Corruption
Companies at risk of bribery: report
Date December 17, 2014 - 6:40AM
Cochlear is one of the
"high risk" comapnies named in the report.
Australia's major banks,
miners and healthcare companies are at risk of being caught up in corruption
because they operate in high-risk countries and do not have proper safeguards
in place, a report from Citibank warns.
Cochlear, Westpac and
Newcrest Mining are among the top ASX-listed companies named in the report as
having a "high risk" exposure to bribery. This is based on the
countries in which they operate, their sector and their involvement in
government contracts.
Small miners operating
in developing countries and "banks expanding into Asia" are also high
risk areas, the report said.
Citibank said regulatory
focus on bribery and corruption was increasing, leading some companies to
respond with tighter safeguards. However, many companies were falling
behind.
"Companies
implicated in bribery or corruption may face loss of contracts, or loss of
opportunity to tender for contracts," it said.
"We still identify
some laggards among resources companies, companies providing services to the
international resources industry, and in healthcare."
It said the health and
medical sector, because of its close work with governments, was particularly at
risk, singling out Cochlear as having poor internal mechanisms to deal with the
risk.
"Health
and medical is an industry sector identified as being exposed to potential
bribery risk. Cochlear currently provides little information on how it is
addressing this risk."
A Cochlear spokesman
declined to comment.
The report, released
annually, follows the emergence of bribery allegations at construction giant
Leighton Holdings in 2013, leading to an investigation by the Australian
Federal Police.
Additional allegations
involving the company's Indian and Indonesian operations were raised by Fairfax
Media in May.
The report rated
companies on their policy and approach to corruption, giving Westpac a
"C" and the other big banks a "B".
It rated Cochlear
"D" on its policy and approach to anti-corruption measures. CSL and
Ramsay Health Care were also deemed high risk.
Newcrest moved from
"C" to "B" during the past two years due to increased
disclosure of anti-corruption measures. However, like Rio Tinto and BHP as well
as smaller miners, it remained high risk due to its operations in countries
with low transparency, such as Indonesia, Papua New Guinea and Cote
d'Ivoire.
Australia still allows
"facilitation payments" to be paid to overseas officials in return
for speeding up or securing a government action, so long as a detailed record
of the payment is kept.
The payments have been
banned in the UK, and the OECD has put pressure on other countries, including
Australia, to do the same.
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