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	Bribery and Corruption by University of New South Wales   Bribery scandals have engulfed a number of Australian companies operating overseas. The incidents raise questions about shortfalls in management supervision of staff, who act corruptly for the "good" of their employer. Some of Australia"s largest companies, such as mining giant Rio Tinto, have been involved in widely reported examples. In 2005, the unruly behaviour of grain marketing organisation, AWB Limited, formerly the Australian Wheat Board, also hit the headlines. And recently bribes were reported to have been paid by Securency International, the polymer banknote company half owned by the central bank, the Reserve Bank of Australia.   Transparency International, the global anti-corruption coalition, has released several progress reports on the enforcement of the Organisation for Economic Co-operation and Development"s Anti-Bribery Convention. Transparency"s 2009 report pointed to Australia"s weak record of enforcing the agreement. In fact, Australia had not prosecuted anyone. Generally enforcement was extremely uneven among the 36 out of 38 signatories to the convention the report covered. "There is active enforcement in only four countries (Germany, Norway, Switzerland and the United States) and little or no enforcement in 21 of the parties," said the report. "Increased efforts are also needed in countries with moderate enforcement because their level of enforcement is not high enough to provide effective deterrence."   In mid-2009, when Rio Tinto"s Australian head of iron ore marketing in China, Stern Hu, was charged with bribery, it was suggested the Chinese government was taking revenge for a rebuff of its earlier takeover bid for the company. Yet the recent court judgement of the case detailed how Hu demanded a 30% commission – disguised as a "consultancy agreement" – in return for giving a Chinese company a long-term contract for the supply of iron ore via an agent. He laundered a US$798,000 cut through a friend"s bank account. Other bribes were handed over in a restaurant in the office tower where Rio Tinto has its Shanghai headquarters. Hu"s colleagues also rigged Rio Tinto"s spot market tendering processes in favour of those who bribed them.   Australian Federal Police are now investigating a whistleblower"s allegations that Securency International, the Reserve Bank subsidiary that invented and markets polymer banknotes, offered A$50 million in bribes and procured prostitutes to win contracts all around the world.   In the AWB case, the grains marketer has now admitted the A$290 million in fees it paid to a Jordanian transport company were loaded with payments that were passed onto Saddam Hussein"s regime in Iraq. This contradicted its earlier responses to the Australian Securities Exchange and to Paul Volcker, who investigated corruption in the Oil-for-Food Programme for the United Nations (UN) in 2005. Terence Cole, who headed the 2006 Australian inquiry investigating allegations that AWB paid bribes to the Iraqi regime to secure wheat sales, was told: "AWB has consistently maintained its position that it did not know, and could not know, what Alia [the Jordanian company] did with the money AWB paid to it by way of transport fees."   Official responses to the AWB scandal have been muted. Although AWB was violating United Nations (UN) sanctions by inflating transport costs to effectively funnel money to Saddam Hussein"s regime, the Australian Taxation Office ruled that the A$290 million that AWB paid was not illegal under Iraqi law. Consequently, they were not bribes under Australian law, and the Tax Office determined AWB was well within its rights to claim the costs as a tax deduction. The Australian Federal Police last year dropped its investigation, saying it was not clear that breaching a UN sanction is a criminal offence and a conviction "was not in the public interest". Now, the grain exporter is defending a A$100 million shareholder class action by claiming Australian and United Nations officials knew of the payments – and they did not breach the UN Oil-for-Food Programme anyway.   A Case of Complacency?   There"s an argument that the Australian government has a conflict of interest as bribery for contracts leads to profit for government coffers through more exports and tax revenue, according to David Chaikin, a Sydney-based barrister and academic. "Singapore and Hong Kong prosecute private sector bribery, but Australia does not, even though it has been criminal here for 100 years," Chaikin says. "The Securency and AWB cases appear to have the tacit support of the Australian government. Working for the government shields employees to some degree."   Australians can be prosecuted at home for two offences offshore – child sex tourism and bribing foreign officials. The apparent reluctance to prosecute offshore bribery points to a deep-seated complacency in Australian law enforcement about these issues, says Ross Buckley, a law professor at the University of New South Wales. "This is probably due to the political power of the big companies," he suggests. Buckley believes the government needs to provide guidance to Australian companies by reforming unwieldy provisions and publicly setting a maximum monetary amount for "facilitation payments" for each country overseas. In 2006, only 51 of Australia"s top 100 companies had explicit policies prohibiting their employees from giving and receiving bribes, compared with 92% of such companies in the UK and 80% in the US.   However, Australian companies need to be careful of corruption offshore. They are at risk being made into "splash examples" by foreign governments, as cases in Indonesia and China have shown recently. "It amazes me that company executives say it is the only way to get business – and almost everyone does it," says Buckley.   Discounting the Cost of Corruption   The rationalisation of corruption – how staff convince themselves that corrupt behaviour is acceptable – is the research field of Elizabeth Maitland, a lecturer at the Australian School of Business. Economic models of corruption are based on the assumption that individuals make rational decisions to engage in corrupt practices and balance the costs of exposure against the potential gains from abusing the authority of their office. It"s assumed the perpetrators are conscious they are deciding to commit illegal acts. Yet Maitland"s research suggests a very different process occurs, in which corruption is rationalised as normal behaviour, not criminal activity, and the "costs" of corruption are not decisive considerations.   Exploring the cognitive processes underpinning corruption, Maitland and her team analysed how individuals became willing participants in an entrenched system of corruption, using the example of an elite unit of the Los Angeles Police Department (LAPD) that became corrupt in its fight against gang crime. The Community Resources Against Street Hoodlums (CRASH) unit rationalised its actions as legitimate behaviour in pursuit of organisational goals. In an extreme case of corruption, the CRASH unit covered up violent abuses of police authority over a period of years. The officers falsified evidence and arrests, carried out assaults, outed informants to criminals, and shot suspects and innocent bystanders.   Maitland"s research sought to understand how CRASH unit members justified their actions and became willing participants in a system of entrenched corruption. The researchers used the theory of situated cognition, which argues the human mind is embedded in and shaped by social contexts. The way people think and behave is the result of the interplay of their context and the mental schemes they use to make sense of the world. In the LAPD example, this involved formal policies and policing models, as well as its informal norms.   In the CRASH unit, there was an officially sanctioned, proactive policing model to crack down on gang crime. Public officials declared "a state of war" on gangs, as media reports of drive-by shootings and vicious tit-for-tat killings escalated. The LA criminal justice system institutionalised the special nature of gang-related crime: "gang injunctions" enabled courts to prohibit gang members from congregating, displaying gang colours, or possessing pagers or mobile phones. Former police noted how the focus on statistical measures of violent crime created a "bunker mentality" that signalled gang violence was out of control and required unique measures.   Maitland"s team mapped the cognitive processes by which the unit"s "expert policing" schemes were adapted to support elaborate rules, routines, symbols and actions to achieve what the unit believed was its mission – to remove gang members from the street at any cost. "Money and personal gain were not the object of the corruption," says Maitland. "We define corruption as the abuse for private gain of police authority, including the authority to use violence, deprive suspects of their liberty, make arrests and provide evidence in court. CRASH officers did not engage in corruption to collect bribes, but for private gains in the form of psychological, emotional and long-term financial rewards." These gains included maintaining their status as members of an elite group, gaining official commendations for achievements, and ensuring their long-term career prospects in the LAPD.   Police leaders unwittingly played an influential role in supporting the systemic abuses. Unit members were applauded for their success in reducing crime rates, and believed their methods for achieving this success were implicitly sanctioned by senior officers.   How Corruption Becomes the Norm   The research shows that corrupt individuals draw on one or more common rationalisations, such as denying there are direct victims of their actions, to cast their behaviour as standard practice. According to one police whistleblower: "…our mentality was, "Well, these guys don"t play by the rules, we don"t have to play by the rules."   "CRASH officers also used the "end justifies the means" rationale, such as the community benefits of restoring law and order to a criminal neighbourhood. Corrupt groups overlay these strategies with socialisation tactics to ensure newcomers adhere to established patterns of behaviour. They do this because group members usually remain aware that outsiders may view their actions in a less favourable light, so they attempt to conceal or limit knowledge of their activities.   The entrenchment of corrupt behaviour within the group is crucial. Moving from single, unconnected actions by individual officers – planting evidence on a suspect or assaulting an unforthcoming informant, for instance – to the group consistently committing such acts requires the evolution of group understandings and norms. Collectively, the LAPD officers relied on each other for back up or to collate information about gang activity, and needed to think together. "The research highlights that corruption on behalf of the organisation can be entrenched without the explicit sanction or involvement of top management," says Maitland. While LAPD command engaged in "sense-giving" behaviours, the leaders were not explicitly supporting or encouraging corruption.   By denying the criminality of their behaviour, individuals engage in mental processes and calculations in which the penalties for committing a criminal act arguably do not figure prominently, if at all.   Anti-corruption programs and reforms should concentrate less on the pecuniary gains involved and more on the cognitive processes, suggests Maitland. "Managers and executives should be aware of their "sense-giving" behaviours, such as allowing a different set of rules to apply to one group of employees," she says. "Identifying individuals or organisations as outside standard rules and practices is a scenario that has wide application – including to multinational enterprises operating outside their home location where the temptation is to play by local rules."   Maitland believes studies can also help understand how different organisational contexts enable corruption to arise and fester, sometimes in advanced economies and countries not subject to systemic or wide-scale corruption. Equally, in countries plagued by systemic corruption, large-scale change may first require focusing attention on key organisations, such as the police, to provide a stable platform to promote wider reforms.   * Update: Oct 2012 - The OECD has criticized Australia over its response to foreign bribery cases. The report says Australian businesses were highly exposed to foreign corruption, but prosecutors and federal police were under-resourced and investigators lacked experience in targeting corporate crime. Despite 28 cases reported to federal police since the introduction of laws in 1999, criminal charges had been laid over only one, access the complete report via the link below. Visit the related web page
	Tens of Thousands march across Europe to protest Austerity Measures by Associated Press & agencies European Union   Sept 2010   Tens of thousands of people marched across Europe to protest against government austerity measures, which unions say will slow economic recovery and punish the poor.   Trade unions said they had called rallies in 13 capitals from Lisbon to Helsinki, while Spanish unions held a general strike to oppose spending cuts and pension and labor market reforms.   "The main feeling of the people is that for the banking system there are billions of euros, but the social payments are being cut. That"s not right," said Ralf Kutkowski, a German coal miner protesting in the Belgian capital.   Marchers in Brussels, carried banners saying "No to austerity" and "Priority to jobs and growth." The 50 unions represented included German coal miners, Romanian gas workers and Polish shipbuilders.   European governments say they have been forced into austerity measures to avert the danger of a sovereign debt crisis like the one suffered by Greece, but many workers feel they are being punished for problems that were not of their making.   Protests have taken place in many countries in the last few months. Protests on Wednesday were planned in Brussels, Dublin, Lisbon, Rome, Paris, Riga, Warsaw, Nicosia, Bucharest, Prague, Vilnius, Belgrade and Athens   "We don"t want to take it on our backs," said Philipp Jacks, a German trade unionist marching in Brussels. Graham Smith, a public sector youth worker from Edinburgh in Scotland, said: "The message is we need our public services because the people who need them most are the people being hit most by the crisis."   In Slovenia, half of public sector workers remained on strike for the third day against a planned wage freeze,.   Dennis Radtue, a coal mining union representative from Germany, said the gap between rich and poor was growing. "Rich people have a lot of opportunity to save their money and pay no taxes, while a normal worker has to pay taxes whether he wants to or not," he said.   In an ironic twist, the march in Brussels came as the EU Commission proposed punishing member states that have run up deficits. Most of the national deficits have funded social and employment programs in a time of high unemployment across the continent.   "It is a bizarre time for the European Commission to be proposing a regime of punishment," said John Monks, general secretary of the European Trade Union Confederation, which organised the Brussels march.   "How is that going to make the situation better? It is going to make it worse," Monks said in an interview with Associated Press Television News.   Unions say workers will become the victims of an economic crisis set off by bankers and traders, many of whom were rescued by massive government interventions.   "There is a great danger that the workers are going to be paying the price for the reckless speculation that took place in financial markets," Monks said. "You really got to reschedule these debts so that they are not a huge burden on the next few years and cause Europe to plunge down into recession."   In Spain, the cuts have forced Spain to trim its central government deficit by half through July but the unemployment rate stands at 20 per cent, and many businesses are struggling to survive.   The salary cuts for civil servants, pension reforms and new laws that make it easier for companies to fire workers were rushed into law quickly in Spain, without traditional negotiations between management and workers.   Greece, which was rescued by the euro-nations this spring to stave off a financial markets bankruptcy, has also been forced to cut deep into workers allowances, with weeks of strikes and actions as a result.   Greece"s government has imposed stringent austerity measures, including cutting civil servants salaries, trimming pensions and hiking consumer and income taxes. Several other EU nations are also planning similar actions.   Financial commentators claim, that whatever unions try, government debt across the continent will force drastic changes in Europe"s labour situation.   The unions point out that recent economic growth had largely benefited the rich leaving the workers to pay the bills. The crisis has left over 23 million people unemployed in Europe.   Economic growth has revived in the European Union, home to 500 million people and the executive European Commission expects the bloc"s economy to grow 1.8 percent this year after a 4.2 percent contraction in 2009.   But EU unemployment is running at 9.6 percent of the workforce, and at around twice that rate in Spain, Latvia and Estonia. Unions say austerity will curb job creation.   "We understand there are problems, but it is being used as a very good excuse for all kinds of pressure on the people who are employees, workers and not in big business," said Alexander Nikolov, who drove from Bulgaria to protest in Brussels.   * Below is a link to the Council of Europe"s social inclusion page. Visit the related web page
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