1. What is the Inquiry about?
The ALRC was asked by the Attorney-General of Australia, the Hon Christian Porter, to review the Commonwealth regime of corporate criminal responsibility – the detailed legal rules that determine when and in what circumstances a corporation may be found guilty of a crime.
2. What was the ALRC asked to review?
The Attorney-General, the Hon Christian Porter, asked the ALRC to review:
- the policy rationale for Part 2.5 of the Code;
- the efficacy of Part 2.5 of the Code as a mechanism for attributing corporate criminal liability;
- the availability of other mechanisms for attributing corporate criminal responsibility and their relative effectiveness, including mechanisms which could be used to hold individuals (eg senior corporate office holders) liable for corporate misconduct;
- the appropriateness and effectiveness of criminal procedure laws and rules as they apply to corporations; and
- options for reforming Part 2.5 of the Code or other relevant legislation to strengthen and simplify the Commonwealth corporate criminal responsibility regime.
View the Terms of Reference.
3. What is Part 2.5 in Schedule 1 of the Criminal Code Act 1995 (Cth)?
Part 2.5 sets out the legal tests for attributing the physical and fault elements of an offence to corporations. Corporate attribution rules enable offences, which are typically drafted with humans in mind, to apply to corporations. Part 2.5 sets out various ways to attribute criminal responsibility to a corporation. For instance, this may involve attributing the actions and states of mind of certain individuals, such as employees or agents, to the corporation. Alternatively, the corporate culture of a corporation can be used to determine whether the corporation had a particular state of mind.
See a description of Part 2.5 in Chapter 2 of the Final Report and the ALRC’s recommendation for reforming attribution in Chapter 6.
4. How are corporations regulated?
Corporations are subject to various forms of regulation. Legislation establishes standards of conduct and proscribes unlawful behaviour, whether through civil or criminal law. The corporate criminal responsibility regime comprises one part of Australia’s broader system of corporate regulation.
Standards of conduct can be enforced administratively, civilly, or criminally, depending on the particular contravention in question and the policy and strategy of the regulator. The regulation of corporations also involves private actors, such as through the law of contract.
When it comes to enforcing the criminal law, corporations are prosecuted very rarely in comparison to to individuals. Between 30 June 2009 and 30 June 2019, the Commonwealth Director of Public Prosecutions commenced only 13 cases against corporations for offences under the Criminal Code.
For a discussion on how corporations are regulated, see Chapter 5 of the Final Report. For further data on the incidence of corporate prosecutions, see Chapter 3.
5. How was the Inquiry conducted?
The Inquiry was led by Hon Justice SC Derrington, President of the ALRC, and the Hon Justices R J Bromwich and J E Middleton who were appointed by the Australian Government as Part-time Commissioners.
The ALRC received the Terms of Reference on 10 April 2019 from the Attorney-General. The ALRC asked for comments on the scope of the Inquiry and Terms of Reference, and received 14 comments from a variety of stakeholders. It appointed an Advisory Committee of experts in the area of corporate criminal responsibility.
The ALRC published a Discussion Paper on 15 November 2019 which set out proposals for reform and asked questions about particular areas of reform. The ALRC received 49 submissions in response to the Discussion Paper. Submissions were received from business groups, corporations, law firms, human rights organisations, and consumer representative NGOs.
Following the release of the Discussion Paper, the ALRC hosted a public seminar in Sydney in conjunction with Allens, entitled ‘Interrogating the English Approach to Prosecuting Corporate Crime’. The seminar was attended by over 75 guests comprising the legal profession, academics and the public. The keynote speakers were the Rt Hon the Lord Garnier QC, who as UK Solicitor-General was the architect of the Bribery Act 2010 (UK), and Mukul Chawla QC, a prominent English white-collar crime lawyer.
The ALRC hosted a series of seminars in Perth, Melbourne, Sydney, and Brisbane, where the ALRC welcomed over 290 attendees. Each seminar featured an expert panel that delved into the most contentious issues raised in the Discussion Paper.
Throughout the Inquiry, the ALRC engaged widely with a range of stakeholders, including enforcement authorities, regulators, courts, organisations, and the community. The ALRC conducted over 100 consultations with individuals and organisations. See Appendix A and B of the Final Report for a full list of those involved.
On 30 April 2020, the ALRC delivered the Final Report to the Attorney-General, the Hon Christian Porter. The report was tabled by the Attorney-General on 31 August 2020, at which time it became public.
6. What was the role of the Advisory Committee?
The Advisory Committee is composed of experts on corporate criminal responsibility who were tasked with assisting the ALRC to identify key issues, and to provide expert opinions and quality assurance in the research and consultation process. The ALRC engaged with the Advisory Committee closely prior to releasing the Discussion Paper and the Final Report.
7. How was the public involved?
The public was invited to comment on the scope of the Inquiry and the Terms of Reference, as well as to make submissions on the Discussion Paper. The ALRC’s public seminars in Perth, Melbourne, Sydney and Brisbane, following the release of the Discussion Paper, provided an opportunity for members of the public to ask questions and share their opinion on the proposals, contributing to the recommendations that were made in the Final Report.
8. What did the ALRC recommend?
The ALRC made 20 recommendations in the areas of: criminal justice data collection; principled criminalisation; corporate attribution; offences specific to corporations; sentencing corporations; individual liability for corporate conduct; transnational business; and deferred prosecution agreements. View the recommendations.
9. How do the recommendations address the problems with the current law?
Implementation of the recommendations contained in the Final Report will improve Australia’s corporate criminal responsibility regime. These recommendations 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.
10. How does the Inquiry relate to the Financial Services Royal Commission?
Following the Financial Services Royal Commission, there are widespread concerns that corporations, and senior officers within those corporations, are not adequately held to account for serious corporate misconduct. The Royal Commission’s findings, and the response of regulators to those findings, suggest that corporations may be subject to greater legal and regulatory scrutiny than they have in the past and that there will a particular focus on litigating, rather than negotiating settlements.
The Terms of Reference asked the ALRC to consider the issues highlighted by the Royal Commission.
11. Where can I find the Final Report?
12. Is there a shorter version of the Final Report?
13. What are the Data Appendices?
The Data Appendices consist of criminal justice data collated by the ALRC, as well as original and derivative data created by the ALRC. The Data Appendices are an important component of the evidence base for the recommendations set out in the Final Report. The Data Appendices consist of three key datasets, including:
- a review of 25 statutes relevant to regulating corporate conduct;
- quantitative data on how Commonwealth agencies investigate and prosecute corporate crime; and
- data that statistics agencies and courts provided on corporate criminal prosecutions in federal and state courts.
14. Who can I contact to discuss the Final Report?
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