Australia’s new corporate criminal responsibility laws

Following the Financial Services Royal Commission, there were widespread concerns that corporations and management were not being held sufficiently accountable for serious corporate misconduct.

In April 2019, the Australian government commissioned the Australian Law Reform Commission (ALRC) to undertake a comprehensive review of the corporate criminal responsibility regime. The purpose of this inquiry was to ensure that Australia’s laws continue to effectively combat corporate crime and protect consumers.

The ALRC report, Corporate Criminal Responsibility, was tabled in Parliament on 31 August 2020 and makes 20 key recommendations for reform.

 

The recommendations

This article provides a summary of the key recommendations, together with the problems they are designed to address and the main benefits of implementation as outlined in the ALRC report.

 

Recommendation 1

The Australian Government, together with state and territory governments, should develop national principles and policies for the collection, maintenance, and dissemination of criminal justice data.

  • Problem addressed: There is insufficient data relating to corporate crime.
  • Main benefit of change: A clearer understanding of corporate crime in Australia will result in better-informed policy making.

 

Recommendation 2

Corporations should be subject to a criminal offence only in the most serious cases where a criminal penalty is warranted and in the public interest.

  • Problem addressed: Criminal law is not applied to corporations on a principled basis.
  • Main benefit of change: Breaches of the criminal law by corporations will more readily be recognised as serious, which will encourage compliance.

 

Recommendation 3

Infringement notices should not be available as an enforcement response for criminal offences committed by corporations.

  • Problem addressed: Infringement notices don’t adequately regulate criminal conduct.
  • Main benefit of change: Improved public confidence in the criminal justice system.

 

Recommendation 4

If a proposed law includes a new criminal offence provision for corporations, government should be required to explain publicly why it is appropriate and necessary.

  • Problem addressed: Too many criminal offence provisions relevant to corporations.
  • Main benefit of change: Simpler, clearer laws will reduce the regulatory compliance burden on corporations and facilitate law enforcement effectiveness.

 

Recommendations 5 and 6

The law should contain one clear method of determining corporate criminal responsibility.

A corporation should be criminally responsible for the conduct of a person acting on its behalf.

  • Problem addressed: Multiple inconsistent mechanisms for attributing criminal responsibility to corporations.
  • Main benefit of change: Similar to recommendation 4.

 

Recommendation 7

The law should contain one way of determining whether a corporation is considered at fault for particular misconduct.

  • Problem addressed: Inconsistency in attributing fault to corporations.
  • Main benefit of change: Similar to recommendation 4.

 

Recommendation 8

There should be new criminal laws that address multiple contraventions of civil penalty provisions.

  • Problem addressed: Repeated civil penalties may simply be treated as a “cost of doing business”
  • Main benefit of change: Will encourage improved compliance.

 

Recommendation 9

The Australian Government should implement select recommendations of the report “Same Crime, Same Time: Sentencing of Federal Offenders” (ALRC Report 103, April 2006).

  • Problem addressed: Inconsistency in federal sentencing.
  • Main benefit of change: Greater consistency, fairness and clarity in federal sentencing.

 

Recommendation 10

The law should require courts to consider a number of specified factors when sentencing a corporation.

  • Problem addressed: The law contains little statutory guidance for courts when sentencing a corporation, leading to inadequate penalty and sentencing options.
  • Main benefit of change: Improved public confidence in the criminal justice system.

 

Recommendation 11

A statutory provision should be enacted requiring the court to consider a number of specified factors when making a civil penalty order in respect of a corporation.

  • Problem addressed: Similar to recommendation 10.
  • Main benefit of change: Similar to recommendation 10.

 

Recommendations 12-14

Courts should be able to impose a range of non-monetary penalties when sentencing a corporation (e.g. community service)

Courts should be able to make orders dissolving a corporation.

Courts should be able to make orders disqualifying a person from managing corporations.

  • Problem addressed: Similar to recommendation 10.
  • Main benefit of change: Sentences will be more appropriate and better reflect the purposes of corporate criminal law, while mitigating impact on “innocent” third parties.

 

Recommendation 15

The Australian Government, together with state and territory governments, should develop a national debarment regime.

  • Problem addressed: Weaknesses in the system of awarding government contracts.
  • Main benefit of change: Encourage corporate compliance and public trust.

 

Recommendations 16 and 17

Courts should be able to make orders for the preparation of pre-sentence reports for corporations.

Courts should be able to consider victim impact statements.

  • Problem addressed: Lack of appropriate avenues for courts in sentencing.
  • Main benefit of change: Courts will be able to hand down more appropriate sentences to convicted corporations. Victims of corporate crime will have a voice when corporations are sentenced.

 

Recommendation 18

The Australian government should thoroughly review the effectiveness of individual accountability mechanisms for corporate misconduct within five years of the entry into force of the proposed Financial Accountability Regime or equivalent.

  • Problem addressed: Insufficient corporate accountability.
  • Main benefit of change: Strengthened responsibility and accountability framework, and increased transparency.

 

Recommendation 19

The Australian government should consider applying the failure to prevent offence in the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 to other Commonwealth offences that might arise in the context of transnational business.

 

Recommendation 20

There should be judicial oversight of DPAs and publication of the reasons for any approval of a DPA in open court.

 

 

Conclusion

Existing laws present challenges to effectively prosecuting corporations for serious misconduct, hampering the work of the courts and law enforcement. There is a need to reform how corporations are regulated, in a way that properly involves the criminal law. The recent ALRC recommendations aim to help achieve this outcome.

Nyman Gibson Miralis provides expert advice and representation in cases involving corporate crime, bribery and corruption, and assists companies to effectively achieve compliance with legislation.

Contact us if you require assistance.