In the front line of fight against fraud

A crime unit boss says it's tough to speed up complex cases, writes Georgia Wilkins.
By · 9 Nov 2013
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9 Nov 2013
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A crime unit boss says it's tough to speed up complex cases, writes Georgia Wilkins.

Australia's anti-corruption authorities have faced intense scrutiny in recent weeks over their handling of a series of high-profile bribery cases.

As the fallout from the claims continues, the two bodies in charge of enforcing bribery laws, the Australian Federal Police and the Australian Securities and Investments Commission, have been accused of acting too slowly, and sometimes not at all, in handling cases.

A year after the Organisation for Economic Co-operation and Development delivered a stinging criticism of the authorities' failure in securing just one prosecution in 13 years, they are now being accused of inaction over corruption claims at Leighton Holdings and the Reserve Bank's note-printing subsidiaries.

But the woman in charge of the federal police white-collar crime division says some of those claims are unfair.

Speaking to Weekend Business weeks after fresh allegations at Leighton and the RBA subsidiaries, the federal police fraud and anti-corruption unit manager, Linda Champion, has sought to defend the division's conduct and capacity in laying charges against corporate criminals.

While she will not comment directly on individual cases, Champion says critics have overlooked the constraints of investigating and charging rich and powerful people.

"These are complex matters so we cannot just pull in alleged suspects before we have our facts in place," she says.

"Especially when you're talking about large corporations, the suspects are very smart people and incredibly litigious, so we look at that from the outset."

Fairfax Media recently revealed that Leighton's top executives and directors allegedly oversaw plans to pay multimillion-dollar kickbacks to contractors in Iraq, Indonesia and Malaysia, and covered up warnings of internal fraud.

The police are investigating payments associated with the Leighton Iraq venture, but have been criticised for taking too long to act.

Leighton has said it is co-operating with the police investigation and that its directors have acted with due diligence at all times. Champion says the federal police have taken significant steps to strengthen their ability to prosecute corporate criminals but it is difficult to speed up investigations.

"I can't really say, for such large and complex matters, how to expedite them. I'm aware all countries grapple with similar challenges."

Champion was transferred from the special references investigations team to set up the fraud and anti-corruption unit in February.

She came to the division after working on complex fraud cases at the Townsville crime branch.

She says she was drawn to the work after seeing the ripple effect of corruption on communities, particularly disadvantaged ones. "That strikes a chord and makes it a bit more humanised for me. It's a driving reason behind where I'm going with this new foreign bribery push."

But nine months after the division was set up, questions are being raised about its ability to deal with complex corporate crimes that can span multiple jurisdictions.

Last month the federal police and ASIC revealed they had dropped an investigation into Jack Flader, the mastermind behind Australia's biggest superannuation fraud, after investigators failed to find sufficient evidence he had broken the law.

This was despite the assistance of the Securities & Futures Commission of Hong Kong, where he is based.

The abandonment of the inquiry ends any possibility of charges being laid against Flader, despite a court finding he was the "ultimate controller" of Trio Capital, which cost investors $176 million.

In the case of Leighton, the police have been accused of failing to interview some of those alleged to be involved in the corruption, even after two years of investigations.

Champion says their work is hampered by the challenge of obtaining evidence from overseas.

"Large-scale investigations can span several countries. There are very lengthy processes for us to obtain evidence, to even assess and analyse in the first instance.

"Proving jurisdiction in itself can be complicated when you're looking at subsidiary companies overseas.

"We want to get all our information and facts in place before we speak to key witnesses or suspects."

She says even when the international component of an investigation is successful, legal hurdles remain in Australia.

"We have to go through and ensure our evidence meets the Australian legislation evidentiary standards," she says.

"It's more than likely that the evidence is held overseas, as well as the witnesses and the suspects. There is a complexity you don't usually have with investigations back here."

Critics of the police role in corporate matters say that aside from their failure to prosecute cases, they are also not able to uphold basic levels of transparency and accountability to the public.

They say the abandonment of cases without the public's knowledge is of great concern, leaving few people with a clear understanding of how the organisation operates.

"It's the public's money, so the public has an interest in knowing that everything that needs to be investigated is investigated," University of Sydney senior lecturer Juliette Overland says.

Australian National University law school associate professor Dr Kath Hall says both the federal police and ASIC need to address how they disclose information to the public while adhering to their confidentiality rules.

"We need good reasons for when the AFP fails to take action, and how things are proceeding," she says.

Greens deputy leader Adam Bandt has called for the Abbott government to conduct an inquiry to determine whether Australia needs a specialist agency to fight white-collar crime, similar to Britain's Serious Fraud Office.

He says the inquiry should also examine the relationship between ASIC and the federal police - a relationship that has been tarnished by poor co-operation and buck-passing.

ASIC chairman Greg Medcraft has defended its role in the Leighton case. Last month he said it was up to the federal police to conduct a criminal investigation before the commission looked into civil claims.

Champion says the police have made several efforts to improve their enforcement record since the OECD review, including setting up a new framework for foreign co-operation through a new anti-corruption taskforce.

They have also introduced a panel of experts to oversee decision-making at the unit.

Australia is required to report back to the OECD in October next year on its progress in implementing its recommendations.

The agency has criticised the low enforcement of foreign bribery offences and urged the police to take sufficient steps to ensure foreign bribery allegations are not closed prematurely.

It has also recommended they be more proactive in gathering information from diverse sources at the pre-investigative stage.

OECD anti-corruption division head Patrick Moulette says it has not formally reviewed Australia's efforts to tackle bribery since the report last year and therefore remains "seriously concerned" about the lack of convictions.

At the time of the last review, only one case had led to prosecutions out of 28 referrals in 13 years.

The organisation says Australia must vigorously pursue foreign bribery allegations.

"We also remain hopeful that we will see progress when Australia reports back to the working group," Moulette says.
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