Worldwide: Combatting Corruption Risk In The Asia Pacific Region: What Next?

Last Updated: December 29 2016
Article by Ben Allen and Michelle J. Shapiro


The election of Donald Trump as the next US president has raised fundamental questions about the role of the United States going forward, and what implications this will have globally. This presents renewed challenges for Asia Pacific trade; particularly in light of uncertainty arising from increased protectionism as well as broader trade and currency risks for the region. This also has a unique impact for those companies reliant on global supply chains and regional subcontractors for manufacturing. Corruption as an impediment to business remains a theme for the region, and one that adds to the uncertainty.

The recent ASEAN Business Outlook Survey 2017 conducted by AmCham Singapore and the US Chamber of Commerce allows some broad comparisons across the Asia Pacific region to be made. The tone of the (pre-election) survey is optimistic with 87 percent of companies saying that their level of trade and investment in the region will increase in the next five years. Troubling however is the fact that 62 percent say the need to combat corruption is a key priority area to enhance regional economic cooperation. In Australia, understanding corruption risks and consequences is still an area that needs work.

Corruption risks for businesses regionally

As this year’s corruption scandal in the oil and gas sector demonstrated, the issues are not new. Much has been written in recent years about the scope and costs of regulatory investigations and the powers of regulators, in Australia as well as in the UK and US. Bribery and corruption risk is becoming an increasing concern for businesses, and company executives and organisations operating in a range of sectors across the region are among those that have incurred the most significant penalties. How increased regional trade uncertainty affects those in Australia remains to be seen. More importantly for those Australian businesses reliant on regional supply chains, the weapons at the regulator’s disposal in the coming year will be critical to understand, as well knowing what more can be done locally to avoid corruption risks.

Corruption can take many forms. Not all companies bid on government contracts, being a major area of focus for regulators. Companies often underestimate the impact of private sector bribery, which remains a focus for not just Australia’s corruption regulator (the Australian Federal Police) but also its corporate regulator (ASIC). Nevertheless, the ASEAN Business Outlook Survey 2017 demonstrates that pressure for businesses to pay bribes for routine government services around the region remains a significant obstacle, especially when the alternative is to face costly delays within the supply chain.

While the problem potentially affects all businesses operating regionally, the impact on individual companies (and specific transactions) will vary according to the sector and location. Another major variable among organisations is that organisation’s culture, which will also be a factor considered when discussions commence with regulators investigating allegations of wrongdoing. How those discussions proceed, with new enforcement options at the regulators disposal, remains to be seen.

Deferred prosecution agreements in Australia?

In March 2016, the Australian Government released for public consultation its paper for improving enforcement options for serious corporate crime: Consideration of a Deferred Prosecution Agreements scheme in Australia. That paper outlined the Australian Government’s consideration of options to facilitate a more effective and efficient response to corporate crime through encouraging greater self-reporting by companies; the key plank of those options being a deferred prosecution agreement (DPA) scheme. Utilised to great effect in the UK and US, the paper argued that an Australian DPA scheme for serious corporate crime may improve agencies’ ability to detect and pursue crimes committed by companies and help to compensate victims of corporate crime. That paper coincided with the Senate Economics Committee inquiry into foreign bribery and white collar crime, which is now scheduled to report on 30 June 2017, and which will likely include recommendations in relation to DPAs in Australia.

If adopted in Australia, DPAs would be a revolutionary tool for prosecutors addressing corruption issues. It had been thought that deferred prosecution agreements would not be appropriate within the Australian constitutional setting but a series of legislative amendments adopted in the UK could be mirrored in Australia negating that concern. However, risks will still remain for corporations once negotiations with prosecutors commence.

What can Australia learn from the US and UK schemes?

Deferred prosecution agreements were viewed as an attractive alternative to criminal prosecution in the US from around 1999. This grew largely from the need to find a mechanism to bring corporates to account for criminal violations without inflicting harm on innocent victims. These victims included workers left unemployed as a result of a company being found guilty of an economic crime, as well as affected investors and markets.

The US example of a DPA scheme, in operation for much longer than the UK scheme, has shown that deferred prosecution agreements have the capacity to both encourage and enforce cultural and behavioural change amongst corporations, while allowing internal redress in sufficient training and compliance. Negotiated agreements, as opposed to complex investigations and criminal proceedings, are more efficient, less costly and result in a more assured outcome for all parties in many cases. Financial penalties payable under a deferred prosecution agreement also allow both an accrual of government revenue as well as redress for wrongdoing and, in some cases, compensation for victims.

There remains a risk for corporations in entering into deferred prosecution agreement negotiations. There is no assurance that once negotiations are commenced an agreement will be formulated and prosecution deferred. As seen in the US and UK, evidence raised and admissions made by companies throughout negotiations can be used in any later prosecution if an agreement is unable to be reached. The prosecutor may also choose to withdraw unilaterally from negotiations and pursue criminal proceedings based on such information. It is likely that any Australian adoption of deferred prosecution agreements would include similar processes.

Nevertheless, history has also shown that corporations are incentivised by the prospect of entering into a deferred prosecution agreement and avoiding criminal prosecution. This is especially so given the reduction in legal uncertainty and costs, negative publicity and the ability to avoid criminal liability and associated consequences. In the US, companies are increasingly more likely to self-report, thereby improving enforcement rates and outcomes for serious economic crimes.

In Australia, adopting the improvements made to the deferred prosecution agreement framework by the UK legislature (by incorporating a judicial function and oversight) would make deferred prosecution agreements an effective option for authorities here in pursuit of corporate wrongdoers. The potential for alternative and individually negotiated outcomes, as well as heightened levels of voluntary reporting and compliance as provided by deferred prosecution agreements cannot be overlooked.

What more can businesses do to combat a “culture of corruption”?

In February 2016, the chairman of the Australian Prudential Regulation Authority (APRA), Wayne Byres, informed a Senate Estimates Committee hearing that APRA and the Australian Securities and Investment Commission (ASIC) had each set up teams specifically to focus on “fixing corporate culture”. He went on to say that those teams would be sharing information about organisations, but acknowledged that “you can’t just regulate [appropriate culture] into existence”. Mr Byres saw leadership from executives as the key plank to improving behaviour within organisations. The difficulty for organisations is identifying “appropriate culture” and, perhaps more importantly, knowing how to fix “bad culture”. Striking the right culture balance will be key to ensuring that regulatory compliance is adhered to and also key to minimising fraud and corruption risks.

Attributing liability to an organisation for a breach of Australia’s Commonwealth anti-bribery legislation requires that organisation to have expressly, tacitly or impliedly authorised or permitted the commission of the relevant offence. In practice, the means by which such authorisation or permission is established includes proving that a corporate culture existed that directed, encouraged, tolerated or led to non-compliance or that the organisation failed to create and maintain a corporate culture that required compliance. Similarly, for those facing investigations of fraud or wrongdoing by other regulators (such as ASIC’s recently proposed action against those financial institutions allegedly engaged in the rigging of Australia’s bank bill swap rate, or BBSW), demonstrating that wrongdoing was the work of individual “bad apples” and not the barrel in which they were stored may prove critical. Establishing a culture of compliance to the satisfaction of regulators may help an organisation escape from liability, but begs the question: what is required to create “good culture”?

How do you create “good culture”?

In Australia, certainly in the context of anti-corruption regulation, there is very little guidance about what constitutes a compliant “corporate culture”. This is in stark contrast to the United States and the United Kingdom, where comprehensive guidance is offered to organisations across a range of white collar crime offences, including bribery and corruption. In the absence of clear guidance in Australia, organisations might look to generally recognised compliance standards to assist in understanding an approach to creating good culture.

To embed a true culture of compliance, a focus on more than just leadership (or “tone at the top”) is required. It must extend to things such as appropriate hiring (and increased vetting procedures for staff), proper incentives tied to long term performance of the organisation, adequate internal controls (such as dual authorisations, segregation of duties and suitable reporting structures), efficient internal audits (including use of data analytics), budget support for internal audit and compliance functions, promotion of an open communication channel throughout the organisation (including a robust whistleblower regime), competent and empowered compliance personnel as well as appropriate and tailored training for all staff. Focussing only on the “bad apples” within an organisation ignores the bigger issues: a true culture of compliance requires weeding out the structures, processes and social systems of organisations that lead to opportunities for wrongdoing to occur.

Where to from here?

Australia has already been criticised by the lack of anti-corruption proceedings under the OECD Anti-Bribery Convention, enacted in 1999. This dearth of enforcement more probably signifies inadequate strategies for prosecution and a lack of incentives for voluntary reporting than it does the absence of fraudulent or corrupt practices among Australian and foreign companies. The recent scandal involving Unaoil may change that landscape. Against this backdrop, it is clear that new strategies to address corporate wrongdoing, fraud and corruption would assist Australian authorities and enforcement bodies in their endeavours. A new weapon in the arsenal such as deferred prosecution agreements may be the next logical step to take up the fight against serious economic crime. In addition, being ready to respond to an allegation and demonstrate “good culture” will be critical. Conversations with risk and compliance officers and those with governance oversight need to start now as such areas are increasingly in the spotlight when it comes to how organisations manage their affairs, particularly in relation to their compliance obligations and what will be seen as “good culture” when it comes to avoiding corruption.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
24 Oct 2017, Seminar, Washington, DC, United States

The Dentons Forum for Women Executives invites you to join us for a luncheon featuring guest speaker Liza Mundy, journalist and author. Ms. Mundy recently released her latest book, Code Girls, the riveting untold story of more than 10,000 spirited young American women who cracked German and Japanese codes to help win World War II.

27 Oct 2017, Seminar, New York, United States

Please join us for a milestone event, our 10th annual CLE Seminar for In-House Counsel.

1 Nov 2017, Seminar, Washington, DC, United States

Celebrate the 58th anniversary of Dentons' Government Contracts practice

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.