The focus on corporate conduct and enforcement continues with the announcement by the Federal Government of a review into Australia’s white-collar crime laws, including whether the current Commonwealth Criminal Code should be amended to enable senior corporate officers to be held liable for misconduct by corporations. The review will also assess whether Australia’s current laws attribute sufficient liability for corporate criminal misconduct.
The Australian Law Reform Commission (ALRC) will undertake a comprehensive review of the corporate criminal responsibility regime (Review), with the assistance of Robert Bromwich, a current Federal Court judge and former Commonwealth Director of Public Prosecutions.
The Review will consider whether reforms are necessary or desirable to improve Australia's corporate criminal liability regime, and if so, what those reforms should be. Specifically, the Terms of Reference provide that the ALRC should review the following matters:
- the policy rationale for Part 2.5 of the Commonwealth Criminal Code (the Code) which ascribes liability to corporates for criminal breaches of Commonwealth legislation;
- the efficacy of Part 2.5 of the Code as a mechanism for attributing corporate criminal liability;
- the availability of other mechanisms for attributing corporate criminal responsibility, including mechanisms which could be used to hold individuals (e.g. senior corporate office holders) liable for corporate misconduct;
- the appropriateness and effectiveness of criminal procedure laws and rules as they apply to corporations; and
- options for strengthening and simplifying the Commonwealth corporate criminal responsibility regime.
As part of the Review, the ALRC has been asked to consider, among other things:
- the findings and recommendations of the Banking Royal Commission and whether those recommendations are able to be facilitated through reforms to Part 2.5 of the Code (or other corporate liability regimes);
- the findings and recommendations of the 2017 ASIC Enforcement Review Taskforce; and
- the effectiveness of current Commonwealth criminal procedural laws in light of the Federal Court of Australia’s criminal jurisdiction – particularly focusing on the interaction with state and territory criminal procedure laws.
The remit of the Review provides the ALRC with broad discretion to undertake an extensive analysis of Australia’s individual criminal liability regime for corporate misconduct. This is consistent with a pattern of increasing legal and regulatory scrutiny on the adequacy of existing penalties for corporate misconduct and senior executives involved in that conduct. Some of the recent focus includes:
- The findings and recommendations of the 2017 ASIC Enforcement Review Taskforce.
- The 2018 introduction of the Banking Executive Accountability Regime for authorised deposit-taking institutions.
- The findings and recommendations of the Banking Royal Commission (see more here).
- Significant increases to penalties for corporate and financial sector misconduct (see more here).
- ASIC’s new approach to enforcement, with a more active approach to litigation and a reduced emphasis on negotiated settlements (see more here).
In this environment, there appears to be a clear regulatory appetite to hold large corporations and their executives to greater account. We consider it likely that the ALRC will make a number of recommendations that expand the ways in which criminal responsibility can be imposed on both corporations and individual executives, and make it easier for liability to be imposed for corporate criminal misconduct.
Given the potential impact of any recommendations made by the ALRC on corporate Australia, it is imperative that organisations stay informed on the outcomes of this Review.
The ALRC must provide its report to the Attorney-General by 30 April 2020.
Watch this space
The ALRC is inviting interested stakeholders to provide comments on the scope of the Review and any issues relevant to the Terms of Reference. Comments are open until 10 May 2019 and, subject to publication guidelines, will be published on the ALRC website.
We anticipate that the ALRC will provide a number of further consultation rounds as it undertakes the Review and interested stakeholders will be afforded an opportunity to contribute to aspects of the Review prior to the handing down of the final report on 30 April 2020.
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