The Australian Law Reform Commission ("ALRC") has proposed welcomed reforms to simplify Australia's corporate criminal responsibility regime.
On 31 August 2020, the ALRC's Final Report into Australia's corporate criminal responsibility regime ("Final Report") was tabled in Parliament.
The ALRC's review follows increased attention on the conduct and accountability of corporations, directors and senior executives following the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry ("Royal Commission"). It is the first major examination of Australia's corporate criminal responsibility regime since the enactment of the Criminal Code in 1995.
As foreshadowed in the ALRC's Discussion Paper (see our December 2019 Commentary), a key concern of the ALRC was the multiplicity and complexity of current laws, there being more than 3,100 offenses in 25 Commonwealth statutes relevant to corporate misconduct. In the view of the ALRC, these offenses create a significant regulatory burden, lack a principled basis and are often duplicative.
The Final Report contains a total of 20 recommendations for reform which are intended to simplify and standardize the law. The ALRC's key recommendations include:
- The adoption of a single principled model for applying the criminal law to corporations such that only conduct which warrants the condemnation and the stigma of being 'criminal' would attract criminal liability. The consolidation and simplification of existing criminal offence provisions would reduce the regulatory compliance burden on corporations and provide greater certainty for regulators, prosecutors and corporations alike.
- The adoption of one clear method for attributing criminal liability to corporations. A corporation would be considered at fault when the physical element of the offense is committed by a person acting on its behalf within actual or apparent authority and any mental element would be satisfied by the relevant employee, officer or agent having the requisite state of mind. A defence would lie where a corporation has taken 'reasonable precautions' to prevent the commission of the offense.
- The introduction of new criminal laws to address patterns of behavior that result in multiple contraventions of civil penalty provisions. This would incentivize corporations to improve their compliance systems and discourage any perception that civil penalties are a 'cost of doing business'.
- Expansion of penalty and sentencing options so as to include a wider range of nonmonetary penalties, including corrective action orders, orders precluding participation in certain commercial activities and dissolution orders.
- Criminal sanctions for Australian corporations which 'fail to prevent' an associate from committing certain crimes overseas on their behalf.
If implemented, the sweeping reforms recommended in the Final Report would radically alter Australia's corporate criminal liability regime and bring about much-needed simplification.
These matters will be explored further in our forthcoming White Paper.
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