In recent years, there has been a growing focus by the Australian Government on corporate misconduct following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry ("Financial Services Royal Commission"), which published its Final Report in February 2019. In the Final Report, Commissioner Kenneth Hayne criticised the Australian Securities and Investments Commission ("ASIC") for failing to properly hold corporations accountable for misconduct, including by failing to use the criminal law in appropriate cases.1 As a result, ASIC has adopted a "why not litigate?" mandate, but with very mixed results 2.
On 10 April 2019, the Attorney General of Australia asked the Australian Law Reform Commission ("ALRC") to undertake a comprehensive review of the Commonwealth corporate responsibility regime. The ALRC published a Final Report on Corporate Criminal Responsibility on 31 August 2020 ("Final Report"). 3 The Final Report makes a number of significant recommendations for reform of the law in a number of different areas relevant to corporate crime.
This White Paper considers the future direction of corporate crime in Australia, first examining the recent Crime Legislation Amendment (Combatting Corporate Crime) Bill 2019 ("CLACCC") which proposes to introduce a new offence of failing to prevent foreign bribery and a deferred prosecution agreement ("DPA") scheme/
The White Paper then examines five key reforms considered by the ALRC in the Final Report which indicate the future direction of corporate criminal responsibility in Australia. These are:
1. Limitation on the use of criminal law as a method of corporate regulation;
2. Reform to corporate criminal attribution methods;
3. Sentencing reform for corporate offenders;
4. Individual liability of directors and senior managers for corporate misconduct; and
5. Expansion of the "failure to prevent" model to other transnational offences.
THE CRIME LEGISLATION AMENDMENT (COMBATTING CORPORATE CRIME) BILL 2019
The CLACCC is currently before the Australian Senate. 4 Although the CLACCC appears to have been delayed due to the COVID-19 pandemic, there are no indications that the Government is no longer committed to its passage. Key elements of the CLACCC are:
- The introduction of a new criminal offence applicable to corporations of "failing to prevent" foreign bribery; and
- The creation of a DPA scheme.
Failure to Prevent Foreign Bribery
The "failure to prevent" foreign bribery offence is based on section 7 of the Bribery Act 2010 (UK). The "failure to prevent" model of liability criminalises improper conduct by or on behalf of corporations which have failed to take appropriate and adequate measures to prevent serious wrongdoing. The model seeks to act as a preventative device to influence behavior and corporate culture by requiring corporations to put in place effective procedures and controls which deter wrongdoing.
If the CLACCC is passed, section 70.5A of the Commonwealth Criminal Code ("Code") would provide that a corporation commits an offence if:
- An "associate" commits the offence of foreign bribery under Australian law, or engages in conduct outside of Australia that would constitute an offence under Australian law if that conduct occurred in Australia; and
- That associate's conduct was "for the profit or gain" of the corporation. 5
The term "associate" is broadly defined to include an officer, employee, agent, contractor, subsidiary or someone who otherwise performs services on behalf of the corporation. 6 The failure to prevent offence is not predicated on conviction of the wrongdoing associate, and a corporation can be prosecuted independent of the associate. 7 This allows corporations to be prosecuted in cases where their associates are outside the jurisdictional reach of the Crown.
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1 Commonwealth of Australia, Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (February 2019) Vol 1, 152.
2 See Jones Day, "ASIC v Mitchell: Another Reason for ASIC Not to Litigate" (August 2020).
3 Australian Law Reform Commission, Final Report: Corporate Criminal Responsibility (ALRC Report 136, April 2020) ("ALRC Final Report").
4 The CLACCC is the second iteration of the original Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth). The 2017 Bill was introduced in the Senate on 6 December 2017 and lapsed on 1 July 2019. After it lapsed, the Bill was reintroduced in December 2019. The CLACCC is substantively similar to the earlier Bill, but incorporates some amendments in light of the report by the Senate Legal and Constitutional Affairs Legislation Committee in 2018; see Senate Legal and Constitutional Affairs Legislation Committee, Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (2018).
5 Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (Cth) ("CLACCC"), Schedule 1 (proposed Criminal Code, s 70.5A).
6 CLACCC, Schedule 1 (proposed Criminal Code, s 70.1).
7 CLACCC, Schedule 1 (proposed Criminal Code, s 70.5A(3)). See also Bribery Act 2010 (UK), s 7(3)(a).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.