“There is no defense for willful blindness.” Greg Medcraft of ASIC. Photo: Jim Rice
The fall-out from the allegations surrounding the activities of Leighton Holdings has widened, on Friday claiming the scalp of another former senior staffer, Russell Waugh, as the corporate watchdog demanded tougher action by boards of directors to prevent illegal activities.
”There is no defence for wilful blindness,” Greg Medcraft, the head of the Australian Securities and Investments Commission, said on Friday.
His comments came in the wake of the widening fallout from claims of kickbacks paid by engineering and construction firm Leighton Holdings in Iraq, along with other failures.
Both Leighton’s former chief executive Wal King and the company have denied any wrongdoing. Investigations by the Federal Police are continuing.
”If companies operate in sectors or jurisdictions that are known to have a high risk of bribery, they need to ensure they have appropriate policies in place to mitigate the risk,” ASIC’s Mr Medcraft said on Friday.
”Have the systems, and the procedures, and the protocols to create a culture where bribery cannot exist.”
Mr Medcraft defended his organisation’s investigations record, saying cases are ”not always simple” , while pointing out that claims of bribing foreign officials are handled by the Federal Police, not ASIC.
In cases of bribery investigations, it may be easy to show a company paid an agent a big commission, he said.
”It is another thing to secure evidence to prove this money was offered to bribe the foreign official. This is because the money is usually paid to overseas middlemen who are unlikely to co-operate with any investigation and may not be compelled to do so.”
As a result, company directors need to question the information put before them, he said. ”There is no defence for wilful blindness.”
Earlier this week two former Leighton figures – David Stewart and David Savage – resigned from their positions as the chief executive of builder Laing O’Rourke Australia and as a director of British builder Keller, respectively, in the wake of the claims surrounding Leighton.
On Friday Mr Waugh quit another engineer, UGL, following criticism of his handling of an investigation into an alleged black market racket in which $ 500,000 of steel owned by Leighton was used to build a ship abroad, among other matters.
Mr Waugh had been apppointed as the chief executive-elect of UGL ahead of a corporate reorganisation, which is to be completed over the next 18 months.
As well, late this week Unaoil, which partnered with Leighton in a controversial Iraq project that has been the subject of speculation over kickbacks, denied any involvement in improper activities.