ALRC Releases Final Report into Corporate Criminal Responsibility

Thursday 19 November 2020 @ 2.51 p.m. | Judiciary, Legal Profession & Procedure | Legal Research

The Australian Law Reform Commission (“ALRC”) has released its Final Report for its investigation into Corporate Criminal Responsibility, which makes substantial recommendations for the reform of corporate criminal liability.

Following the tabling of the report in Federal Parliament, Attorney-General Christian Porter said in a Media Release “[the report was] representing one of the most detailed examinations ever undertaken of the nation’s corporate accountability framework”.

About the Inquiry

According to the media release, the Federal Government commissioned the ALRC to undertake an inquiry to “ensure Australia’s laws continue to serve as an effective deterrent against corporate crime and remain fit for purpose as a means of protecting consumers for the next decade and beyond”.

The media release also notes that the “ALRC considered corporate liability mechanisms across 25 Commonwealth statutes and consulted widely with stakeholders across private industry, civil society and Government”.

As noted in the Summary Report (see para 1.2), the inquiry “has been set against the background of a renewed focus on the protection of Australian consumers from egregious misconduct by corporations, and increasing regulation in the area of corporate wrongdoing...”

The Terms of Reference

The Terms of Reference required the ALRC to:

  • review the policy rationale and efficacy of Part 2.5 of the Criminal Code (contained in Schedule 1 of the Criminal Code Act 1995 (Cth));
  • other mechanisms for attributing corporate criminal responsibility;
  • liability of individuals for corporate misconduct;
  • criminal procedure laws and rules; and
  • options for reforming Part 2.5 of the Criminal Code or other relevant legislation to strengthen and simplify corporate criminal responsibility across the Commonwealth.

Some Key Recommendations

Some key recommendations made by the ALRC include:

  • Accountability for serious misconduct – Ensure there is a principled basis for criminalising corporate conduct, justify new offence provisions, and stop the use of infringement notices for criminal offences applying to corporations;
  • Fair and consistent prosecutions – Use one clear method to determine whether a corporation is responsible for a crime, hold corporations responsible for persons acting on their behalf regardless of their job title, and ensure organisational fault required for conviction of corporation; and
  • Sentencing options for corporations – Give courts specific factors to consider and allow courts to impose non-monetary penalties, dissolve a corporation and disqualify its management. Provide the ability to order pre-sentence reports and consider victim impact statements. Develop a national debarment regime to restrict corporations convicted of criminal offences from obtaining government contracts.

Further Recommendations

Further recommendations made by the ALRC include:

  • Sufficient data – Improve the collection of criminal justice data to inform policymaking;
  • Address inadequate consequences – Introduce new criminal laws to prevent repeated civil penalties from being treated as a “cost of doing business”;
  • Individual liability for corporate misconduct – Review individual accountability mechanisms for corporate misconduct within five years of the new Financial Accountability Regime coming into force;
  • Accountability overseas – Consider laws to hold corporations responsible when they fail to prevent an associate from committing serious crimes overseas on the corporation’s behalf; and
  • Public oversight of Deferred Prosecution Agreements – Require judicial oversight and publication of reasons in open court.

Implementing the Recommendations

The Summary Report indicates (see page 5) that by implementing the recommendations, Australia’s corporate criminal responsibility regime will:

  • result in simpler, clearer laws that reduce the regulatory compliance burden on corporations;
  • better protect individuals from serious corporate misconduct by ensuring the criminal law, regulators, and law enforcement are focused on the most egregious criminal conduct;
  • make corporations less likely to view civil penalties as merely a ‘cost of doing business’, by criminalising corporate systems of conduct or patterns of behaviour that lead to breaches of civil penalty provisions;
  • standardise the legal tests for attribution of criminal responsibility to corporations, to provide greater certainty, consistency, and clarity;
  • increase the range of penalty and sentencing options available in respect of corporate offenders to punish and rehabilitate criminal corporations more effectively;
  • provide for judicial oversight of Australia’s proposed Deferred Prosecution Agreements scheme;
  • make Australian corporations criminally responsible if they fail to prevent an associate from committing certain crimes overseas on their behalf;
  • ensure mechanisms to hold directors and senior managers liable for corporate misconduct are monitored closely following recent judicial and legislative developments; and
  • establish a national approach to the collection and dissemination of data relating to corporate crime, to facilitate the development of evidence-based criminal justice policy.

If the recommendations are implemented, the ALRC considers they will significantly strengthen and simplify the Commonwealth corporate criminal responsibility regime.

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