The AFR has a good story today on the now spectacularly failed process of using lawyers to investigate corruption allegations:
…the less obvious common thread is that both Leighton and the RBA had called in highly paid lawyers to investigate rumours of kickbacks prior to the scandals becoming public, but the advisers apparently waved them through.
It was only much later that police were called in to investigate.
Certainly it can be hard to detect corrupt practices in distant chaotic countries even from inside a company, but both cases raise serious questions about why the forensic probity investigators missed the scams and whether directors have taken their reports as a reason to close the case.
One close observer of the current scandals, likens the interrelationship between companies and probity investigators, to the conflict faced by ratings agencies sensationally exposed during the global financial crisis.
“Why would the law and accounting firms want to devour their own meal ticket?”, the observer says.
Calling in a conflicted investigator as a defense against corruption? Nice one. And it’s made worse by the lack of transparency:
Worse, the reports can usually never be completely scrutinised because of legal professional privilege or confidentiality.
The Freehills report into bribery allegations at NPA, completed in 2007, has never been released…Since the scandal has been exposed, Reserve Bank governor Glenn Stevens has repeatedly used the Freehills report to claim that the bank’s chiefs did all that they could.
Of course I have no idea if this is naivete or something else but the practice is transparently inadequate. And yet more:
Sadly, the failure to question the limited role of advisers must fall squarely on the shoulders of the corporate watchdog.
…The scrutiny comes on top of the serious gap already exposed between ASIC and the AFP on bribery issues.
ASIC claimed last week that they could not investigate the bribery matters until they had received a referral from the police. But the police have limited resources to investigate and by the time the matter comes to ASIC, the six-year limit for enforcement action has often expired.
It’s called “co-operation” fellas. The truth will out, even in a boys club plutocracy but too late to actually hold anyone to account it seems. Are we going to see some action on this from the Government or is it going to just keep telling everyone we’re “open for business”? Aren’t we just.
