There were some interesting developments in the first quarter of 2021 in the spheres of corporate crime, anti-bribery and corruption after the COVID-19 pandemic delayed many reforms, which we have summarised in this update.
First, we expect that throughout 2021, further reforms will be introduced, including the establishment of the long-awaited Commonwealth Integrity Commission and the Crimes Legislation (Combatting Corporate Crime) Bill 2019.
Second, the fallout from the matters that may be identified during the various Crown Resorts inquiries is likely to be a focus of the first half of 2021 and will be watched by many, as will the flow-on effects which will undoubtedly impact the gambling sector in Australia.
Third, recent penalties imposed by the Courts for corruption offences demonstrate the importance of early pleas of guilty and cooperation as mitigation factors.
The Commonwealth Integrity Commission
On 2 November 2020, the Commonwealth Government released draft legislation regarding the long-awaited federal corruption body, the Commonwealth Integrity Commission (CIC). Our previous update here summarises the proposed legislation.
As part of the establishment of the CIC, on 1 January 2021, the Australian Commission for Law Enforcement Integrity's (ACLEI) jurisdiction was expanded to include four new agencies. Additional funding and staff were also allocated in the 2020-21 Budget. The CIC will eventually subsume the ACLEI.
Submissions on the Commonwealth Integrity Commission Bill 2020 (Cth) closed on 12 February 2021. The consultation process concluded on 12 March 2021.
The establishment of the CIC will likely be progressed later this year. 'Regulated entities' who will be subject to the jurisdiction of the CIC (which includes higher education providers, certain research bodies who receive Commonwealth funding and regulatory bodies such as the Australian Federal Police and the Australian Criminal Intelligence Commission) should ensure that they have strong risk and compliance programs in place.
Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (Bill)
This Bill has been slowly making its way through the parliamentary approval process and is currently before the Senate. If passed, it will introduce significant reform to Australia's anti-corruption regime. The proposed reforms include:
- the introduction of a new offence, being the failure of a company to prevent foreign bribery by an 'associate' for profit or gain of the company. An associate is defined as being an officer, employee, agent or contractor of another person, a subsidiary or a person controlled by another (within the meaning of the Corporations Act), or a person who otherwise performs services for or on behalf of another person. A company may be convicted of this offence even if the associate is not
- broadening the office of bribery of a foreign public official by making it an offence to provide or offer a benefit to another person with the intention to improperly influence a foreign public official (who may or may not be the other person) in order to obtain or retain business or for a business or personal advantage (whether or not for the person engaging in the prohibited conduct)
- the introduction of a new defence for a company charged with failure to prevent foreign bribery, available if the company can establish that it had adequate procedures in place to prevent bribery of foreign public officials by associates. If passed, the Minister will be required to publish guidance on the steps available to a company to prevent an associate from bribing foreign public officials.
Although the passing of this Bill has been delayed due to the COVID-19 pandemic, we expect it may be put back on the political agenda in 2021. The Australian Law Reform Commission's (ALRC) recent report on Corporate Criminal Responsibility endorsed key aspects of the Bill (our discussion on the ALRC Review can be found here). This may bring renewed momentum to the passing of the Bill.
In anticipation of the Bill being passed, companies should ensure that they have robust risk assessment and compliance programs in place in respect of anti-bribery and corruption. Additionally, board members should ensure that they have familiarised themselves with the proposed key changes.
Crown Resorts Inquiries
A number of inquiries have been announced or completed into Crown Resorts Limited (Crown), following media allegations of improper conduct by the entity and its subsidiaries. The alleged misconduct includes allegations of money laundering and breaches of gambling laws.
The fallout from these inquiries is likely to result in a shakeup of the regulation of casinos and gambling in Australia.
NSW Casino Inquiry
On 1 February 2021, Commissioner Patricia Bergin delivered her report to the Independent Liquor and Gaming Authority (ILGA).
Commissioner Bergin found that the wholly-owned subsidiary of Crown, Crown Sydney Gaming Pty Ltd (Licensee), was not fit and proper to hold a licence for its new casino at Barangaroo on the Sydney Harbour.
Commissioner Bergin made a number of recommendations, including:
- the establishment of the Independent Casino Commission (ICC)
- that the Casino Control Act 1992 (NSW) be amended to impose an obligation on each NSW casino licensee to report suspicious transactions concurrently to AUSTRAC and the ICC.
Royal Commission into Crown Melbourne
On 22 February 2021, the Victorian Government announced the establishment of a Royal Commission into Crown Melbourne Ltd's suitability to hold its Victorian casino licence, as well as the suitability of its associates including Crown. The Honourable Raymond Finkelstein QC will serve as Commissioner and Chairperson of the Royal Commission. This Royal Commission will hand down its recommendations by 1 August 2021.
Royal Commission into Crown Perth
On 5 March 2021, the Western Australian Government announced that a Royal Commission would be established to investigate Crown's suitability to run its casino at Burswood, Perth. Three commissioners have been appointed - former WA Supreme Court judges Lindy Jenkins and Neville Owen and former WA auditor-general, Colin Murphy.
The Royal Commission is expected to deliver an interim report in relation to the regulatory framework by 30 June 2021 and a final report with findings and recommendations by 14 November 2021.
ASIC Immunity Policy for market misconduct offences
On 24 February 2021, ASIC released its 'immunity policy'. This policy is directed to individuals who believe they have contravened a provision of Part 7.10 of the Corporations Act and intend to cooperate with ASIC in relation to its investigation and any court proceedings. Part 7.10 deals with financial market contraventions including insider trading, market manipulation, false trading and market rigging. These offences are historically difficult to identify, investigate and prosecute. It is clear that ASIC is adopting a different approach to investigating these types of offences, the result of which may be that not all those who contravene a provision will be investigated or prosecuted.
To be eligible for immunity, an individual must have engaged in the contravening conduct with at least one other person and be the first person to disclose it to authorities. The policy will only apply to misconduct into which ASIC has not yet commenced an investigation. Additionally, the individual cannot be the instigator of the conduct. The individual must cooperate fully and provide full and frank disclosure. This will likely involve the individual providing ASIC with extensive assistance, including participating in interviews and providing documents. This assistance will likely need to be more extensive in cases that are more complex and difficult to prove.
ASIC can only grant this immunity itself in relation to civil penalty proceedings. If the misconduct relates to a criminal proceeding, ASIC must make a recommendation to the Director of Public Prosecutions, who will then consider whether to grant immunity.
The first step to seek immunity is for the individual or their legal representative to approach ASIC and seek a 'marker' to preserve their place as first in time. In order to be protected by this policy, it is essential that an individual reports any misconduct without delay. If ASIC has already provided the 'marker' to another person, that individual will not be granted immunity. In these circumstances, an individual should still consider, and obtain legal advice about, cooperating with ASIC. The approach of ASIC to an individual in both an investigation and any subsequent proceedings may be impacted by their level of cooperation.
An individual considering self-reporting misconduct to ASIC should obtain legal advice before approaching the regulator and making any declaration.
Rosemary Rogers sentenced after NAB fraud
In late January 2021, Rosemary Rogers, former chief of staff to the CEO of NAB was sentenced to a combined eight years in prison for participating in a multi-million dollar fraudulent scheme in which she was found to have accepted bribes for bloated invoices over four years. The trial was in the NSW District Court before acting Judge Paul Conlon. Ms Rogers was charged with 64 offences.
Ms Rogers received a significant discount for pleading guilty to numerous offences, including 27 counts of being an agent corruptly receiving a benefit and for dishonestly obtaining a financial advance by deception. She also cooperated with authorities. Ms Rogers' co-accused, Helen Rosamond, is still awaiting trial.
Major cartel case concludes
In February 2021, the Federal Court ordered that international shipping company Wallenius Wilhelmsen Ocean AS pay a fine of $24 million for its involvement in a cartel between 2009 and 2012. This comes some four years after its co-accused, shipping companies Nippon Yusen Kabushiki Kaisha and Kawasaki Kisen Kaisha were fined $25 million and $34.5 million respectively for their parts in an agreement to allot themselves international shipping routes.
The conclusion of this investigation serves as a timely reminder to companies operating in Australia that the possible consequences of cartel conduct can be severe. It also demonstrates that, if charged with offences, companies should consider taking steps to minimise penalties imposed by ensuring they have compliance programs in place, cooperate with investigations and making early pleas of guilty where appropriate.
Country Care cartel prosecution
The Australian Competition and Consumer Commission (ACCC) is, for the first time, prosecuting a criminal cartel case against individuals in Australia and an Australian corporation.
The charges brought against Country Care, its managing director and a former employee relate to alleged cartel conduct involving assistive technology products used in rehabilitation and aged care. In the proceedings, the ACCC alleges that Country Care and the individuals entered into a bid rigging cartel with the aim of price fixing and ensuring that certain tenders would be successful.
The trial was scheduled to commence on 22 March 2021, after being delayed by a number of interlocutory applications which demonstrate the difficulties associated with the prosecution of complex cartel proceedings. This will also be the first criminal jury trial to be conducted in the Federal Court of Australia.
We will provide an update on the outcome of the trial when concluded.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.