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Government accepts Cole Inquiry 1,2,3

Government accepts Cole Inquiry 1,2,3

THE FEDERAL Government has accepted the first three recommendations of the Cole Inquiry into the UN Oil-for-Food scandal with some limitations and additions.The government’s response follows the…

THE FEDERAL Government has accepted the first three recommendations of the Cole Inquiry into the UN Oil-for-Food scandal with some limitations and additions.

The government’s response follows the tabling on 27 November 2006 of the Report of the Inquiry into Certain Australian Companies in Relation to the UN Oil-for-Food Programme by Commissioner Terence Cole QC.

But having in substance agreed with the three recommendations concerning the enforcement of UN sanctions, the government refused to support a strict liability and 10 year prison sentence for individuals who act contrary to UN sanctions, as suggested by Cole.

The first of Cole’s recommendations asked for a prescribed form to be signed by a senior executive requesting permission to export wheat. He urged that the provision of false or misleading material in, or recklessly omitting material from, the prescribed form be made an offence.

The government agreed to establish the prescribed form, increase financial penalties, and make a criminal offence — punishable with up to 10 years in jail — for individuals who sign a false or misleading form or are otherwise complicit in the provision of false or misleading information.

In regard to recommendation two, the government, while accepting the need to criminalise conduct which breaches UN sanction regimes, chose to impose a strict liability on corporations but not individuals.

“The government considers that it is neither fair, nor useful, to subject individuals to 10 years imprisonment for unintended actions or unforeseen consequences unless these resulted from an unjustifiable risk, that is, recklessness,” the government response said.

“Accordingly, the offence for conduct that breaches a UN sanction will require proof of fault where individuals are concerned.”

Recommendation three suggested amending the fact that no body is empowered to obtain evidence and information to review compliance with UN sanctions.

The government will address this regulatory shortfall by empowering “various agencies responsible for granting permits in relation to UN sanctions” with the ability to conduct due diligence, monitor compliance and single out possible breaches of the law.

The government also claimed it has exceeded the inquiry’s recommendations by proposing additional legislative changes to statutes that govern tax deductions and foreign bribery.

These include amending the Income Tax Assessment Act 1997 (ITAA) to prevent deductibility of facilitation payments, except in the case of minor payments, which will be more closely aligned with provisions in the Criminal Code.

Division 70 (Foreign Bribery) of the Criminal Code, and the corresponding provision of the ITAA, will also be amended so the defence in s 70.3 “applies only where the law of the foreign country states that the advantage in question is permitted or required and that the offence can be made out regardless of the results of the payment or the alleged necessity of the payment”.

These additional changes came from comments made by Cole in the report, but not from specific recommendations.

Responses to recommendation four — referring to legal professional privilege (LPP) in royal commission proceedings — and recommendation five — relating to wheat export marketing arrangements — have been delayed until the necessary inquiries have been completed.

The Australian Law Reform Commission (ALRC) was requested to engage in an inquiry on LPP in November last year, and their report is due in December 2007. The ALRC was asked to examine “[LPP] and its impact on all Commonwealth bodies, including royal commissions, that have coercive information gathering or associated power.”

In regard to wheat export marketing arrangements, the government appointed a Wheat Export Marketing Consultation Committee in January, which released a report in late March that will form the basis of a response from the government on future wheat export arrangements.

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