The case is about the justification of A$12 millions being transferred into a personal

Swiss Bank Account of the foreign consultant with the consent of one of the five directors of

Colourful Corporation and the chief financial officer had authorized the payment, which

clearly shows that it is an act of bribery. We have extensively studied the case and have

analysed the laws and penalties which the corporation and the employees will be liable to

pertaining to the act of bribery, the risk and damage it may lead to for the corporation and

propose the necessary steps for the corporation to consider in resolving the case in its best

interest and minimizing the damage to the corporation.

The firm being an Australian firm falls under the jurisdiction of Australian law, i.e.

under The Corporation Act 2001, Australia is also a member of OECD (Organisation for

Economic Co-operation and Development), and has to abide its convention of combating the

Bribery of Foreign Official for the compliance of which Australia introduce a new offence in

the Criminal Code Act of 1995 under which the corporation can be prosecuted. Australia is

a member of UNCAC (United Nation Convention against Corruption), and has to abide the

rules governing these organisation, whereas the bribing has been done in India the firm might

be liable to the Indian laws as well. The Firm is also liable to ASIC Act, 2001(Australian

Securities and Investment Commission Act), which issues the layout for the proper usage of

public money, and the firm being a public limited company listed on Australian stock

exchange is liable to follow the guidelines issued in the act.

The Australian Federal Government has introduced legislation proposing a

significant increase in the penalties for individuals and companies that engage in foreign

bribery and corruption. A new Bill was passed in September 2009 to amend the Criminal

Code Act of 1995. In this new amendment made, any individuals who are found guilty in the

act of bribing a foreign or Commonwealth public official will be liable to a maximum of 10

years' imprisonment, a fine of A$1,100,000, or both. Beside that the individual employee will
be charged with criminal act, The Criminal Code Act 1995 also states that Corporation found

guilty of bribing a foreign or Commonwealth public official may be subject to a maximum

penalty of A$11,000000 or three times the value of any benefit that the corporation may have

directly or indirectly obtained from conducting the offence, or if the court cannot determine

the value of that benefit the penalty fee will be 10 percent of the annual turnover of the

corporation during the 12 months preceding the offence, whichever yields the highest penalty

for the corporation will be used.

There are also other risks both internal and external for the corporation beside the

legal threats. First of all is the corporation image among the public will be tarnished. With the

news of the corporation being involved within an act of bribery being publisised in the

general news media it will generate a perception of the corporation being indulged in

dishonest business and not trust worthy. This will in turn create confusion among the

shareholders. The shareholders may lose trust in the company’s share’s because of the

potential legal problem the company will have to face. It can create an air of unrest and result

in the downfall of company’s stock price. The corporation may also be forced to forfeit its

acquired project due to the Federal Government investigating and halting the project process.

Beside the project being involve in the case, other project of the corporation may also be

affected. Its other partners could be worried about the future of corporation and the problems

that might arise while continuing work with the corporation. They therefore may choose to

leave other ongoing or future project with the corporation. It will cost the corporation a

substantial portion of its potential revenues. With the falling stock price and the decrease in

revenue and profit of the corporation, its partners and shareholder can be very displeased and

a class action lawsuit could follow. The company’s partners and its shareholder can sue the

company for breaching/failing its continuous disclosure obligation (Corporation Act 2001, ss

674) and would lead to further loss in revenues or the disruption of current business.
 In order to minimize the risk and damage for the corporation, a few necessary steps

are recommended. First it needs to address the media. The corporation could try to show an

honest image in front of the public by explaining to the media that the company anti-bribery

policies are very strong and rigid, it looks perfectly fine on paper. This incident was due to

the improper implementation of the policies and the police investigation is underway. Any

individuals involved in this case will be prosecuted. The corporation should also reassure its

shareholders that the ongoing Indian building project would continue unaffected. This could

avoid class action lawsuit from the shareholders. Cooperate with the Federal police to solve

the case quickly and provide them with the necessary documents to avoid unnecessary

prolongation of the case. For the long term, the corporation should try to rebuild its image.

Replace its CFO and potentially also the CEO to reassure its shareholder changes are being

made to prevent it from happen again. The corporation can also hold training session

emphasizing consequence of bribery regularly for its employees and get it noticed to the

public via media. This will return the faith among the shareholders and the citizen that the

corporation is taking this issue very seriously. A new executive and a new team other than the

sales and management team should be assigned with the task of double checking all the

existing policies as well as introduce new policies as needed to prevent this from happening

again and help in monitoring the working of the corporation with the foreign consultants.

This team could also join all future project negotiation to monitor and prevent bribery.

The Australia government has been criticized from other international bodies that its

anti-bribery law is not heavy enough to discourage people and company from doing it. The

Australia government has since then increased the penalties substantially and made sure that

the new substantial reputational, operational and financial risks a corporation may face will

discourage it from committing it. As from the risks analysis, it proves that the damage

potential of such case could greatly affect its brand image, its financial gain and even its
future. Therefore it is critical to have very strong and rigid policies to battle bribery from

within the corporation. No matter how much effort the corporation put forward to repair it,

the damage can only be minimized but cannot be reduced to 0. Bribery may bring to the

corporation immediate gains in financial, but in the long term it will bring much greater

disadvantage for the corporation. It could permanently damage the corporation image as well

as corrupt the corporation culture.

 REFERENCES

 http://www.ag.gov.au/foreignbribery

 http://www.comlaw.gov.au/Series/C2004A04868

 http://www.oecd.org/dataoecd/4/18/38028044.pdf