Case shows apparent ease with which Australian firms flout the law, anti-corruption advocates say

This article is more than 2 years old

This article is more than 2 years old

Anti-corruption advocates have called for more resources to help federal police investigate foreign bribery, saying the case of Sinclair Knight Merz shows the apparent ease with which Australian companies are flouting the law.

Guardian Australia on Friday revealed damning evidence of corruption involving SKM, a major Australian government foreign aid contractor.

The Australian-based consulting firm was found by the World Bank to have repeatedly bribed public officials in Vietnam, using ghost contracts, fake study tours and subsidiary companies to mask the payments.



Australia handed out millions in aid contracts to company accused of bribery Read more

SKM is now also facing criminal prosecution for allegedly bribing officials in Vietnam between 2006 and 2011, and the Philippines between 2000 and mid-2005.

The company, a donor to the Liberal and Labor parties, was simultaneously receiving vast amounts of public money from the Australian government to administer projects under its foreign aid program, although there is no evidence that it directly used taxpayer money to bribe officials.

Australia’s laws criminalise the bribery of foreign governments. But the anti-corruption group Transparency International Australia said federal police had not been given sufficient resources to tackle what are complex and difficult cross-border investigations.

The AFP began its investigation of SKM in July 2013 but the firm was not taken to court until last month.

The Transparency International Australia chief executive, Serena Lillywhite, said Australia had a low rate of successful prosecution for bribery. She said the SKM case highlighted the “apparent ease with which some companies were turning a blind eye to Australia’s foreign bribery laws”.

“The record for prosecution is fairly low to say the least,” Lillywhite told Guardian Australia. “One aspect is undoubtedly that it’s not always easy to gather evidence.

“But Transparency International Australia holds the view that our enforcement agencies like the AFP need to be far better resourced to actually undertake the investigative work required to land a successful prosecution.”

Lillywhite also renewed calls for firms charged with foreign bribery to be debarred from further work with the Australian government.

The Australian government likely knew of evidence that SKM had bribed foreign officials as early as 2012, when the firm self-reported to the World Bank. It certainly knew in mid-2013, when the AFP began investigating the firm.

Quick guide Sinclair Knight Merz timeline Show Hide 2000-05 According to court documents, Sinclair-Knight Merz employees allegedly bribe officials in the Philippines to gain contracts on a number of World Bank and Asian Development Bank-funded projects between 2000 and 2005

2006-11 According to court documents and a World Bank investigation, Sinclair Knight Merz employees allegedly bribe Vietnamese government officials between 2006 and 2011 to obtain work on a number of World Bank-funded infrastructure projects 2012 Sinclair Knight Merz self-reports corruption allegations to the World Bank. The allegations are investigated by the World Bank’s integrity unit, INT July 2013 The Australian federal police launch an investigation into bribery allegations 24 July 2013 World Bank announces a conditional sanctions agreement with Sinclair Knight Merz, following the company’s self-reporting to the World Bank. The company remains able to bid on World Bank contracts, provided a number of governance and compliance conditions are met by the company 9 September 2013 Jacobs Engineering Group announces merger with Sinclair Knight Merz. Sinclair Knight Merz is maintained as a registered business name in Australia 26 January 2018 The World Bank issues a sanctions decision regarding two individuals allegedly involved with bribery incidents in Vietnam 11 May 2018 Jacobs Group and a number of former executives are issued with a court attendance notice for Australia

But the firm continued to be awarded contracts, including under the foreign aid program, until it was bought out by the Californian consulting giant Jacobs at the end of 2013. The newly merged Jacobs continued to receive government work, mainly on defence projects.

Lillywhite said the lack of a formal debarment regime was a weakness in Australia’s anti-corruption powers.

“Currently, there are no transparent policies or guidelines for the debarment of companies or indeed individuals who engaged in foreign bribery associated with Australian government contracts,” she said.

“It’s the view of Transparency International Australia that we need a transparent debarment regime for all government procurement agencies. This was in fact recommended by the OECD during their assessment of Australia as part of our compliance with the OECD regime.”

The criminal case against SKM is ongoing. Jacobs, the firm that bought SKM, has distanced itself from past practices.

“The activities reported to authorities by SKM date as far back as 18 years ago, long before Jacobs acquired SKM in December 2013,” a Jacobs spokeswoman said. “In no way does that conduct reflect the ethical business standards and practices of Jacobs.”

• This reporting is supported by the Susan McKinnon Foundation through the Guardian Civic Journalism Trust