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The Risk Report: U.S. whistleblower rewards could apply to Australian businesses

Thomson Reuters Accelus - Tue, 4 Oct 2011 10:57 GMT
Author: Thomson Reuters Accelus
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New U.S. whistleblower rewards show the need for robust anti-bribery compliance procedures, even for businesses operating only in Australia, a lawyer has warned. The U.S. Securities and Exchange Commission (SEC) has introduced rules to reward individual whistleblowers who provide information that leads to successful prosecutions for breaches of U.S. securities laws, including the Foreign Corrupt Practices Act (FCPA). An Allens Arthur Robinson (AAR) paper said the rewards generally applied to U.S. listed companies' breaches of U.S. securities laws and provided significant incentives for employees to report suspected breaches to SEC. But AAR partner Marshall McKenna told RR the rule had implications for Australian businesses because some U.S. laws applied in other jurisdictions. "An Australian company can operate in Australia, servicing Australians, but still be subject to U.S. prosecutions." It was therefore important to have robust compliance procedures to prevent FCPA breaches, particularly for U.S.-listed companies. McKenna said the "scary thing" was not the risk of breaching the FCPA, but businesses being subject to laws in multiple jurisdictions. But similar rewards were unlikely in Australia because its anti-corruption regime was different. In Australia, the ACCC could prosecute businesses and fines were paid into consolidated revenue. But, in the US, fines went to the agencies that applied anti-corruption legislation, not the government. "So, when agencies [impose] fines, they get fundamentally rewarded ... the incentive is on the regulator to regulate," McKenna said. The Risk Report is published by Thomson Reuters.

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