Australian Government announces stronger penalties for corporate misconduct

On 20 April 2018, the Australian Government announced a tough new criminal and civil penalties regime to target misconduct in the financial services sector. The announcement follows on from 50 recommendations made by the ASIC Enforcement Review Taskforce in December 2017, which the Government’s proposal largely adopts. Penalties for the most serious criminal offences under the Corporations Act 2001 (Cth) (Corporations Act) will be increased to a maximum of: for individuals, 10 years imprisonment and/or the greater of a $945,000 fine or three times the benefits gained or loss avoided; and for corporations, the larger of $9.45 million, three times the benefits gained or 10% of a company’s annual turnover. The range of contraventions subject to civil penalties will be extended. The maximum penalties will be increased to the larger of: for individuals, $1.05 million (up from $200,000) or three times the benefit gained or loss avoided; and for corporations, $10.5 million (up from $1 million), three times the benefit gained or loss avoided, or 10% of annual turnover (capped at $210 million). Maximum prison terms for providing false or misleading information to ASIC will also be increased from two to five years. The proposed changes will require consultation and an amendment to the Corporations Act. An exposure draft of enacting legislation has not been published, nor is there any indication as to when the new provisions will come into effect.

Senate Committee releases report into proposed reforms to corporate crime legislation

On 20 April 2018, the Legal and Constitutional Affairs Legislation Committee (Committee) released its report on the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth) (Bill). The Committee recommended that the Bill should be passed. Among other changes, the Bill introduces a new offence of failure of a body corporate to prevent foreign bribery by an associate. The Bill proposes a defence for corporations that have ‘adequate procedures’ to prevent such conduct. The Committee recommended internal corporate whistleblowing systems should be included as part of the Government’s recommended ‘adequate procedures’ guidance. The Committee also recommended that corporate stakeholders should have a four week period to provide comment on an exposure draft of the Government’s proposed adequate procedures guidance, as well as the DPA Code of Practice. For more information on the Bill, see our briefing, ‘New Australian measures to Combat Corporate Crime’. Click here to read the full report.

Australian Senate Economics Reference Committee releases report into foreign bribery

On 28 March 2018, the Australian Senate Economics Reference Committee (Committee) published its report into foreign bribery (Report). The Report is the culmination of a long-standing inquiry first commenced in June 2015. The Report found that Australia has been underperforming in the regulation and enforcement of foreign bribery due to legislative challenges and poor corporate culture. The Committee made 22 recommendations to address the issues that are currently preventing Australia from having an effective and comprehensive foreign bribery enforcement regime. Some of the key recommendations include: introducing a scheme for additional funding for complex foreign bribery investigations; introducing a new corporate offence of failing to prevent foreign bribery; introducing a deferred prosecution agreement scheme for corporations; abolishing the facilitation payment defence; expanding ASIC’s register of beneficial ownership to require companies, trusts and other corporate structures to disclose information regarding their beneficial ownership; and introducing a debarment framework to ensure companies are required to disclose if they have been found guilty of foreign bribery offences. A number of these recommendations are already the subject of the corporate crime bill currently before Federal Parliament. Click here to read our briefing on the Report.

ASIC’s appeal in civil penalty proceedings against former AWB officer dismissed

On 23 April 2018, the Victorian Court of Appeal dismissed ASIC’s appeal in its long-running civil penalty proceedings arising from the Oil-for-Food matter against Peter Geary, a former officer of the Australian Wheat Board (AWB). ASIC’s allegations concerned various payments that were made by AWB between 1999 and 2003, which were allegedly in breach of UN sanctions. The Court of Appeal rejected ASIC’s case that Mr Geary contravened his duties as an officer under sections 180 and 181 of the Corporations Act. ASIC Commissioner, John Price, stated that ASIC is “currently reviewing” the decision. This was the last case against former AWB executives arising from the matter.