THE ATTITUDES and practices of AWB officials during the UN Oil for Food program mirror those unearthed by the Wood Royal Commission into corruption within NSW Police, according to the man who led the Cole Royal Commission’s interrogation of the wheat exporter.
John Agius SC, counsel assisting the Commissioner Terence Cole, said in the case of NSW Police, a code of conduct was honoured in “form only” and a focus on arrest rates drove corruption, as was AWB’s by its executives.
Agius — who was speaking just prior to the release of the Cole Commission’s report — added that AWB’s travails demonstrated the heavy price of bad governance.
“It cannot be doubted that AWB has paid a heavy price as a result of the exposure of its conduct,” he said. “Beyond that, the international reputation of Australian corporations as honest brokers has been damaged.”
Indeed, a recent report by Transparency International found that AWB’s behaviour had damaged Australia’s anti-corruption reputation.
Agius added that during the course of the Inquiry, he had faced criticism from commentators who sought to label bribery and kickbacks as a normal aspect of doing business in some parts of the world.
“It was said that this was simply the cost of doing business and that the payments were, after all, payments to Iraq of its own money — albeit money extracted from the United Nations controlled escrow account — by AWB in collusion with Iraqis in breach of UN sanctions.”
There were many reasons to refute this, he said, starting with respecting the rule of law, not only domestically but internationally. Moreover, the payment of bribes distorts normal market conditions, encourages the payment of bigger and more frequent bribes and even in countries where facilitation payments and bribery are not illegal, there will be difficulties in recording the payments in accounts.
“The making of such payments puts a corporation on a slippery slope,” Agius, who was speaking at the Chartered Secretaries of Australia national conference late last year, said.
“Just as there is no such thing as being a little pregnant there is no such thing as being a little corrupt. Once a corporation embarks upon corrupt conduct, even if that conduct is explained as a necessary evil, nonetheless the toleration of evil becomes an accepted practice.
“The issue then becomes one of how bad should we be or how low should we stoop. In these circumstances, long before the risk becomes one of exposure, the risk is one of loss of control.”
Agius added that investigating corruption and bribery allegations is essential given the adverse impact on stakeholders such as employees, customers, service providers and sectors of the public.
“The collapse of the share price of AWB is an indicator here, not to mention the damage done to its reputation in the marketplace,” he said. “The fact is that corporations cannot afford to take the risk.”
At the end of 2005, AWB shares were trading at around $6, while at the start of 2007, they were languishing around the $2.30 mark.