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Anti-corruption bar set higher, but Australia still has more to do

Many countries still need to clean up their act on anti-corruption and whistleblowing protections. Shutterstock

Despite the adoption of a third two-year G20 Anti-Corruption Action Plan, corruption received only a few lines in the latest G20 leaders’ communique.

The credibility of the G20 as a whole now rests on doing better on the detail. After all, the driving reason why leaders have consolidated anti-corruption measures as part of the core G20 agenda is to promote honesty and integrity in the world’s governmental and financial affairs.

The high point from the summit was G20 leaders’ decision to follow the G8 with High Level Principles on Beneficial Ownership Transparency. This aims to ensure the real owners of corporations, trusts and other legal entities can be identified, in order to clamp down on the use of anonymous shell companies as vehicles for engaging in corruption and tax evasion.

Griffith University’s Professor Jason Sharman describes the text of the principles as – for the most part – a “sensible and realistic list of improvements, without over-promising”.

However, according to Sharman, they also face the inevitable problem that “talk is cheap”, with two big problems going to the credibility of G20 leaders and the G20 process.

The first trouble lies in the fact that the “new” G20 commitments essentially repeat promises made by most countries since 2003, through the Financial Action Task Force (FATF), to require beneficial ownership information to be kept and made available. Despite these existing commitments, most of the countries involved have “spectacularly failed to do so, in law and practice” – as revealed by the subsequent research.

Contrary to some stereotypes, the worst offenders are not isolated tax havens, which have been responding to the moral and legal pressures to keep better records for years. It is the United States itself, followed by the United Kingdom, Canada and many others.

As Transparency International says, this is not reason to give up. Rather, the new G20 principles mean “the moral and political mandate for action has now been lifted to a new level” and, in some ways, brought home to roost. But it prompts the question: why should anyone believe these new commitments, when they just repeat old unfulfilled promises?

The second problem lies in the story that G20 countries are telling each other, and the world, about the extent to which they are making progress towards their anti-corruption goals.

Also released on the second day of the Brisbane summit were the “accountability reports” of each G20 country, in which they self-assess whether they have achieved commitments in the previous action plan. There is some confusion, mixed with gilding of the lily.

Eleven of the 19 countries report that their country already requires “the beneficial ownership and company formation of all legal persons organised for profit [to] be reported”, but in how many countries are these requirements real?

The UK’s claim is based on proposed reforms; its fine print confirms these have not yet been implemented. Turkey – next year’s G20 president – claims to have the requirements in place when actually it does not, including still being a country that allows bearer shares, which is one of the worst, most untraceable ways of transferring company ownership.

This year’s president, Australia, does not seem to be sure. Its individual accountability report claims that, “yes” it has the necessary requirements in place under basic company registration rules. The all-country summary contradicts this, by appearing to confess the true answer, which is “no”.

Whistleblower protection: getting there … or not?

Unfortunately, there are other issues on which countries are reporting progress that they are not actually making – potentially on a more serious scale.

In their accountability reports, every country claims to have whistleblower protection legislation in place for the public sector, and all but four for the private sector. One might presume, or hope, this means laws that at least meet the principles agreed by the G20 itself in 2011, on advice from the OECD. Yet we actually know that it doesn’t.

In fact, 12 of the 19 countries are claiming they have this legislation in place when a comprehensive assessment this year by Blueprint for Free Speech, Griffith and Melbourne Universities and Transparency International Australia showed their laws – if they exist at all – are missing six or more of the 14 basic elements that define reasonable best practice.

Australia is again no saint. There is no mention of major gaps in its new federal public sector law, like the fact that claims of corruption against any government minister, politician, elected official or member of their staff will attract no protection at all.

And despite claiming to have protection laws in place for private sector whistleblowers, Australia’s limited Corporations Act provisions are missing or defective on nine of the 14 criteria.

Australia’s self-assessment simply identifies that, as a new move, ASIC proposes to establish an “Office of the Whistleblower”. What it fails to disclose is that this is in response to much more far-reaching recommendations of the June 2014 Senate Economics Committee inquiry, which identified the need for more serious overhaul of Australia’s inadequate private sector whistleblowing laws.

Can we do better?

Can Australia, or the G20 as a whole, do better than this? The answer is we must.

Why would Australia not also show its leadership by completing the decision to join the Open Government Partnership?

Or announce that it intends to become a full member of the Extractive Industries Transparency Initiative, another international mechanism endorsed and encouraged by the G20?

Or back its commitments to transparency with a positive blueprint for open data and citizen rights to information, rather than abolishing the Office of the Australian Information Commissioner as is currently underway?

Or say how it intends to clean up its own “know your customer” requirements and enforcement, under the new beneficial ownership principles?

All these issues signal what many average citizens fear – there’s a huge gap between the rhetoric of leaders and the reality of their governments’ actions.

A longer version of this article can be read here.

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