280 other non-government organisations around the world are demanding that companies come clean. The Publish What You Pay coalition calls for the mandatory disclosure of companies payments to all governments for the extraction of natural resources. As the world’s attention is focused on the ability of Australian companies to uphold basic ethical standards, it is essential that companies commit to publish what they pay. Moreover, it is time for the Australian Government to commit to making all Australian companies uphold basic international standards in their operations abroad.
From �The Age�, 11 February 2006 � article by Andrew Hewett, Executive Director, Oxfam Australia

Make Poverty History: Tackle Corruption

A new paper released on 19 January, Make Poverty History: Tackle Corruption, analyses the results of TI�s 2005 Corruption Perception Index released in December 2005. The paper argues that �corruption is a blight on social stability and economic growth. The abuse of political power for private benefit is profoundly unjust to those who are honest or poor.�

East Timor: New Penal Code Criminalises Defamation

Journalists in East Timor are voicing alarm over a new penal code recently signed into law under which individuals who publish statements deemed to defame public officials can be imprisoned, reports the Southeast Asian Press Alliance (SEAPA). Signed by Prime Minister Mari Altakiri on 6 December 2005, the new code enters into force on 1 January 2006. Some legal experts say the code gives more protection to public officials than to ordinary citizens. Under Article 173, anyone can be jailed for up to three years and fined for publishing comments seen as harming an official’s reputation. The penal code does not set limits on fines and other penalties for defamation. SEAPA says the provisions could undermine media coverage of the presidential and national elections in 2007.
From the International Freedom of Expression eXchange (IFEX) Communiqu�, 21 December 2005

United Nations Convention Against Corruption

On 15 December 2005 38 nations joined together in an historic alliance to conquer corruption. Because of its broad reach across continents, the United Nations Convention Against Corruption has the potential to address an important channel of international corruption: bribe payments by crooked companies, and extortion by corrupt officials. But the Convention�s promise is tinged with doubt. Three out of every four countries that have signed the Convention have yet to ratify it. That means that 102 countries clearly recognise the Convention�s value, yet will not be bound by its terms as it enters into force. Until they are, the promise of the Millennium Development Goals will remain unfulfilled. The Group of Eight countries committed at their Summit at Gleneagles in July to promptly ratify the Convention, yet only France has done so. Leaders of Canada, Germany, Italy, Japan, Russia, the United Kingdom and the United States should follow France�s example and complete the ratification process. Ratification isn�t about getting credit for signing an agreement. It�s about making it come alive. Every country in the world should take the pledge: We will not let criminals hide within our borders or pass their stolen money through our banks. We will not let corruption happen here.
This is a matter of urgency. Many countries are in the process of ratifying the Convention. But until all nations are bound by the Convention�s terms, like water through the cracks, criminals will find ways to breach the dike.
From a statement by Huguette Labelle, Chair, Transparency International – TI Media Release, 16 December 2005


10-12 April 2006: 2006 IIPE Conference at Keble College, University of Oxford, UK. World Ethics Forum: Confronting Corruption: Codes, Conventions and the Quest for Integrity. Call for Papers – open until 3 December 2005. Contact the World Ethics Forum 2006 Secretariat:

20-21 April, 2006: 6th Australian Security Research Symposium – Queensland College of Arts, South Bank, Brisbane, Australia. Themes are: crime prevention work of security providers, including advances in security methods and technology; regulatory issues, law and conduct.

25 – 27 September, 2006: Governments & Communities in Partnership – From Theory to Practice Conference, Melbourne, Australia. The conference will bring together key policy makers, community leaders and researchers from around Australia, together with leading experts from the UK, Ireland, Austria, Canada, the United States and New Zealand. The aim is to deepen the academic and policy debate about the impact and value of efforts to �join-up� different public services and related initiatives to strengthen communities. Call for abstracts and presentations – open until April 30th, 2006.

2-3 November 2006: 6th National Investigation Symposium, Manly Pacific Hotel, Sydney � a major biennial public integrity event featuring presentations of key survey results from the Whistling While They Work project. The symposium is organised by the ICAC, NSW Ombudsman and Institute of Public Administration of Australia (NSW Division). Information will become available on the Institute of Public Administration of Australia website.