Sustainable International Business Future - BHP Billiton - Case Study Example

SUSTAINABLE INTERNATIONAL BUSINESS FUTURE By Name Course Instructor Institution City/State Date Sustainable International Business Future Introduction The anti-foreign bribery law in Australia is clearly not working and must be overhauled so that a regime of deterrence and liability is created, whereby the corrupt multinational companies (MNCs) can be detected as well as punished easily. Although Australia is a party to the OECD Anti-Bribery Convention, it is still allowing the facilitation payments, which are prices paid by Australian MNCs to get overseas’ contracts. Given that the number of MNCs working in China and Africa is exceedingly high, the time to espouse a different approach has come. Clearly, Australia should improve its anti-bribery approach to become more robust and clearer so as to ensure that the Australian Federal Police are not overstrained by cases of corruption and bribery. Without effective anti-bribery law, Australia reputation will be soiled further by cases such as BHP Billiton. The bribery and corruption issue in Australia is exacerbated by under-resourced Australian Federal Police (AFP) that is unable to handle the complexity and volume of potential bribery cases. Allegations and incidents of bribery and corruption in the Australian corporate world have increased lately; thus, creating the need for reviewing the sustainability of business ethics. Corruption normally results in international criticism, a decline of MNC’s revenues, and high litigation expenses. The MNCs embroiled in corrupt practices are considered to have poor corporate governance and lack the ability to protect the stakeholder relationships’ integrity as well as to execute and oversee the firm’s codes of conduct. Numerous Australian companies that have expanded their business operation to corruption-plagued countries have increased. Therefore, the duty to protect against bribery and corruption currently falls to MNCs as well as their boards. Evaluating BHP Case from A Sustainable International Business Ethical Perspective BHP Billiton was recently fined $US 25 million for violating the anti-bribery as well as corruption laws. The company was charged by the United States’ Securities and Exchange Commission (SEC) for violating the anti-foreign bribery law after inviting officials who influenced its regulatory as well as business affairs. The company sponsored government officials to participate the 2008 Olympics using the ‘global hospitality’ program that was associated with BHP Billiton’s Olympic Games sponsorship. According to Ala'i (2002, p.5), the anti-corruption efforts’ success depends on the ability to repackage the corruption problem as an economic problem instead of a moral or political problem. Clearly, the BHP Billiton actions clearly mislead the choices of the public sector towards the wrong projects, which normally results in inequitable and inefficient spending and only benefits corrupt government. As mentioned by Adewole (2015, p.187), the business morality in the developed economies has transformed into corporate social responsibility (CSR). The CSR activities have enabled the MNCs to understand ethical behaviours that are acceptable in intra ad inter transactional business operations. More importantly, a number of international initiatives have metamorphosed to help embed sustainable business activities’ moral codes of conducts. Without a doubt, BHP Billiton efforts were not meant to build or strengthen its business capacities towards acceptable moral practices. Adewole (2015, p.188) maintains that conducting business operations ethically can result in sustainability and business growth. BHP Billiton appears to have lacked ethical implications conscious in their activities and operations. Upholding ethical practices while conducting business activities and operations can result in continuous and increased patronage, but unethical behaviour leads to high risks of being blacklisted. Unethical behaviour in business can result in reduced patronage, which connotes that the future of the company is less secured and cannot be guaranteed sustainable growth. Therefore, there exists a connection between future growth assurances, ethical practices as well as improved sustainability. Jones (2000) suggested that Australian managers should know that their understanding of ethical business practices could be incompatible with persons from different backgrounds. Therefore, what MNCs’ managers deem as ethical in a certain culture cannot be considered ethical in another culture. The regulatory and legal framework in the Australian context outlines the minimum acceptable conduct standards while conducting business in the country or overseas. Therefore, failure by BHP Billiton to comply with existing corruption and anti-bribery laws proves that Australia corruption framework is non-effective. The majority of the board of directors and the company executives overseeing the decisions made by the management are depending on the battery of internal governance mechanisms, guidelines, policies, and regulations so as adhere to the compliance onuses. Such governance systems according to Sullivan (2009, p.25) rise above the minimum standards outlined by the existing law and reveals that companies are aspiring to better business ethics. Basically, the BHP Billiton case reveals that the ethical performance variance established in different companies involves adherence to the legal requirements and promotes responsible business conduct by creating new standards. In the last few years, the world has experienced a lot of changes with regard to how business operates in foreign countries. This can be evidenced by how issues related to corruption are treated by business community. It is embarrassing that while private sector is working hard to curb corruption at the global level; BHP Billiton soiled the milestone and comprehensive accountability and transparency standards that have been achieved at the global level. Although ethical codes are crucial in steering accountability and transparency reforms, Sullivan (2009, p.25) mentions that other initiatives extending afar the internal guidelines have made an enormous contribution in the fight against corrupt activities. Australia Losing Its Reputation Because Of MNCs’ Corrupt Activities Pedigo and Marshall (2009, p.59) indicate that globalisation has made a lot of cultures to become interdependent and entwined as MNCs continue operating in a borderless world. The MNCs are continually facing inexorable ethical dilemmas while operating in the cross-cultural environments. For instance, managers are forced to violate their country’s cultural and personal norms when the host country’s ethical practices and practices confront them. The majority of Australian MNCs are operating in environments where competition has become globalised and very intense; as a result, some of them have been coerced to bypass the ethical boundaries. The MNCs motive for improved revenues and profits has resulted in unethical practices, which has consequently harmed the societal morals and values (Krishna et al., 2011, p.281). Australia has been losing its reputation because of its inability to adequately scrutinise the MNCs, which has led to increased corrupt practices. According to Koker and Harwood (2015), criminals are using tax money to finance criminal-related activities and have been able to retain their public decorum, which has facilitated their ability to access formal professional and financial services. Although Australian governments have continually insisted that it is committed to combat corruption, Koker and Harwood (2015) argue that the battle is currently fought by the private sector single-handedly. The anti-bribery law will only be successful if the governments join the private sector in the fight against corruption. Australia looks less determined to win the fight against corruption because the existing integrity agencies are poorly resourced. As a result, the AFP has become less willing to incarcerate the senior government officials engaging in corruption activities, unless ordered by the executive. The country’s Transparency International ranking according to Mulgan (2016) has started falling and has been overtaken by countries making anti-corruption their main objective such as Britain. Furthermore, Australia is ranked behind all the developed Westminster-based governments such as Canada, Britain and New Zealand. While the country’s reputation continues to nose-dive, corruption is yet to become the main agenda of the federal government. Corruption in Australia has led to distrust and has instilled an unethical sense of power for those holding the authority positions. Corruption has cemented false as well as dangerous structures and enables the privileged few to be enriched through diversion of resources which could be used to benefit the public. As mentioned by the Age (2016), corruption exacerbates inequality, cements poverty, generates cynicism and can result in civil unrest. The Australian government has continually been reminded to reinforce its anti-corruption laws by aligning it with the United States’ Foreign Corrupt Practices Act as well as the United Kingdom’s Bribery Act, which are considered to be the world’s best-practice standards. The Australian anti-corruption laws according to the Age (2016) have been existent for 17 years but are below par , full of inconsistencies as well as loopholes, promotes misperception and enables the corrupt individuals to go unpunished. In the UK, failure to report bribery is considered an offence, but that is not the case in Australia. The Australian MNCs normally pay facilitation payments in order to lubricate the government wheels so as to make sure that a deal is done. The Australian anti-bribery law considers such actions as minor. However, the facilitation payments destabilise the moral principles that underpin the bribery and corruption laws. Therefore, such payments should be scrapped completely and be outlawed. Australia's efforts to combat bribery and corruption has continually been criticised by the OECD, and although there are some notable improvements such as the formation of the Fraud and Anti-Corruption Centre, more needs to be done. Hitherto, major parties in Australia have exhibited little determination in formulating initiatives that would help fight corruption. Mulgan (2016) thinks that no one should expect major changes in the Australia’s efforts to combat corruption driven by the MNCs and the few privileged elites. The business environment is becoming more and more globalised, and this presents more challenging barriers to Australian MNCs; therefore, the government should find ways of enabling the investors in establishing pathways for responsible and sustainable investment. Until the anticorruption law is overhauled, corrupt MNC practices will continue soiling Australia’s reputation and the rule of law. Instability practices and ineffective competition in Australia if not managed effectively can negatively affect the economy since investment decreases. Need To Overhaul Its Anti-Corruption Law Without a doubt, Australia needs an independent body that is focused and properly coordinated to investigate claims of MNCs’ bribery and corrupt practices. Given that the OECD is very concerned with the country’s poor and ineffective foreign bribery laws, the government must take strict measures or Australian businesses will continue featuring in the foreign corruption. As pointed out by McKenzie (2015), the existing anti-foreign bribery regime in Australia is ineffective and must be overhauled so that a regime of deterrence as well as liability can be created. For the country’s anti-bribery regime to become effective, the government must formulate incentives that are far stronger in order to motivate business organisations to disclose corruption as well as collaborate with the established order. Given that collecting corruption evidence from foreign jurisdictions is very challenging, Australia should ensure that the existing laws enabled the authorities to charge companies or individuals for corrupt practices. Some of the welcoming improvements made by the government hitherto include the recent Australian bribery laws amendment, whereby prosecutors are no longer required to find the entity that received the bribe. Still, this is a minor stride towards a corrupt-free Australia. The need for new laws is increasing; therefore, Australia should amend its law in a w ay that a company can be held responsible for bribery acts performed by an employee unless there was sufficient compliance regime implemented in the company when the offence was taking place. Before such a law is introduced, the government should make sure that the companies understand the connotation of having an adequate compliance program. In the process of overhauling the anti-corruption law, the government should ensure that the outlaw scheme of the private persons and public officials’ bribery activities is aligned to the one used in the UK. The law should have sufficient jurisdictional reach in order to be applicable to the Australians avoiding detection by sub-contracting their corrupt practices to foreign third parties. According to McKenzie (2015), the UK law has a suitable jurisdictional reach, which Australia should try to emulate. Guidance and communication program should be introduced in Australia so as to ensure that the MNCs are offered regular and clear updates regarding how they can prevent and identify corruption. More importantly, the program will help the MNCs understand how an adequate corporate compliance system can be implemented in their organisation. Where appropriate, the authorities in Australia should make sure that every investigation on corruption is reported publicly so as to promote deterrence and increase awareness. The anti-corruption law overhaul must incorporate a tool that could facilitate the authorities to prevent companies repeatedly engaging in non-compliance and corruption activities from government incentives. Such as debarment program should be made mandatory and subjected to careful scrutiny. The role played by the court system in handling corporate crime as well as foreign bribery cases pose a serious challenge to the anti-corruption law. In some countries like the UK, cases of financial crime and bribery practices are occasionally directed to judges, specially trained for such cases. In Australia, the prosecution of major bribery cases are normally overwhelmed by delays in Australia’s court systems. There is a need for the government to reconsider to reconsider how bribery and corruption case are handled in the Australian courts, and ensure that serious cases are allocated to specially trained and experienced judges. The corruption cases should not be handled by any court, instead, they should go to judges who have knowledge regarding the complexities of such cases. Besides that, the Australian Securities and Investments Commission (ASIC) must be given power and sufficient resourcing in order to successfully investigate breaches of corporate law attributed to the corruption and bribery transactions. More importantly, the ASIC should be allowed to take part in the investigations of bribery allegations so as to make sure that civil remedies can be used in case the criminal investigations comes to a standstill. Furthermore, the Commonwealth Director of Public Prosecutions should improve its role in combating corruption and bribery and making sure that during investigations there is adequate resourcing. Conclusion In conclusion, this article has provided evidence suggesting that corruption and bribery in Australia are eroding the country’s reputation and damaging good corporate governance both locally and overseas. As mentioned in the article, corruption practices and activities normally lead to anti-competitive practices in the business world. If unchecked, the corruption consequences could be far-reaching. With the view to BHP Billiton case, it is clear that the ethical behaviour of businesses depends on established benchmarks for business ethical responsibility. A business ethical profile has turned out to be a crucial benchmark for determining how consumers or suppliers relate to the business. Evidently, business ethical practices are beneficial because they result in improved reputation and business image and guarantees sustainable business activities. When the business practices are ethical the stakeholders become confident and satisfied and the business is assured sustainable success in the long-run since the needs of consumers are taken into account. Still, Australia efforts to combat corruption has been criticised widely, especially by the OECD. The need to overhaul the current laws has been emphasised and can be achieved through legal reforms and aligning the anti-corruption law with the ones used in the UK and the U.S. Eradicating corruption practices in Australia should not be a war fought only by the private sector. The government should also take part in the fight against corruption by instilling zero-tolerance laws and ensuring that the cases associated with corruption are handled by experienced judges. References Adewole, A., 2015. Sustainable Entrepreneurial Development and the Problems of Business Ethical Practices in Nigeria. International Journal of Business and Social Science, vol. 6, no. 1, pp.187-91. Ala'i, P., 2002. Controlling Corruption in International Business: The International Legal Framework. Working Paper. Encylopedia of Life Support Systems. Jones, J., 2000. Ethics revisited. The 1990s: an "ethical decade" or a decade of hypocrisy? Research Paper. Adelaide: Flinders University of South Australia. Koker, L.d. & Harwood, K., 2015. Lax rules boost risk of organised crime snaring government contracts. [Online] Available at: https://theconversation.com/lax-rules-boost-risk-of-organised-crime-snaring-government-contracts-44292 [Accessed 27 September 2016]. Krishna, A., Dangayach, G.S. & Jain, R., 2011. Business Ethics: A Sustainability Approach. Procedia - Social and Behavioral Sciences, vol. 25, pp.281 – 286. McKenzie, N., 2015. What Austrlia Can Learn From Overseas Anti-Bribery Regimes. [Online] Available at: http://www.aph.gov.au/DocumentStore.ashx?id=79bc385c-6799-4448-8dc8-a6911b8e75f2&subId=411400 [Accessed 27 September 2016]. Mulgan, R., 2016. The growing case for a federal anti-corruption agency. [Online] Available at: http://www.canberratimes.com.au/national/public-service/the-growing-case-for-a-federal-anticorruption-agency-20160427-gofwyo [Accessed 27 September 2016]. Pedigo, K.L. & Marshall, V., 2009. Bribery: Australian Managers’ Experiences and Responses When Operating in International Markets. Journal of Business Ethics, vol. 87, pp.59–74. Sullivan, J.D., 2009. The Moral Compass of Companies: Business Ethics and Corporate Governance as Anti-Corruption Tools. Focus paper. Washington, DC: International Finance Corporation. The Age, 2016. Lax laws and morals let corruption flourish. [Online] Available at: http://www.theage.com.au/comment/the-age-editorial/lax-laws-and-morals-let-corruption-flourish-20160331-gnvczw.html [Accessed 27 September 2016]. Read More