White-Collar Crime 2021

Last Updated October 21, 2021

Australia

Law and Practice

Authors



Gilbert + Tobin has a Disputes and Investigations practice comprised of 23 partners and special counsel, supported by over 100 lawyers across the firm's offices in Sydney, Melbourne and Perth. Gilbert + Tobin specialises in assisting clients in navigating complex and significant contentious issues. Many of its cases involve multiple parties and novel legal or factual issues. The firm offers extensive experience advising on sensitive investigations and inquiries – from internal issues and regulatory investigations to Commissions and public inquiries. The firm's lawyers pride themselves on understanding the need for clarity of thought, discretion, insight and professionalism; and that the way in which investigations are handled can be the best protection against bigger issues. They understand that litigation should always be a last resort but, where necessary, must be handled strategically and commercially, with regard to protecting their client’s reputation. The authors would like to thank lawyers Dominic Eberl, Kate Bouffler, Rosie Enderby, Kristina Froio and Jordan Phoustanis for their assistance in preparing this chapter.

Australia, as a constitutional federation, has a complex system of criminal laws comprising offences against the laws of the Commonwealth of Australia as well as offences against the laws of each of the Australian states and territories (including, for some states, both common law and statutory offences).

Commonwealth and state and territory offences are generally classified as either:

  • summary offences (sometimes called “simple offences”) – triable before a judge without a jury; or
  • indictable offences – triable before a judge and jury (some of which may be tried summarily).

Most offences will only be established if the prosecution proves, beyond a reasonable doubt, that:

  • the accused’s conduct satisfied the physical element(s) for the offence; and
  • the accused had the relevant state of mind, such that the physical element(s) coincided with the requisite fault element(s) for the offence (eg, intention, knowledge, wilful blindness, recklessness or negligence, depending on the offence).

Some offences, particularly in relation to the management of corporations and financial services licensees, are “strict liability” or “absolute liability”, meaning there is no requirement to prove state of mind elements for the physical elements of the offence.

It is not necessary for the prosecution to prove a motive (since intention and motive are distinct concepts at law in Australia), although proof of a motive may assist a judge or jury more readily to infer intention and, potentially, the identity of the person who committed the offence.

Under both Commonwealth and state and territory laws, a person who attempts to commit an offence may be held criminally liable and punished as if the offence had been committed, even if the offence is not completed.

At the Commonwealth level, limitation periods will apply where the maximum penalty which may be imposed for the offence is six months' imprisonment for an individual (or less), or 150 penalty units for a body corporate (or less). In those cases, the applicable limitation period is one year, unless that limitation period has been modified by statute. For example, in the case of offences against the Corporations Act 2001 (Cth) (Corporations Act), the limitation period is five years after the act or omission alleged to constitute the offence (but this period is capable of being extended with Ministerial consent).

Otherwise, Commonwealth offences are not subject to a limitation period.

Each of the states and territories has its own statute(s) of limitations. In general, limitation periods tend to be prescribed for summary offences and not for indictable offences (including indictable offences which are triable summarily). The applicable limitation periods for summary offences range from six months to two years from the date of the alleged offence, depending on the jurisdiction and the offence in question.

Australian law presumes that criminal legislation has only domestic effect. This presumption is capable of being displaced by clear language demonstrating a legislative intention to create an offence with extra-territorial operation.

The Parliaments of Australia and each of the states and territories are able to enact offences with extra-territorial operation, provided that there is a substantial and bona fide connection between the subject matter and the Commonwealth or the state or territory in question (eg, offences committed abroad by Australian citizens or offences involving conduct partially within Australia and partially overseas).

Examples of offences with an extra-territorial operation include anti-money laundering and counter-terrorism finance offences, fraud offences, offences involving the use of carriage services, conspiracy offences and accessory offences.

Commonwealth and state and territory criminal laws treat corporations as legal persons which are capable of committing crimes.

For example, under Section 4 of the Crimes Act 1900 (NSW) (NSW Crimes Act), “person” is defined to include “any society, company or corporation”, such that a corporation could in theory be prosecuted for any of the various offences under that Act, provided that the requisite physical and fault elements are capable of being attributed to the corporation through the conduct of one or more individuals. Furthermore, Section 16 of the Crimes (Sentencing Procedures) Act 1999 (NSW) (NSW Sentencing Procedure Act) prescribes fines for corporations in respect of offences which are otherwise punishable by imprisonment.

Commonwealth General Test of Attribution

Part 2.5 of the Criminal Code Act 1995 (Cth) (Commonwealth Criminal Code) extends criminal liability for Commonwealth offences to corporations and specifies the general test for attribution of physical and fault elements. The Crimes Act 1914 (Cth) (Commonwealth Crimes Act) prescribes monetary penalties for corporations in respect of those offences which otherwise only carry prison sentences.

The general test of attribution in Part 2.5, however, has been displaced in respect of various Commonwealth offences by other legislation. This has recently been identified by the Australian Law Reform Commission (ALRC) as an area requiring legislative simplification, since the variety of attribution tests has the potential to lead to confusion as to the circumstances in which a corporation may be criminally responsible, and complicates the litigation process.

The following applies under the Commonwealth’s general test of attribution.

If a physical element of an offence is committed by an employee, agent or officer of a corporation within the scope of their employment, the physical element will be attributed to the corporation.

If a fault element of an offence is intention, knowledge or recklessness, that fault element will be attributed to a corporation that expressly, tacitly or impliedly authorised or permitted the commission of the offence. This can be established by proving:

  • that the board of directors or a high managerial agent of the corporation intentionally, knowingly or recklessly carried out the relevant conduct, or expressly, tacitly or impliedly authorised or permitted the commission of the offence;
  • that a corporate culture existed within the corporation that directed, encouraged, tolerated or led to non-compliance with the relevant provision; or
  • that the corporation failed to create and maintain a corporate culture that required compliance with the relevant provision.

If a fault element is negligence in relation to a physical element of an offence and no individual employee, agent or officer of the corporation has that fault element, that fault element may nonetheless exist if the body corporate’s conduct is negligent when viewed as a whole (ie, by aggregating the conduct of any number of its employees, agents or officers). Negligence may be evidenced by the fact that the prohibited conduct was substantially attributable to inadequate management, control or supervision of the conduct of one or more of its employees, agents or officers, or failure to provide adequate systems for conveying relevant information to relevant persons in the body corporate.

Prosecuting Legal and Natural Entities for the Same Offence

It is possible for an individual and a corporation to be found directly liable in respect of the same offence. An individual may be personally liable as an accessory to a corporation’s offence or as a principal offender, including where the individual is deemed to be a principal offender because of their role and status in the management of the corporation (including in the field of taxation, occupational health and safety and environmental regulation).

Generally, there is no formal policy preference at either Commonwealth level or state/territory level as to when to prosecute a legal entity or a natural person or both, and the prosecution of a legal entity will not prevent the prosecution of an individual for their involvement in the same or a related offence, nor vice versa. However, prosecutors at both the Commonwealth and state/territory levels are empowered to exercise their discretion to grant concessions to persons who participated in alleged offences in order to secure their evidence in the prosecution of others, provided that certain conditions are met. There also exists, in respect of market misconduct offences and cartel offences, immunity regimes designed to encourage early reporting and co-operation with regulatory and prosecutorial authorities.

Successor Liability

There is no concept of successor liability for corporations under Australian law. A successor entity will not be held liable for offences committed by the target entity that occurred prior to the merger or acquisition.

Each state and territory has established processes which enable a criminal court to direct an offender to compensate an aggrieved person(s) for injury or loss occasioned by the offending conduct. Similarly, under the Commonwealth Crimes Act, a court may order an offender to make reparation to a person in respect of loss suffered or expense incurred by reason of a Commonwealth offence.

Additionally, a number of Commonwealth, state and territory laws that impose white-collar criminal liability contain parallel provisions which grant civil rights of action by or on behalf of victims and/or other persons who have suffered loss as a consequence of contravening conduct, including in some jurisdictions as a class action.

For example, the Corporations Act imposes duties on company directors and officers which, if breached, can give rise to criminal liability, as well as liability to compensate the corporation for any losses suffered as a consequence of the breach. Several Commonwealth, state and territory statutes impose criminal liability for conduct in a variety of contexts in trade or commerce relating to unfair practices, false or misleading representations and pricing, as well as liability to compensate persons who have suffered losses as a consequence.

Generally, persons who claim to have suffered a loss as a consequence of the contravening conduct and bring civil proceedings bear the onus of proving, on the balance of probabilities, that the conduct in question occurred and that there was a causal nexus between the conduct in question and the loss suffered. Evidence of a criminal conviction or of a finding of fact in a criminal proceeding will not be admissible in civil proceedings to prove the existence of a fact that was in issue in the criminal proceeding.

In April 2020, the ALRC provided a report to the Australian government following a review of the Commonwealth corporate criminal responsibility regime (CCR Report). The CCR Report examined the regime for establishing corporate criminal responsibility in Part 2.5 of the Commonwealth Criminal Code, including mechanisms that could be used to hold senior corporate office holders and other individuals liable for corporate misconduct. In broad terms, the ALRC’s recommendations to improve and reform the regime seek to:

  • simplify and clarify laws that reduce the regulatory compliance burdens on companies;
  • criminalise corporate systems of conduct or patterns of behaviour that lead to breaches of civil penalty provisions;
  • standardise legal tests for attribution of criminal responsibility to companies to provide greater certainty, consistency and clarity; and
  • implement a new model of "failure to prevent" offences of misconduct overseas by Australian corporations.

The ALRC’s recommendations are not binding on the Australian government. However, the Australian government has indicated it is carefully considering each of the recommendations with a view to future legislative reforms.

The Australian government is also presently considering specific reforms in respect of a variety of white-collar offences.

Strengthening of Anti-bribery Legislation

In December 2017, the Australian Senate introduced the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth) (CLACCC Bill), which was aimed at improving Australia’s anti-foreign bribery compliance and enforcement response. The CLACCC Bill proposes, among other things, a new offence for failing to prevent foreign bribery; lowering the bar for prosecution of bribery offences; and introducing a deferred prosecution scheme, to incentivise voluntary reporting. The 2017 CLACCC Bill lapsed but was reintroduced in the same form, with the same title in 2019 and is still being considered by the Australian Parliament.

Introduction of Trading Plans

In a Commonwealth Senate report published in April 2021, it was recommended that the Australian government provide for a trading plan scheme for company founders, similar to the one in place under the US Securities and Exchange Commission Rule 10b5-1. Under such a scheme, founders of Australian listed companies (and, potentially, also other company “insiders”) would be able to set up a plan to sell their shares, without being liable for insider trading, provided the individual did not possess inside information at the time the plan was established. The Australian Securities Exchange has indicated support for a trading plans regime.

The main authorities with powers of investigation and/or powers to institute and/or prosecute criminal proceedings in respect of white-collar offences include the following.

Commonwealth Director of Public Prosecutions (CDPP)

The CDPP institutes and carries on prosecutions on indictment for Commonwealth offences and has the power to take over prosecutions for Commonwealth offences instituted by other persons and agencies.

Australian Securities and Investments Commission (ASIC)

ASIC is an independent Commonwealth authority which regulates corporations, managed investment schemes, participants in the financial services industry and people engaged in credit activities under various Commonwealth laws, including the Corporations Act, the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and the National Consumer Credit Protection Act 2009 (Cth). ASIC has information-gathering and investigatory powers and the power to initiate criminal prosecutions for offences and is authorised to prosecute some minor offences. ASIC will refer more serious offences to the CDPP for prosecution. ASIC may also commence proceedings seeking civil penalties.

Australian Competition and Consumer Commission (ACCC)

The ACCC is an independent Commonwealth authority, whose role is to enforce the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act) and a range of additional legislation, promoting competition and fair trading. The ACCC has information-gathering and investigatory powers as well as the power to initiate criminal prosecutions for offences under the Competition and Consumer Act. The ACCC has signed a memorandum of understanding to refer serious cartel conduct to the CDPP for prosecution. The ACCC may also commence proceedings seeking civil penalties.

Commissioner of Taxation

Through the Australian Taxation Office (ATO), the Commissioner is responsible for administering Commonwealth taxation laws. The ATO has information-gathering and investigatory powers and may initiate prosecutions in the name of the Commissioner in respect of a taxation offence. The ATO has prosecutors who conduct the prosecution of summary taxation offences. Generally, the prosecution of more serious taxation offences will be referred to the CDPP.

Australian Federal Police (AFP)

The AFP is the primary agency responsible for the provision of police services in respect of the laws of the Commonwealth, and will often be responsible for or will assist other Commonwealth agencies in the investigation of suspected Commonwealth offences. In addition to the regulatory agencies noted above, the AFP will also receive referrals from the Australian Transaction Reports and Analysis Centre (AUSTRAC) (Australia’s money laundering and terrorism financing regulator) with respect to suspected crimes identified as part of its monitoring and investigatory processes.

The relevant state and territory police services and crown prosecutors investigate and prosecute state and territory offences.

Police and the key regulators referred to in 2.1 Enforcement Authorities are empowered to initiate and carry out investigations into criminal conduct, to institute criminal proceedings and to conduct prosecutions (generally, for minor or summary offences) or refer the prosecutions of indictable offences to the CDPP or state prosecutors.

Investigations by Regulators (ASIC, ACCC, ATO)

ASIC, the ACCC and the ATO have discretion to determine which suspected criminal matters they will investigate and will consider a range of factors when deciding whether to investigate or take enforcement action. Factors relevant to the exercise of the discretion are largely driven by their respective regulatory objectives. Each have a range of compliance and enforcement tools at their disposal, including, among other things, the ability to pursue a variety of civil enforcement remedies.

For example, the specific factors that ASIC may consider broadly include:

  • strategic significance, including the seriousness of the misconduct and its impact on the market, market integrity and investor or consumer confidence;
  • regulatory benefits of pursuing misconduct, including whether the misconduct is widespread or part of a growing trend and whether enforcement action will send an effective message to the market;
  • issues specific to the case, such as the time since the misconduct occurred, whether it was an isolated instance, and the availability of evidence; and
  • alternatives to formal investigation, such as engagement with stakeholders, surveillance, guidance or policy advice.

AFP Investigations

The AFP’s Case Categorisation and Prioritisation Model (CCPM) sets out guidance to assist the AFP in determining whether to investigate, including by categorising matters by incident type, impact on Australian society, the importance of the matter to the AFP and the resources required to investigate. Economic crime (including money laundering) and bribery of Commonwealth or foreign public officials are categorised as having a high impact on Australian society.

Additionally, the Minister for Home Affairs may give written directions to the Commissioner of the AFP, with respect to general policy in relation to the performance of the AFP’s functions. The most recent direction, issued in December 2020, included cyber-crime, fraud and anti-corruption as expected focus areas for the AFP.

Australia’s key regulators have information-gathering and investigative powers, including powers to require documents to be produced, require individuals or companies to provide information or be examined in relation to particular conduct, and search powers (subject to the issue of a warrant).

Regulatory Information-Gathering and Investigative Powers (ASIC/ACCC/ATO)

ASIC, the ACCC and the ATO each have a range of compulsory information-gathering powers at their disposal.

ASIC is empowered to inspect any book (including, among other things, financial records) that a person is required by law to keep, and is also empowered to issue written notices to:

  • compel the production of other books in a person’s possession relating to the affairs of a body corporate or registered scheme; or
  • require a person who ASIC suspects or believes, on reasonable grounds, is able to give information relevant to a matter that it is investigating, to give to ASIC all reasonable assistance in connection with the investigation, and to appear before a specified member or staff member for examination on oath.

The ACCC is empowered to issue written notices to persons requiring them to:

  • furnish, by writing signed by that person, any information which the ACCC has reason to believe the person can give in relation to a suspected contravention of the legislation it administers;
  • produce any documents which the ACCC has reason to believe the person can produce in relation to such a contravention; or
  • appear before the Commission or a specified member or staff member for examination on oath.

Likewise, the ATO is empowered to issue notices in writing, for the purpose of the administration or operation of a taxation law, to compel:

  • the giving of any information which the Commissioner requires, or the production of any documents in the person’s custody or under the person’s control; or
  • the person to attend and give evidence before the Commissioner, or an individual authorised by the Commissioner.

Additionally, ASIC, the ACCC and the ATO each have powers to search premises in Australia and seize materials either with the informed consent of the occupier of the premises or with a warrant issued by a magistrate. A magistrate may issue such a warrant if the magistrate is satisfied, by information on oath, that there are reasonable grounds for suspecting that there is evidentiary material on the premises or there may be evidentiary material on the premises within the next 72 hours. The AFP may be authorised to execute or to assist in executing such a warrant.

AFP Powers

The AFP has a range of investigative powers, including powers:

  • to apply to the Federal Circuit Court of Australia for a written notice requiring a person to produce documents which are relevant to, and will assist in the investigation of, a serious offence (provided the AFP officer holds a reasonable belief that the person has such documents);
  • to apply to a magistrate for the issue of a warrant to search premises (provided there are reasonable grounds for suspecting that there is, or will be within the next 72 hours, evidentiary material at the premises); and
  • in serious and urgent circumstances to stop, detain and search a conveyance without a warrant if a constable suspects, on reasonable grounds, that a thing relevant to an indictable offence is in or on the conveyance and that it is necessary to exercise the power in order to prevent the thing from being concealed, lost or destroyed.

State and territory police forces have similar investigative powers to the AFP.

In Australia, internal investigations are generally conducted on a voluntary basis, usually in response to the discovery of a regulatory or compliance issue, or an investigation by a regulator, such as ASIC. By proactively conducting an internal investigation, a corporation or firm will be better prepared to deal with any regulatory investigation or enforcement action. Additionally, if an entity seeks to apply to ASIC or the ACCC for immunity pursuant to each regulator’s respective immunity regimes (referred to in 4.3 Co-operation, Self-Disclosure and Leniency), the grant of immunity will depend (among other things) on the entity’s full co-operation, which may require a full internal investigation of the facts.

Australia is a party to various bilateral and multilateral treaties designed to facilitate mutual assistance in criminal matters. Where Australia does not have a treaty with a country from which it requests, or receives a request, for mutual assistance, this does not preclude the request from being made. However, in the absence of any such treaty, the request for mutual assistance and whether it is accepted will depend (in respect of outbound requests) on the domestic laws of the country whose assistance is sought and (in respect of inbound requests) on whether any mandatory or discretionary grounds for refusal apply under the Mutual Assistance in Criminal Matters Act 1987 (Cth).

All inbound and outbound extradition requests are handled in accordance with the Extradition Act 1988 (Cth). Australia will only accept an extradition request from a country that has been declared an extradition country under domestic regulations.

In addition, Australian regulators have entered into memoranda of understanding with their international equivalents (eg, the UK FSA; and the US SEC and FINRA). These agreements facilitate the exchange of information between regulators in relation to offences.

Each Australian regulator is able to initiate investigations into potential criminal offences. In respect of serious and indictable offences, where a regulator considers it appropriate, they will refer the matter to the CDPP for consideration as to whether to prosecute.

The Prosecution Policy of the Commonwealth (Prosecution Policy) underpins and guides all decisions of the CDPP over whether to prosecute. The factors considered by the CDPP vary from case to case, but relevantly include:

  • whether the offence was serious or trivial;
  • any mitigating or aggravating circumstances;
  • the passage of time since the alleged offence;
  • attitudes of the victims;
  • the need to give effect to regulatory or punitive imperatives; and
  • the likely outcome in the event of a finding of guilt.

Deferred prosecution agreements (DPAs) are not currently available but are under consideration at the Commonwealth level as part of the CLACCC Bill (referred to in 1.6 Recent Case Law and Latest Developments). 

Plea negotiations are common in criminal proceedings in Australia.

The Commonwealth Prosecution Policy includes provisions governing plea negotiations in relation to Commonwealth offences. It provides that negotiations between the defence and the prosecution as to charges and a plea can be consistent with the requirements of justice, subject to:

  • the charges to be proceeded with bearing a reasonable relation to the nature of the criminal conduct of the defendant;
  • those charges providing an adequate basis for an appropriate sentence in all the circumstances of the case; and
  • there being evidence to support the charges.

Any decision to agree to a plea agreement proposal must take into account all the circumstances of the case and other relevant considerations including:

  • the defendant’s willingness to co-operate and the extent to which they have already done so;
  • whether the sentence that is likely to be imposed if the charges are varied as proposed would be appropriate for the criminal conduct involved;
  • the desirability of prompt and certain dispatch of the case;
  • the defendant’s antecedents;
  • the time and expense involved in a trial and any appeal proceedings; and
  • the likelihood of adverse consequences to witnesses.

The prosecution will not agree to a charge negotiation proposal initiated by the defence if the defendant continues to assert their innocence with respect to a charge or charges to which the defendant has offered to plead guilty.

For information on sentencing, please see 5.2 Assessment of Penalties.

Corporate Criminal Offences

Although corporate criminal prosecutions are predominantly heard in state courts, the majority concern contraventions of Commonwealth legislation. In theory, corporations are capable of being convicted of any Commonwealth offence, including ones for which the prescribed punishment is imprisonment. But in practice, most prosecuted corporate crime relates to the contravention of financial, economic, environmental and workplace regulations.

Although the Commonwealth Criminal Code contains various offences that may be committed by corporations (and their officers, agents and employees), it is not the sole source of Commonwealth criminal offences. Nor does it codify or harmonise the principles relating to white-collar offences. Outside the Commonwealth Criminal Code, the richest sources of offences commonly applying to corporations (and their officers, agents and employees) are found in the Corporations Act and various statutes concerning financial services law, competition law, tax and environmental protection. Examples of corporate criminal offences include insider trading, market manipulation, serious cartel conduct and money laundering offences.

Constituent Elements of Offences

The prosecution of most offences requires the prosecutor to prove, beyond a reasonable doubt, one or more physical elements coinciding with applicable fault elements (see 1.4 Corporate Liability and Personal Liability). The Commonwealth Criminal Code provides a framework for the majority of offences applying to corporations, including attribution (although some offences are governed by separate statutory regimes which dictate different principles).

Corporate Fraud

The Commonwealth Criminal Code proscribes the following.

  • Fraud against Commonwealth entities including:
    1. obtaining a financial advantage by deception;
    2. dishonestly obtaining a gain or causing a loss to a Commonwealth entity; and
    3. dishonestly causing a loss or a risk of loss.
  • Knowingly making false or misleading statements to a Commonwealth entity in connection with an application for a licence, permit, registration or benefit.

Similar fraud offences to those detailed above, but which relate to fraud directed at persons other than Commonwealth entities, are provided for in state and territory legislation.

The Corporations Act includes offences relating to the concealment, destruction, alteration or falsification of accounting records or company books, and misleading or deceptive conduct in trade or commerce in relation to financial services or financial products.

Bribery, being the provision of a benefit that is not due to a person with the intention of influencing that person, is generally unlawful in Australia. Commonwealth law proscribes bribing a Commonwealth or foreign public official. Bribery between private parties is not criminalised at a national level, however each state and territory has its own laws proscribing private bribery.

Bribery of a Foreign Public Official

It is a Commonwealth offence for a person to provide a benefit to another person, in circumstances where the benefit is not legitimately due to the recipient and the benefit is provided with the intention of influencing a foreign public official (who need not be the recipient of the benefit) in the exercise of their official duties. In order to commit an offence, the person offering the benefit must do so in order to obtain or retain business or a business advantage that is not legitimately due. Importantly, the advantage does not actually need to be obtained to establish the offence.

Bribery of a Commonwealth Public Official

Similarly, persons are prohibited from dishonestly providing a benefit to a person with the intention of influencing a Commonwealth public official in the exercise of their duties. It is not necessary that the person giving the bribe knew that the official was a Commonwealth public official, or that the duties were duties in their capacity as a Commonwealth public official. Corresponding offences apply to public officials that solicit or accept bribes.

Penalties

The penalties for bribing a Commonwealth public official or a foreign public official are as follows.

  • Individual – imprisonment for not more than ten years, a fine of not more than 10,000 penalty units, or both.
  • Body corporate – not more than the greatest of the following:
    1. a fine of 100,000 penalty units;
    2. three times the value of the benefit obtained (if the value can be determined); or
    3. 10% of annual turnover during the preceding 12 months.

False Accounting Offence

It is also an offence intentionally to alter or destroy an accounting document that a person is required to make under statute or common law to conceal or disguise the giving or receiving of a bribe. The maximum penalty for this offence is half of that for the primary bribery offence.

Australian authorities strongly encourage Australian companies, particularly companies conducting business offshore and/or with foreign governments, to implement robust and effective anti-bribery and corruption compliance programmes. Despite this, there are currently no laws in Australia that create a specific obligation to prevent bribery and influence peddling, including by requiring the institution of a compliance programme.

However, the CLACCC Bill (see 1.6 Recent Case Law and Latest Developments), currently before the Australian Parliament, proposes to introduce a new corporate offence of failing to prevent bribery of foreign public officials. The proposed offence renders a corporation criminally liable where an officer, employee or agent of the corporation commits a bribery offence for the profit or gain of the corporation, unless the corporation can prove that it had instituted adequate procedures to prevent foreign bribery.

Insider Trading

Under the Corporations Act, persons are prohibited from transacting, tipping or procuring other persons to transact in financial products (including securities) while in “possession” of information that they know, or ought reasonably to know, is inside information. Persons are also prohibited from conveying “inside information” where they know, or should reasonably know, that the recipient will trade with the information or cause others to trade with the information. “Inside information” is information that is:

  • not “generally available”; and
  • price sensitive (determined by reference to whether a reasonable person would expect it to have a material effect on the financial product’s price or value).

“Possession” of inside information is not defined in the Corporations Act, although the language of the statute suggests that a person may be in possession of inside information even if they do not appreciate its significance. The concept of “possession” is extended in relation to corporations and partnerships, such that a corporation is taken to know, and possess, information if an officer of the corporation knows or possesses it in their capacity as an officer of the corporation, and a member of a partnership is taken to know, and possess, inside information if another member of the partnership or an employee of the partnership has come to know or possess it in their capacity as a member of the partnership or in the course of the performance of their duties.

Market Manipulation

In Australia, market manipulation is addressed through a general proscription and a series of specific prohibitions contained in Division 2 of Part 7.10 of the Corporations Act. Broadly, it is an offence to take part in or carry out one or more transactions that have, or are likely to have, the effect of creating or maintaining an artificial price for trading in financial products on a financial market operating in Australia. It is also an offence to:

  • engage in conduct that would have the effect of creating a false appearance of active trading of financial products, or artificially maintaining, inflating or depressing the prices of financial products;
  • enter into a fictitious or artificial transaction that results in the trading price for a financial product being maintained, inflated, depressed or rendered volatile;
  • disseminate information about an illegal transaction or conduct constituting market manipulation where the person either engaged in the illegal transaction/conduct, or may receive a direct or indirect benefit from disseminating information about it;
  • make a false or materially misleading statement, knowing or being recklessly indifferent to the veracity of the statement, that is likely either to induce persons to trade or to induce a price effect; and
  • trade for the purpose of influencing a financial benchmark.

Penalties

The maximum penalty for insider trading or market manipulation are as follows.

  • Individual – imprisonment for not more than ten years and/or the greater of 4,500 penalty units or three times the profit gained, or loss avoided.
  • Body corporate – the greater of 45,000 penalty units, three times the profit gained, or loss avoided or 10% of the body corporate’s annual turnover.

In addition to any criminal prosecution, civil penalty proceedings may be commenced against a person or corporation for insider trading or market manipulation.

In Australia, the Commonwealth government levies all major income taxes on Australian individuals and companies. Serious tax fraud (or evasion) is generally prosecuted under the fraudulent conduct offences in Part 7.3 of the Commonwealth Criminal Code. The main offences are:

  • by a deception, dishonestly obtaining Commonwealth property with the intention of permanently depriving the other of the property;
  • by a deception, dishonestly obtaining a financial advantage from the Commonwealth;
  • conspiring with another person with the intention of dishonestly obtaining a gain from (or causing a loss to) the Commonwealth; and
  • obtaining a financial advantage from the Commonwealth while knowing or believing that there was no eligibility to receive that advantage.

Penalties

For the first three offences above, the maximum penalty is ten years' imprisonment.

The fourth offence above is a lesser offence, punishable by 12 months' imprisonment.

Failure to prevent tax evasion is not presently a criminal offence in Australia.

The main offences relating to financial record keeping are contained in the Corporations Act and the Commonwealth Criminal Code. They relate to the failure to keep financial records and to the concealment, destruction, alteration or falsification of accounting records or company books. It is also an offence under the Corporations Act to fail to take all reasonable precautions to guard against the falsification of books or records and to facilitate the discovery of any falsification.

Corporations Act Offences

Under the Corporations Act, in order to establish the offence of failing to keep or preserve financial records (a strict liability offence), it is necessary to establish that a corporation either failed to keep financial records:

  • that correctly recorded and explained its transactions and financial position and performance, and that would enable true and fair financial statements to be read and audited; or
  • for seven years after the transaction covered by the records was completed.

The offences under the Corporations Act are punishable by imprisonment for between one and two years or by a fine.

Commonwealth Criminal Code Offences

A person commits an offence under the Commonwealth Criminal Code if they make, alter, destroy or conceal an accounting document or fail to make or alter an accounting document where there is a legal obligation to do so, for the purpose of facilitating, concealing or disguising matters relating to a bribe. Such an offence is punishable as follows.

  • Individual – imprisonment for not more than ten years and/or a fine of not more than 10,000 penalty units.
  • Body corporate – not more than the greatest of the following:
    1. a fine of approximately 10,000 penalty units;
    2. three times the value of the benefit obtained (if the value can be determined); or
    3. 10% of annual turnover of the body corporate during the preceding 12 months.

The principal criminal offences under the Competition and Consumer Act relate to “serious cartel conduct”. A corporation (or individual) will be guilty of an offence if the corporation:

  • makes and/or gives effect to a contract, arrangement or understanding that contains a “cartel provision”;
  • intends to do so; and
  • does so with the knowledge or belief that the contract, arrangement or understanding contains a “cartel provision”.

A “cartel provision” is one for which:

  • the purpose or effect is fixing, controlling or maintaining price;
  • the purpose is preventing, restricting or limiting production or supply;
  • the purpose is allocating customers or territories between the parties; or
  • the purpose is rigging bids for the supply or acquisition of goods or services,

and which is between parties that are, relevantly, “in competition” with each other.

Penalties

The penalties for cartel offences are as follows.

  • Individual – imprisonment for not more than ten years and/or a fine of 2000 penalty units;
  • Body corporate – not more than the greater of:
    1. a fine of AUD10 million;
    2. three times the total value of the benefits obtained by one or more persons which are attributable to the commission of the offence, or, if the total value of the benefits cannot be determined, 10% of the corporation's Australian annual turnover for the 12-month period immediately preceding the offence.

The Australian Consumer Law (ACL) provides for offences relating to unfair practices, unsolicited consumer agreements, and breaches of safety standards. Specific offences include making false or misleading representations about goods or services, engaging in certain negotiations of unsolicited consumer agreements, propagating pyramid selling schemes and supplying goods while failing to comply with information standards.

Many of the offences in the ACL are strict liability offences, punishable by fines.

In Australia, the main offences in relation to cybercrimes, computer fraud and breach of company secrets are set out in the Commonwealth Criminal Code and legislation of the Commonwealth, states and territories.

Relevantly, the Commonwealth Criminal Code criminalises various cyber-offences, including:

  • unauthorised access to, or modification of, “restricted data” which includes data held in a computer and access to which is restricted by an access control system;
  • unauthorised impairment of data/electronic communications; and
  • possession or control of data with intent to commit an offence.

The penalties for cybercrimes under the Commonwealth Criminal Code depend on the severity of the crime and can be punishable by imprisonment, with the minimum sentence being two years.

The states and territories have also enacted legislation which criminalise similar cyber-offences.

Types of Sanctions

Australia implements two types of sanctions:

  • United Nations Security Council (UNSC) sanctions, which Australia must impose as a member of the United Nations; and
  • Australian autonomous sanctions, which are imposed as a matter of Australian foreign policy.

Pursuant to the Charter of the United Nations Act 1945 (Cth) and the Autonomous Sanctions Act 2011 (Cth), it is an offence for a body corporate or an individual to engage in conduct that contravenes a sanction law or condition of a sanction law. Australian sanctions laws include general prohibitions on providing a sanctioned service, engaging in a sanctioned commercial activity, and dealing with a designated person or entity. Sanctions are generally imposed in relation to specific countries and activities (eg, providing financial assistance for military activity in Iran).

Contravention and Penalties

The maximum penalties for an offence are the same under both Acts.

  • Individual – imprisonment for not more than ten years or the greater of a fine not exceeding three times the value of the transactions (if the value can be determined) or a fine of 2,500 penalty units.
  • Body corporate – the greater of a fine:
    1. not exceeding three times the value of the transactions (if the value can be determined); or
    2. of 10,000 penalty units.

Misleading a Government Agency

It is also an offence to give false or misleading information to a Commonwealth entity in connection with the administration of a sanction law.

Contravention by an individual is punishable by imprisonment for ten years, 2,500 penalty units, or both.

As set out in 1.4 Corporate Liability and Personal Liability, criminal liability for Commonwealth offences extends to body corporates, with the penalty being not greater than five times the amount of the maximum pecuniary penalty that could be imposed on an individual.

Various statutes render the concealment of a criminal offence, including through the destruction of records, a crime. For example, the Commonwealth Crimes Act makes it an offence to benefit (either directly or indirectly) from:

  • compounding or concealing;
  • abstaining from, discontinuing or delaying a prosecution of; or
  • withholding evidence of,

an indictable offence, where that offence is against a law of the Commonwealth or a territory. The penalty for an individual is up to three years' imprisonment.

Each of the states and territories have similar offences in relation to concealment.

Similarly, there are statutory offences for concealment in relation to specific regulatory regimes. For example, it is an offence under the ASIC Act to conceal, destroy, alter or remove from the jurisdiction, “books” (broadly defined) which relate to a matter that ASIC is investigating, or about to investigate. The penalty for an individual can be up to five years' imprisonment.

Furthermore, under the Corporations Act, it is an offence for officers of companies to fraudulently conceal the removal of any part of the property of the corporation or conceal any debt owed to or by the corporation (among other things).

The penalty for an individual is up to two years' imprisonment.

As set out in 1.4 Corporate Liability and Personal Liability, the penalty for a body corporate for each of the Commonwealth offences of concealment is not greater than five times the amount of the maximum pecuniary penalty that could be imposed on an individual.

Generally, at both Commonwealth and state and territory levels, a person who aids, abets, counsels or procures the commission of an offence will be taken to have committed the primary offence. A person may be found guilty of aiding and abetting in situations where the person who committed the primary offence has not been found guilty of that primary offence.

In some instances, an accessory may be liable for the same or substantially similar penalty as the person who committed the primary offence.

Offence of Money Laundering

It is an offence under Part 10 of the Commonwealth Criminal Code to launder money in Australia. Money laundering offences fall into tiers depending on whether it is the proceeds of crime or will become an instrument of crime, and the alleged offender’s knowledge, reckless indifference or negligence as to whether it is the proceeds of or an instrument of crime. The penalty (which can be a significant fine or prison sentence) depends on the state of mind of the offender.

Obligations to Prevent Money Laundering

The Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) (AML/CTF Act) places a positive obligation on reporting entities (broadly, financial institutions or providers of designated services) to have a programme in place to identify, mitigate and manage the risks posed to their business by money laundering and terrorism financing. AUSTRAC administers and has the power to enforce the AML/CTF Act. A failure to have or comply with an adequate programme can result in AUSTRAC applying to the court for a civil pecuniary penalty, payable to the Commonwealth. The penalty may be as follows.

  • Individual – up to 20,000 penalty units.
  • Body corporate – up to 100,000 penalty units.

In Australia, general criminal law defences apply to white-collar crimes (innocence, duress, honest and reasonable mistake, etc).

The Commonwealth Criminal Code establishes some defences of general application for body corporates, including the following:

Mistake of Fact

In relation to strict liability offences (ie, those with a physical element but no fault element) a person will not be criminally responsible for an offence if at or before the time of the relevant conduct, the person, having considered whether or not facts existed, is under a mistaken but reasonable belief about those facts, and, had those facts existed, the conduct would not have constituted an offence.

A corporation can only rely on this defence if the employee, agent or officer who carried out the conduct was under a mistaken but reasonable belief about facts that, had they existed, would have meant that the conduct would not have constituted an offence and the corporation proves that it exercised due diligence to prevent the conduct.

No Authorisation

In offences where intention, knowledge or recklessness is a fault element, the offence can be attributed to a corporation that expressly, tacitly, or impliedly authorised or permitted the commission of the offence. However, attribution will not be established where the corporation proves that it exercised due diligence to prevent the conduct, or the authorisation or permission of the offence.

Intervening Conduct

A body corporate may plead the defence of intervening conduct against the physical element of a strict or absolute liability offence where it can demonstrate that the physical element of the offence was brought about by a person (who is not an employee, agent or officer of the body corporate) who the body corporate has no control over and could not reasonably be expected to guard against the occurrence of the intervening conduct or event.

The defences outlined above are not an exhaustive list and certain white-collar offences may be countered with specific defences.

There are no blanket exceptions to white-collar offences for any particular types of transactions, sectors or persons. However, statutory regimes may provide for specific exceptions to certain offences (eg, the “exception” to insider trading prohibitions protecting underwriters that acquire securities pursuant to an underwriting agreement obligation).

Furthermore, Commonwealth, state and territory prosecutors each have policies that govern the exercise of their prosecutorial discretion which guide determinations as to which matters are prosecuted (in light of their scarce resources and overall considerations of justice). Prosecution decisions are made on a case-by-case basis. Matters such as the merits of a case, its prospects, and the alleged magnitude and type of harm may be considered.

Australian regulators, investigators and prosecuting authorities may take account of self-disclosure and co-operation in making decisions concerning whether to proceed with an investigation or prosecution. However, except to the extent noted below, there is no requirement for them to do so with respect to white-collar offences, and it is by no means certain that self-disclosure and/or co-operation would assist a party considering such a step. Self-disclosure and co-operation with investigators or prosecuting authorities may also be considered by a court in sentencing.

ACCC Immunity Policy

The ACCC has an immunity and co-operation policy for cartel conduct which applies to both individuals and corporations. Where an individual or corporation intends to make an application for immunity, they can request that the ACCC place a marker. The marker allows the applicant a limited amount of time to gather the information necessary to demonstrate that they satisfy the requirements for conditional immunity. Once a marker has been requested, the individual or corporation must co-operate fully with the ACCC in order to obtain conditional immunity including by providing full disclosure of information to the ACCC.

The ACCC is not able to grant immunity from criminal prosecution for cartel conduct although the ACCC will make recommendations to the CDPP where it considers such immunity is appropriate. The CDPP will make its own assessment according to the Prosecution Policy of the Commonwealth.

ASIC Immunity Policy

In February 2021, ASIC published an immunity policy for contraventions of Part 7.10 of the Corporations Act, including offences of insider trading and market manipulation. Under this policy, immunity may be available for individuals who think they may have contravened (with at least one other person) a provision of Part 7.10 and intend to co-operate with ASIC in relation to its investigation and any court proceedings regarding the contravention. Immunity is not available to corporations under the policy.

In order to qualify for immunity under the policy:

  • the individual seeking immunity must be the first individual who satisfies the immunity criteria and reports the misconduct to ASIC; and
  • the individual must do so prior to ASIC commencing an investigation into the conduct. 

The process for obtaining immunity from ASIC is similar to that of the ACCC, including the marker process. ASIC is not able to grant immunity from prosecution. However, ASIC can make recommendations to the CDPP that immunity be granted to individuals. The CDPP will then make its own assessment according to the Prosecution Policy of the Commonwealth.

The Corporations Act provides whistle-blower protection to individuals who meet the following criteria:

  • the individual is an “eligible whistle-blower”, which includes current or former employees, officers and contractors of a corporation (and relatives, spouses or dependants of those individuals);
  • the disclosure is made to an “eligible recipient”, which include directors, company secretaries, senior management, auditors, actuaries of the corporation, ASIC or Australian Prudential Regulation Authority (APRA), or the individual’s legal representatives;
  • the disclosure relates to a regulated entity, which includes companies, banks, insurers, and superannuation entities and trustees; and
  • the individual has reasonable grounds to suspect that the information that they are disclosing indicates that the entity has committed an offence or a contravention of Australian law, including of the Corporations Act, Banking Act, Criminal Code, or that the conduct represents a danger to the public or financial system.

In general terms, whistle-blowers who make qualifying disclosures cannot be subject to any civil or criminal liability for making the disclosure. No contractual or other remedy may be enforced or exercised against the whistle-blower on the basis of the disclosure.

The Corporations Act also prohibits the victimisation of the whistle-blower and creates a right entitling any victimised whistle-blower to seek damages. Additionally, a whistle-blower whose employment is terminated as a result of their disclosure may commence court proceedings seeking that their employment be reinstated.

Public companies, large proprietary companies, and corporate trustees of superannuation entities regulated by APRA must have a whistle-blower policy. Among other things, the whistle-blower policy must include information about the legal protections available to whistle-blowers, how a corporation will investigate a disclosure made by a whistle-blower and how they will protect whistle-blowers from detriment.

The prosecution bears the burden of proving every element relevant to the guilt of the person charged, as well as disproving any matter in relation to which the defendant has discharged an evidential burden of proof. The standard of proof is beyond reasonable doubt: see Section 141 of the Evidence Act 1995 (Cth) (and see also Division 13 of the Commonwealth Criminal Code), and Section 141 of the Uniform Evidence Acts of the States of New South Wales, Tasmania and Victoria, and the Australian Capital Territory and the Northern Territory. Similar legislative provisions exist in respect of the States of Queensland, South Australia and Western Australia.

A defendant who wishes to raise a positive defence must generally discharge an evidential burden only, this being a burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist (the applicable standard of proof in respect of any burden of proof by the defendant being the balance of probabilities). Once that burden has been discharged, the prosecution bears a legal burden of negating the defence as part of the discharge of the prosecution’s burden of proof beyond a reasonable doubt.

Part IB of the Commonwealth Crimes Act contains provisions which establish general sentencing principles in relation to Commonwealth offences, including the matters to which the court must have regard when passing a sentence, and any reductions for co-operation with law enforcement agencies.

Each of the states and territories has its own legislation dealing with sentencing procedure, rules and guidelines.

Unlike state and territory legislation, Commonwealth statutes do not include specific provisions governing the procedures for fact-finding by a court sentencing a Commonwealth offender. As such, procedures and evidentiary rules in the relevant state or territory in which the sentencing hearing is held will apply, by virtue of Sections 68 and 79 of the Judiciary Act 1903 (Cth), to sentencing hearings in respect of Commonwealth offences, except to the extent that a Commonwealth law has expressly or by necessary implication excluded the operation of such state or territory laws.

Sentencing is strictly a matter for the sentencing court, and although prosecutorial authorities may make a submission that a custodial or non-custodial sentence is appropriate in a particular case, a prosecutor will not be permitted to make a submission as to the bounds of the available sentencing range or to proffer some statement as to the specific result.

Commonwealth and state/territory sentencing legislation permits the court to take into account various factors when determining a sentence, including whether the accused has pleaded guilty to the charge, the timing of the plea and any benefit to the community, victim or witness derived from the plea, as well as the following, to the extent relevant and known to the court as a consequence of its fact finding on sentencing:

  • the nature and circumstances of the offence, any injury, loss or damage resulting from the offence and any victim impact statement from the victim;
  • the degree to which the person has shown contrition for the offence;
  • the degree to which the person has co-operated with law enforcement agencies in the investigation of the offence or of other offences;
  • the deterrent effect that any sentence or order under consideration may have on the person or on other persons;
  • the need to ensure that the person is adequately punished for the offence;
  • any abuse by the person of their position or standing in the community to aid in the commission of the offence; and
  • the probable effect that any sentence or order under consideration would have on any of the person’s family or dependents.
Gilbert + Tobin

Level 35, Tower Two, International Towers Sydney
200 Barangaroo Avenue
Barangaroo NSW 2000
Australia

+61 2 9263 4000

+61 2 9263 4111

info@gtlaw.com.au www.gtlaw.com.au
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Trends and Developments


Authors



Gilbert + Tobin has a Disputes and Investigations practice comprised of 23 partners and special counsel, supported by over 100 lawyers across the firm's offices in Sydney, Melbourne and Perth. Gilbert + Tobin specialises in assisting clients in navigating complex and significant contentious issues. Many of its cases involve multiple parties and novel legal or factual issues. The firm offers extensive experience advising on sensitive investigations and inquiries – from internal issues and regulatory investigations to Commissions and public inquiries. The firm's lawyers pride themselves on understanding the need for clarity of thought, discretion, insight and professionalism; and that the way in which investigations are handled can be the best protection against bigger issues. They understand that litigation should always be a last resort but, where necessary, must be handled strategically and commercially, with regard to protecting their client’s reputation. The authors would like to thank lawyers Dominic Eberl, Kate Bouffler, Rosie Enderby, Kristina Froio and Jordan Phoustanis for their assistance in preparing this chapter.

Over the past decade or so, Australian regulators and prosecutors have faced sustained criticism over the approach they have taken to the investigation, enforcement and prosecution of white-collar offences. In particular, it has often been suggested that they are too slow to act, and too reluctant to prosecute or commence proceedings for white-collar offences, especially against large, institutional companies (such as banks).

In 2018, a wide-scale investigation of these issues in the context of the financial services sector was undertaken by a former judge of the High Court of Australia, Kenneth Hayne, known as the Royal Commission into the Banking, Superannuation and Financial Services Industry (the Financial Services Royal Commission). The Financial Services Royal Commission investigated, among other things, the role that regulators play in the financial services industry and their approach to enforcement of financial services laws. On 1 February 2019, the Commissioner submitted his Final Report to the Australian government, containing extensive findings and recommendations on a broad range of matters pertaining to financial services laws and regulations.

In the context of the Financial Services Royal Commission and broader criticisms, there has been an increased interrogation of the adequacy with which corporations and their officers are held accountable for serious corporate misconduct (including criminal conduct). This has given rise to recommended and proposed legislative reforms and higher levels of enforcement activities against individuals and corporations. This paper describes some of the key matters of note.

Recommendations for Reform

In August 2020, the Australian Law Reform Commission (ALRC) report, titled the Corporate Criminal Responsibility (CCR Report), was tabled in the Australian Parliament. Consistent with the wider trend within the jurisdiction of seeking to increase the efficacy of the corporate regulatory landscape, the report contained 20 recommendations including calls to:

  • rationalise the criminal offences that apply to corporations and the method for determining when a corporation will be criminally liable;
  • increase the adequacy of penalties for corporations, including those that fail to improve their compliance systems (for example, moving from civil to criminal liability for corporations that fail to implement adequate systems that allow corporate misconduct to occur); and
  • increase transparency regarding the rate at which corporations are being prosecuted for corporate offences (and in relation to which offences).

If adopted by the Australian Parliament, legislation enacting the recommendations would clarify the types of offences that corporations and individuals could be liable for, and could lead to an overall strengthening of the law in this area. However, as demonstrated by the pace of legislative change following the Financial Services Royal Commission, implementation of the recommendations set out in the CCR Report could take a number of years (and may not occur at all).

Current Legislative Reforms

Other reforms have moved past recommendations and are being considered by the Australian Parliament, including a significant reform package presented by the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth) (CLACCC Bill).

As explained below, the CLACCC Bill proposes, among other things:

  • introducing a deferred prosecution scheme;
  • a new offence for failing to prevent foreign bribery; and
  • lowering the bar for prosecution of bribery offences.

Deferred prosecution agreements

A key proposal of the CLACCC Bill is the introduction of a deferred prosecution agreement (DPA) scheme to encourage companies to self-report serious misconduct to Australian authorities. The proposed scheme is similar to that already in place in the USA, UK, France, Canada, Singapore and Japan.

The DPA scheme is designed to enhance accountability for serious corporate crime and support an improved corporate culture by allowing corporations to enter into agreements with the Commonwealth Director of Public Prosecutions (CDPP) and potentially avoid criminal prosecutions. Under the proposal, by entering into a DPA, corporations would be required to admit to agreed facts detailing their misconduct, pay financial penalties to the Commonwealth of Australia, and disgorge profits and other benefits obtained through the misconduct.

This by no means represents a “free pass” for corporations. In the form being considered by the Parliament, a DPA must be independently assessed by an “approving officer”, who must be a former judicial officer with appropriate knowledge or experience. Furthermore, the Director of the CDPP must be satisfied that the DPA is in the public interest before submitting it to the approving officer.

Foreign bribery reforms

Australian foreign bribery legislation has consistently been the subject of criticism from international bodies, including the Organisation for Economic Co-operation and Development (OECD), for being too narrow in scope and inadequately enforced. As part of the broader proposed regime, the Commonwealth Attorney-General published draft guidance to the CLACCC Bill (Guidance) which changes the way that corporations are to approach and set their anti-bribery policies. Specifically, the Guidance sets out a series of fundamental elements which are to be included in every corporation’s anti-bribery policies, including the following.

Risk assessments

Corporations should undertake risk assessments to gauge their risk profiles. Policies should be tailored around that risk profile. Any assessments of bribery risk profiles should be ongoing.

Management dedication

Senior management, including board members, should play critical roles in the development and implementation of their anti-bribery policies.

Due diligence

Corporations should apply due diligence procedures as part of the bribery risk assessment relating to associates and as a risk-mitigation measure.

Communication and training

Corporations should carry out communication and training for the purpose of ensuring all staff understand the corporation’s anti-bribery policies and the practical application of the related procedures that implement the policies.

Reporting

All corporations should adopt reporting mechanisms that allow internal and external stakeholders to raise concerns about bribery risks, report instances of bribery or bribery solicitation, request advice and suggest improvements to anti-bribery policies and procedures.

Monitoring and review of compliance programmes

Corporations should monitor, review and adjust their policies and procedures designed to prevent foreign bribery, test the effectiveness of existing policies and procedures, and adapt them to changes in the business environment.

Pre-implementation effects of the CLACCC Bill

The CLACCC Bill has not yet become law and is still being considered by the Australian Parliament. Nevertheless, it represents a significant strengthening of white-collar criminal laws in Australia which already has implications for corporations operating in Australia. Those implications include the following.

Expectations

The CLACCC Bill and the Attorney-General’s Guidance should both be seen as reflecting the Australian government’s expectations as to appropriate conduct and safeguards in the anti-bribery context.

Scope

The recommendations about the nature of anti-bribery policies and the Australian government’s expectations could be extended beyond anti-bribery considerations. Corporations should continue to watch this space for further developments.

Transparency

The CCR Report suggested that the DPA scheme proposed by the CLACCC Bill does not contain sufficient transparency. The ALRC recommended that DPAs be subject to judicial oversight and that reasons for any approval of a DPA should be published in open court. If the government adopted this recommendation (which it is not required to do) it would be a significant development for corporations considering using the scheme and could lead to much greater public oversight of the proposed scheme.

Whistle-Blower Obligations and Protections

Recent changes to whistle-blower obligations and protections are also worth noting.

Australian law protects certain whistle-blowers who disclose misconduct within a corporation. Recently, there has been an increased onus placed upon corporations to ensure that whistle-blowers are afforded proper protections. Legislative changes have been designed to increase transparency within corporations regarding the protections available to potential whistle-blowers and the procedures the company will follow should a complaint be made.

The Corporations Act 2001 (Cth) now requires that public companies, large proprietary companies and corporate trustees of superannuation entities are statutorily required to have a whistle-blower policy. This policy must include:

  • information regarding the legal protections available to the whistle-blower;
  • how the whistle-blower’s complaint will be investigated; and
  • how the whistle-blower will be protected from detriment.

More generally, these changes reflect a wider trend within the jurisdiction of an increased compliance burden upon companies which conduct business in Australia, requiring continual monitoring of policies and procedures to ensure they are up to date and being appropriately implemented.

Increased Regulator Activity

As mentioned above, the approach of some of Australia’s corporate regulators was examined and criticised as part of the Financial Services Royal Commission. Regulators were also criticised in the CCR Report which noted that for economic crimes where there is a mental element as part of the substantive offence, the regulatory response did not adequately reflect the true responsibility of a corporation.

In response, Australia’s corporate regulator (the Australian Securities and Investments Commission (ASIC)) has adjusted its approach to enforcement, moving away from early settlement agreements with corporations and individuals to an approach known as “why not litigate” (which essentially requires the regulator to ask itself why it would not commence court proceedings for misconduct). This approach has seen ASIC seek higher penalties for misconduct, commence litigation more readily, and increase its referrals of corporations and individuals to the CDPP for prosecution of white-collar crimes.

However, ASIC has very recently again revised the policy setting by moving away from the why not litigate approach to a more nuanced approach that employs other enforcement tools and places greater emphasis on supporting the Australian economy in its post-COVID recovery. The impact of this further change in focus is yet to be seen.

Anti-money laundering and counter terrorism financing developments

A significant development in the Australian white-collar regulatory landscape in recent times has been the substantially increased presence and prominence of the Australian Transaction Reports and Analysis Centre (AUSTRAC). AUSTRAC is Australia’s financial crimes regulator and enforces the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act). The obligations established by the AML/CTF Act apply to all financial institutions, reporting entities, or other persons that provide a “designated service”, including in financial services, dealing in bullion, gambling services and other prescribed activities.

Any financial institution that provides a designated service is subject to regulation by AUSTRAC. The AML/CTF Act provides AUSTRAC with significant information-gathering powers and the regulator uses these powers, along with financial intelligence gleaned from transaction reports, partnerships with Australian and international law enforcement agencies, and the public-private Fintel Alliance, to regulate relevant corporations. AUSTRAC’s information-gathering powers are broad and, similar to other Australian regulators, AUSTRAC is empowered to issue notices requiring the production of documents or written statements. It is an offence not to comply with any such notice.

AUSTRAC’s activities have been highly visible over the last few years and it has shown a willingness to investigate and enforce the AML/CTF Act against some of Australia’s largest financial services companies. Since 2018, AUSTRAC has obtained significant civil penalties against two of Australia’s largest financial institutions for breaches of the AML/CTF Act, including most recently in October 2020, when the Federal Court of Australia ordered, by consent, that Australia’s second largest bank pay a AUD1.3 billion penalty.

AUSTRAC’s increasing significance in the Australian financial services landscape is expected to continue with AUSTRAC receiving significant funding boosts. In 2020–21, the Australian government increased AUSTRAC’s funding by AUD104 million reflecting the government’s expectations that the regulator will continue to actively monitor, investigate and enforce the requirements of the AML/CTF Act.

AUSTRAC’s increasing prominence in the Australian AML/CTF landscape has significant implications, not only in relation to issues arising under the AML/CTF Act but also for increased regulatory scrutiny more broadly. Financial institutions subject to investigation or enforcement by AUSTRAC have also found themselves the subject of related investigations by ASIC or Australia’s prudential regulator, the Australian Prudential Regulation Authority (APRA). Formal information-sharing powers and protocols between Australian regulators – including AUSTRAC, ASIC and APRA – are routinely used. Financial institutions can therefore find themselves subject to wide-scale investigations on multiple fronts once an investigation is commenced by AUSTRAC.

What Next?

It is difficult to predict how regulators and the Australian government will continue to deal with white-collar crime. In response to criticisms as to the efficacy and operation of the Australian white-collar crime framework, including from the Financial Services Royal Commission, law reform has focused on a tightening and strengthening of laws in this area, and there has been renewed vigour from regulators and prosecutors to pursue these offences. However, recent comments from the Australian government have suggested that in a post-COVID world, the government expects Australian regulators to provide support to Australian companies in the context of the overall economic recovery. There have also been significant delays in the progress of recently proposed reforms. Regardless, the increased legislative and regulatory scrutiny of white-collar crime means that corporations need to ensure that they have policies in place which adequately deal with white-collar offences.

Gilbert + Tobin

Level 35, Tower Two, International Towers Sydney
200 Barangaroo Avenue
Barangaroo NSW 2000
Australia

+61 2 9263 4000

+61 2 9263 4111

info@gtlaw.com.au www.gtlaw.com.au
Author Business Card

Law and Practice

Authors



Gilbert + Tobin has a Disputes and Investigations practice comprised of 23 partners and special counsel, supported by over 100 lawyers across the firm's offices in Sydney, Melbourne and Perth. Gilbert + Tobin specialises in assisting clients in navigating complex and significant contentious issues. Many of its cases involve multiple parties and novel legal or factual issues. The firm offers extensive experience advising on sensitive investigations and inquiries – from internal issues and regulatory investigations to Commissions and public inquiries. The firm's lawyers pride themselves on understanding the need for clarity of thought, discretion, insight and professionalism; and that the way in which investigations are handled can be the best protection against bigger issues. They understand that litigation should always be a last resort but, where necessary, must be handled strategically and commercially, with regard to protecting their client’s reputation. The authors would like to thank lawyers Dominic Eberl, Kate Bouffler, Rosie Enderby, Kristina Froio and Jordan Phoustanis for their assistance in preparing this chapter.

Trends and Development

Authors



Gilbert + Tobin has a Disputes and Investigations practice comprised of 23 partners and special counsel, supported by over 100 lawyers across the firm's offices in Sydney, Melbourne and Perth. Gilbert + Tobin specialises in assisting clients in navigating complex and significant contentious issues. Many of its cases involve multiple parties and novel legal or factual issues. The firm offers extensive experience advising on sensitive investigations and inquiries – from internal issues and regulatory investigations to Commissions and public inquiries. The firm's lawyers pride themselves on understanding the need for clarity of thought, discretion, insight and professionalism; and that the way in which investigations are handled can be the best protection against bigger issues. They understand that litigation should always be a last resort but, where necessary, must be handled strategically and commercially, with regard to protecting their client’s reputation. The authors would like to thank lawyers Dominic Eberl, Kate Bouffler, Rosie Enderby, Kristina Froio and Jordan Phoustanis for their assistance in preparing this chapter.

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