Fascinating questions are raised by Fairfax Media's revelations this week about allegations of bribery and corruption inside Leighton Holdings and two companies affiliated with the Reserve Bank.
Question No.1: when someone in an Australian company pays a bribe overseas, where does the buck stop?
The short answer is nobody knows: there is no guarantee that the senior officers or directors of a company that pays a bribe will be held to account for breaches of corporate law.
Those who do the deed face criminal sanctions, not corporate ones. Those who supervise them might be found to have breached their duty to the company, by failing to detect and stop the offence, for example. But there is no iron-clad rule.
Directors and senior executives were not "immediately responsible for a breach of other legislation by officers at other levels", the Australian Securities and Investments Commission's former deputy chairman, Belinda Gibson, told a parliamentary committee last December.
Question No.2: why isn't the Australian Securities and Investments Commission crawling all over Leighton and the Reserve Bank companies like an ant on a honeypot anyway?
The answer to that one is more complicated. It takes into account protocols that exist between enforcement agencies, the fact there is a "use by" date for launching civil corporate actions, and nuances of corporate law that give directors and senior officers a "reasonable person" defence against allegations that they have failed to discharge their duty.
A pattern of behaviour is emerging with ASIC. In these cases and others, including its tardy response to whistleblower information it received about serious misconduct inside the Commonwealth Bank's financial planning division, ASIC has shown itself to be a reactive agency when action was required.
It tends to follow events and actions by other agencies and bodies, and it is doing so again in the case of Leighton.
Company directors and senior executives are legally bound to act in their company's best interests, and Fairfax's reports are throwing up evidence that there was knowledge of proposals for corrupt payments at the top of Leighton.
But ASIC is not conducting an investigation of Leighton to see if there were breaches of duty, and will not make a decision until an Australian Federal Police investigation of the affair is complete.
It has not received a formal reference from the AFP, which considers itself the lead investigator, and has limited itself to information exchanges. It no doubt believes the AFP's task would be complicated if it launched an overlapping investigation of its own into possible corporate offences.
A joint AFP-ASIC investigation was another option. The AFP's resources are stretched, and ASIC had something to bring to the table. In 2011 it investigated Leighton's shock announcement of a $907 million profit write-down on contract blowouts in Australia and the Middle East. In March last year Leighton paid a fine of $300,000, and undertook to lift its disclosure.
On the Reserve Bank affair ASIC has been almost totally enigmatic.
The Reserve's Note Printing Australia subsidiary, its then half-owned polymer film joint venture, Securency, executives and overseas agents were charged over alleged illegal payments to government officials in 2011.
The AFP led the investigation, and in January 2012 it asked ASIC to see if directors' duties had also been breached. ASIC announced three months later that it had reviewed material the AFP provided, was dropping its investigation, and would make no further comment.
After Fairfax's reports this week it said a bit more. On Monday ASIC commissioner Greg Tanzer said that more than 1000 pages of material had been reviewed. ASIC could still not explain its decision to drop the investigation, but the public could be "completely and utterly confident" about it, he said.
On Tuesday it said that Fairfax's reports of alleged improper payments in Iraq in 1998 would be considered, but added, "A six-year statute of limitations applies to civil penalty cases."
The six-year limit obviously plays a part in the regulator's thinking, as does the fact the AFP's case is still running. The case focuses on alleged corrupt payments made between 1999 and 2005, more than six years before ASIC's referral.
ASIC has known there were bribery allegations involving the companies since May 2009, because that is when Fairfax started writing about them. It is also co-operating with a Serious Fraud Office investigation in Britain into payments made by Securency between 2006 and 2009.
Leads existed before the statute of limitations ran out. ASIC just didn't follow them. There are resourcing issues, but if ASIC wants to avoid criticism for being soft on corporate crime, it needs to be a more proactive investigator.