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Literature Review: Bribery in Contemporary Business - Australian Mining and Construction

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Added on 2024/07/02

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This literature review examines the prevalence of bribery in contemporary business, focusing on the mining and construction industries in Australia. It analyzes Australia's ranking in corruption indices, explores the attitudes and behaviors of Australians towards bribery, and investigates specific bribery cases. The review also examines government actions and regulatory amendments aimed at combating bribery in Australia. The paper concludes by highlighting the detrimental effects of bribery on businesses and the importance of ethical practices.

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ABSTRACT
According to the Organisation for Economic Cooperation and Development, it is essential to
curb the bribery in international business in order to reduce the poverty, strengthen
development and also bolster confidence in the market. The purpose of this assignment is
to review the literature on the topic “Bribery is a practice in contemporary business” while
focusing on the mining and construction industry in Australia. A total of 10 literature and
papers were reviewed in this assignment. It includes the international ranking of Australia in
corruption index alongside attitudes and behaviour of Australians towards the bribery in
Australia. Certain cases related to bribery in Australia were studied and also actions or
amendment in regulation done by the Australian government to combat bribery. A list of
references was added at the end.
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Table of Contents
ABSTRACT.................................................................................................................................1
INTRODUCTION........................................................................................................................ 3
LITERATURE REVIEW................................................................................................................ 4
Bribery in Australia............................................................................................................... 4
Bribery cases in Australian business.....................................................................................6
Actions to combat bribery.................................................................................................... 9
CONCLUSION.......................................................................................................................... 11
REFERENCES........................................................................................................................... 12
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INTRODUCTION
Bribery is a form of corruption which typically occurs in the business when the
representative or the company offers monetary or financial consideration against any favour
or for manipulating the decisions of suppliers, partners and buyers. Australia ranks at 13th
position in the corruption perception study conducted by Transparency International. The
index showed the corruption score slipped 8 points that are 77 in 2017 as compared to 85 in
2012 (Ryan, 2018).
The Australian government have actively participated by introducing draft legislation that is
Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 to reduce corporate
bribery and corruption of foreign public officials. There will be a number of key changes in
the existing regulatory framework of anti-bribery after it is passed by the Australian
government (Nahlous, et al. 2018). This assignment represents a literature review on the
topic” Bribery is a practice in contemporary business”.
3

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LITERATURE REVIEW
Bribery in Australia
A critical assessment is presented on the topic of corruption in international business along
with the suggestions for future research (Cuervo-Cazurra, 2016). The studies of the
international business are expanded by the corruption due to its illegal nature, perception
differences regarding illegality and variation in law enforcement against bribery through the
countries. It includes the suggestions to analyse the types, causes, measures and
consequences and control of corruption.
Corruption is used as workshop or laboratory in order to challenge the certain assumptions
of the theories such as extending agency theories to analyse the presence of unethical
agency relationships, extending the dependency of resources by evaluating the escape of
ethical power, extending view on the bases of resources by studying the capability of
corporate social responsibility and also extending neo theory by studying the illegal
legitimacy (Cuervo-Cazurra, 2016).
The study was conducted by Brown & Loosemore (2015) to explore the perceived
behavioural factors that influence the corruption actions in the construction industry in
Australia. The model of corrupt actions by Rabl and Kühlmann was drawn in this paper along
with conducting face-to-face interviews with 23 employees who work in the construction
industry in Australia. It was suggested through the result that the definition of the
corruption is ambiguous though it is commonly perceived and chiefly connected with the
personal gain instead of breaking the law.
Fraud, kickbacks and bribery are the main forms of corruption. The perception towards the
behaviour is driven by the promising attitudes, high goal feasibility alongside subjective
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norms support. The global construction industry was rated to be the most bribery-prone of
all the 19 industries rated by Transparency International (Brown & Loosemore, 2015). The
unprecedented three Royal commissions are the results for the concern regarding the
corruption in Construction Company in Australia thereby arguing for the culture of
encouraging, accepting and rewarding this kind of behaviour.
Data were collected from the World Values survey in order to examine the attitudes of
Australians toward the bribe-taking. More than 1300 participants were selected that
includes the wide range of Australian population concerning age and other demographics.
The difference by category in certain responses was determined by examining the 19
demographic variables such as age, marital status, and gender and so on (Hernandez &
McGee, 2014). It was found that there was a high level of significance in responses due to a
certain demographic variable.
Younger people were less averse to taking a bribe as compared to older people. Women
were hostile towards bribery than men. English-speaking Australia group was the most
ethnic group that opposed bribery as compared to East Asians who were least opposed
(Hernandez & McGee, 2014).
Jews and Buddhist were less averse to bribery while Hindus were most opposed. Single
people were least opposed than married and widowed people. Part-time, full-time and
unemployed were the group that least hostile to bribery than the retired people. Members
of other classes were strongly averse to bribery than lower class people (Hernandez &
McGee, 2014).
Taxpayers with middle income were most opposed to bribery than the people placed in a
lower income group. People who were from happiness group were most averse to bribery
than those who were least happy. The other variables that were not important are an
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institution of employment, health, education, size of the town, the confidence level in
government and position on the left-right spectrum in politics (Hernandez & McGee, 2014).
Bribery cases in Australian business
In Australia and New Zealand, there are facilitation payments to foreign official sources that
are legal as well as tax-deductible within certain parameters. This study highlights the
increase in corruption in both countries and aimed to identify that practicality to allow a tax
deduction for facilitation payment which is considered as bribery by various international
bodies (Marriott, 2016). Allowing the tax deduction due to facilitation payments to foreign
public official gave rise to multiple issues.
In case of value, benefits need to be “minor” or “small” as required by the legislation, the
major argument that is to support the retention of the status of tax deduction becomes
questionable. The competitiveness of the business can be significantly impacted by denying
the tax deduction for minor payments (Marriott, 2016). The second issue, it the inclusion of
words and phrases that are wholly or mainly or ensure or expedite that allows a broad
interpretation of legislation resulting in lack of clarity regarding the permission in making
the facilitation payment.
Third, there is no connection between the expenditure and income earning process for
claiming the deduction for facilitation payment. There is no valid reason for the policy that
reflects that it is not required by this expenditure to attain the general test for a tax
deduction (Marriott, 2016).
The Rolls-Royce bribery case is the most significant deferred prosecution agreement of the
UK where more than £500 million will be paid by the Rolls Royce Company for settling
charges of foreign bribery (Nicolson, 2017). The expectations and approaches of Australian
6

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government and law enforcement agencies are likely to be influenced by this case that is to
consider the measure suite aiming to facilitate more effective responses such as
encouraging foreign bribery self-reporting to corporate crime (O’Connell, 2015).
The decision of Rolls-Royce Company highlights the change equation for Australian
companies due to the level of deferred prosecution agreements availability, considering the
cooperation level and self-reporting to be provided to prosecuting agencies (Nicolson,
2017).
The case studies of international corporate bribery as well as corruption are illustrated
through the examples from the 6 countries which are the UK, Russia, Germany, Australia,
South Africa and Pakistan. The white mainstream culture in Australia is ranked low in power
distance (Kakabadse, et al. 2015). It is suggested that Australian tends to resent the
autocratic relations and fell comparatively equal as well as close to one another in their
work relationships. The low rating to the Australian culture suggests that Australians have
equality in interaction and are comparatively informal while the focus on the present as well
as future. The rank of Australia in individualism is high.
It was noted that the corruption perspectives in the public sector of Australia had fallen 4
points between 2012 and 2013. A survey on over 800 employees in public sector was
commissioned by the Australian national university regarding the corruption perceptive and
found that 1 in 5 senior public sector employees is not aware of the place to report their
observation as well as suspicions of corruption (Kakabadse, et al. 2015).
The economic prosperity and living standards of the Australia and China highly depends on
the Australia–China business relationship. Both the countries differ in their business culture
as China is one of the fast-developing economy, largest nation by economy scale as well as
the population in the Far East as compared to the Anglo-Imperial business traditions and
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practices in Australia from Global South (O’Shannassy, 2017). Crackdown on corruption was
being experienced by China started in 2012, due to certain business relationship
management issues such as Guanxi that is significant relationships, gift giving, corruption
and bribery between both the countries.
There is a distinction between Proper Guanxi and gift giving from bribery and corruption.
After the review of the literature and institutional settings, a framework within whole
governance regime for a corporation is provided by developing a series of research
propositions in order to manage the challenges related to bribery and corruption for the
corporations (O’Shannassy, 2017). The companies that have legal systems parented in the
UK and are listed on the Australian Stock Exchange and Hong Kong Stock Exchange can use
this framework. Some of the model elements can be useful in the business settings of
China.
8

Actions to combat bribery
The association among the concerns of the global community regarding the bribery activities
as well as disclosure practices of anti-bribery by two telecommunication companies of China
that are China Mobile and ZTE operating at international level is investigated in this paper
(Islam, et al. 2015). The findings is derived on the basis of content analysis of the annual
reports as well as articles of global news media over the time period of 16 years starting
from 1995 to 2010 and suggests that there is a close relationship between the changes in
the disclosure level by the two major telecommunication companies in China and
international concern level over the practice of bribery within the telecommunication
industry in China.
It was indicated that anti-bribery disclosure practices are adopted by the companies so as to
reduce the trust gap that is social capital among the companies as well as global
stakeholders (Islam, et al. 2015). It is also argued that the social capital such as Guanxi that
is constructed culturally for domestic companies in China develops trust level among the
managers and their stakeholders thereby avoiding the requirement for the managers to
disclose the information related to anti-bribery performance (Islam, et al. 2015). However
the social capital is inadequate from the companies operating at international level, so the
managers disclose the information related to anti-bribery performance as a medium to
bridge the trust gap between global stakeholders as well as managers.
According to Latimer (2017), this paper aimed at examining the range of legal responses to
bribery specifically foreign bribery in the global setting. The corrosive impact of bribery
along with its negative effect on the economy of Australia is identified before focusing on
the mixed responses to the foreign bribery.
9

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Policy and literature review are the methods used to theoretically analyse this paper. A
comparative approach was used to compare Australia, the UK and the USA, due to
increasing global as well as the organised nature of foreign bribery. It was found that the
response to foreign bribery was recognised by the (OECD) Organisation for Economic
Cooperation and Development to improve from a low base. Strong government leadership
and coordination among the authorities of law enforcement that includes corporate
regulators, police, state-level and territory-level, and corruption authorities at
commonwealth and so on increase the expectations for further improvement (Latimer,
2017).
The amendments are proposed to the foreign bribery offence (FPD) in the Criminal Code Act
1995 thereby proposing the introduce Deferred Prosecution agreement scheme and
adequate procedures defence (APD) and eliminating FPD. These are the certain steps taken
by Australia to strengthen its corruption as well as anti-bribery regime (Fields, 2016). These
are the proposed changes that were welcomed by the business community. Clear guidance
can be provided by Australia regarding the responsibilities of MNC to prevent internal
corruption and comply with the law. Although the major focus of Australia is to reform their
anti-corruption law, the recommended adjustments can be beneficial to every country.
10

CONCLUSION
Thus it can be concluded that though corruption such as bribery has highly practised in the
contemporary business such as mining. The bribery in business may lead to financial losses,
damaged business image, increase business insufficiency, along with discouraging the
shareholders and investors (Latimer, 2017). This results in the weak development of the
organization shattering the morale and culture of the company.
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REFERENCES
1. Brown, J., & Loosemore, M. (2015). Behavioural factors influencing corrupt action in
the Australian construction industry. Engineering, Construction and Architectural
Management, 22(4), 372-389.
2. Cuervo-Cazurra, A. (2016). Corruption in international business. Journal of World
Business, 51(1), 35-49.
3. Fields, S. R. (2016). Statutory Tools for Enhancing Multinational Corporation
Compliance with Anti-Bribery Laws: Recommended Changes to Australia's Foreign
Bribery Offense. Geo. Wash. Int'l L. Rev., 49, 441.
4. Hernandez, T., & McGee, R. (2014). Attitudes toward bribery in Australia: A
demographic study.
5. Islam, M. A., Haque, S., Dissanayake, T., Leung, P., & Handley, K. (2015). Corporate
disclosure in relation to combating corporate bribery: A case study of two Chinese
telecommunications companies. Australian Accounting Review, 25(3), 309-326.
6. Kakabadse, A., Korac-Kakabadse, N., & Khan, N. (2015). Cases of Official and
Unofficial Business Practices: Examples from Australia, Germany, UK, South Africa,
Russia and Pakistan. In International Management and Intercultural Communication
(pp. 127-148). Palgrave Macmillan, London.
7. Latimer, P. (2017). Anti-bribery laws–compliance issues in Australia. Journal of
Financial Crime, 24(1), 4-16.
8. Marriott, L. (2016). Taxing corruption in Australia and New Zealand. Austl. Tax F., 31,
37.
9. Nahlous, H., Tink, D., & Taylor, B. (2018). Compliance check: Anti-Bribery extends its
reach in Australia [Online available at
12

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https://home.kpmg.com/au/en/home/insights/2018/04/anti-bribery-compliance-
check-18-april-2018.html] [Last accessed on 5-09-2018]
10. Nicolson, R. (2017). The Rolls-Royce bribery case and its implications in Australia.
Governance Directions, 69(2), 117.
11. O’Connell, D. (2015). The UK Bribery Act: Challenges and opportunities for Australian
business. Governance Directions, 67(5), 311.
12. O’Shannassy, T. F. (2017). Gift Giving, Guanxi, Bribery and Corruption Challenges in
Australia–China Business: an Ethical Tension Between the Global South and the East.
In Ethics in the Global South (pp. 131-151). Emerald Publishing Limited.
13. Ryan, P. (2018). Australia slips in corruption index, ranks as 13th least-corrupt nation
[Online available at http://www.abc.net.au/news/2018-02-22/australia-slips-in-
global-corruption-rank/9472114] [Last accessed on 5-09-2018]
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