Comino, Vicky --- "Civil or Criminal Penalties for Corporate Misconduct- Which Way Ahead?" [2006] UQLRS 1; (2006) 34(6) Australian Business Law Review 428-446

Last Updated: 12 December 2008

THE UNIVERSITY OF QUEENSLAND
LEGAL RESEARCH SERIES

This article was originally published in the Australian Business Law Review published by Thomson Legal & Regulatory

Comino, V, 'Civil or Criminal Penalties for Corporate Misconduct: Which Way Ahead?' (2006) 34 (6) Australian Business Law Review 428-446

Civil or Criminal Penalties for Corporate Misconduct- Which Way Ahead?

Vicky Comino∗

The Treasurer’s announcement in February 2005 that the federal government would amend the Trade Practices Act 1974 (Cth) (TPA) to introduce criminal penalties for serious or hard-core cartel conduct focuses attention on the debate whether civil or criminal penalties are more appropriate ways to regulate corporate misconduct. This change to the TPA is yet to be enacted. However, in 1993, fundamental reforms were made to the regime of sanctions for enforcement of the statutory duties of corporate officers in Australia when the civil penalty regime, currently contained in Part 9.4B of the Corporations Act 2001 (Cth), was introduced. By adopting this approach, it was hoped that the Australian Securities and Investments Commission (ASIC) could more effectively deal with corporate misconduct and that civil penalties would be a significant enforcement tool. ASIC has had success recently in using the civil penalty regime, particularly against directors in high profile cases. Nevertheless, to ensure that it is regarded as a credible regulator, this article argues that, in the light of the adverse press and perceptions surrounding ASIC’s failure to institute criminal proceedings against Stephen Vizard and the difficulties in bringing civil penalty proceedings resulting from the majority decision of the High Court in Rich v ASIC, ASIC should consider shifting the balance away from civil penalty proceedings to criminal prosecutions in serious cases of corporate wrongdoing. This is especially so now with the recent victory of its US counterpart, the Securities and Exchange Commission (SEC) in the Enron case. The criminal convictions of former top two executives, Jeffrey Skilling and Kenneth Lay (now deceased) on 26 May 2006 and the subsequent sentencing of Skilling to 24 years and four months in prison, bring to a close a four-year investigation into the largest corporate fraud in US history and should buoy corporate regulators around the world, including ASIC to pursue criminal cases.

Introduction
On 4 July 2005, the Australian Securities and Investments Commission (ASIC) announced that it had commenced civil penalty proceedings, rather than criminal proceedings, against Stephen Vizard, “celebrity businessman, impresario, lawyer and one-time television presenter”[1]. ASIC alleged that, in 2000, Vizard had breached his duty as a director of Telstra Corporation Limited (Telstra) by improperly using secret boardroom information to trade shares in three listed public companies in which the telco had an interest, Sausage Software Limited, Computershare Limited and Keycorp Limited, to gain an advantage for himself and/or others.[2] Just two days later, an article condemning ASIC’s decision not to launch criminal proceedings appeared on the front page of The Australian. The headline read “Vizard was ‘too well connected’ for jail”.[3] Even though ASIC defended itself, claiming that it was “a without-fear-or-favour regulator”,[4] such a condemnation of its decision not to prosecute such a high profile wrongdoer attests to the widely held perception that the criminal law is the most appropriate way to deal with corporate misconduct and that corporate wrongdoers should not be treated any differently from street criminals.[5] Indeed, empirical evidence supports the view that the general public is growing intolerant of certain types of white-collar crime,[6] particularly corporate crime.[7] A number of academics[8] also believe that corporate crime[9] is more serious than conventional crime. Apart from the financial costs of corporate crime to the community,[10] it has the capacity to undermine faith in our social institutions.[11]

Despite the success that ASIC has had in recent years in using the civil penalty regime against directors involved in high profile corporate collapses, such as those of HIH[12] (although criminal proceedings have also been instituted)[13], Water Wheel[14] and One.Tel,[15] this article argues, that unless criminal proceedings are undertaken in cases of corporate wrongdoing where the conduct is clearly not inadvertent or minor, ASIC may not be seen as an effective regulator. Although civil penalties have worked successfully, they are generally regarded as a second-rate penalty regime.

In contrast, its US counterpart, the much admired Securities and Exchange Commission (SEC) focuses on promptly bringing criminal indictments against suspected major corporate wrongdoers. Recent action against Dennis Kozlowski, one-time chief executive, whose extravagant spending and pay package at Tyco International became notorious examples of corporate excess, resulted in him being sentenced to eight1/3 to twenty-five years imprisonment and ordered to pay almost $US170 million ($222 million) in fines and restitution for stealing from his former company.[16] More recently, the SEC’s successful criminal prosecutions, particularly those against former Enron Chief Executive Officer, Jeffrey Skilling and its late Chairman and founder, Kenneth Lay for fraud, conspiracy and insider trading on 26 May 2006,[17] will see at least one of the chief architects of the largest corporate fraud in US history effectively spend the rest of his life in jail.[18] On 23 October 2006, Skilling, 52, was sentenced to twenty-four years and four months imprisonment and ordered to forfeit $45 million of illegal gains during his time at Enron.[19] Interestingly, the press reports relating to their guilty verdicts also contrast markedly with the adverse press and perceptions surrounding ASIC’s failure to prosecute Vizard.[20] Those reports typically stated “Our criminal laws will be enforced just as vigorously against corporate executives as they will street criminals”[21] and “The jury has spoken and sent an unmistakable message to boardrooms across the country...No matter how rich and powerful you are, you have to play by the rules”.[22] Accordingly, ASIC should be buoyed by this victory[23] to bring criminal cases against high profile wrongdoers as it is seems that the community wants criminal sanctions to be imposed on corporate criminals just as they are on street criminals.

Reasons for the introduction of the civil penalty regime

The regime of sanctions for enforcement of the duties of corporate officers[24] in Australia was fundamentally reformed in 1993 when the current civil penalty approach was introduced.[25] This drastically reduced the role of the criminal law. Previously, in the 1980s, when State and Territory Corporate Affairs Commissions (CACs) acted under the direction of the former National Companies and Securities Commission,[26] and early 1990s, when ASIC assumed responsibility for corporate regulation,[27] breaches of the statutory duties of company officers were punishable by criminal sanctions.[28] Yet, the use of criminal sanctions made enforcement problematic.[29] ASIC generally failed to bring successful criminal cases, especially in relation to the ‘hit list’ of sixteen matters designated as areas of ‘national priority’[30] and in its dealings with the ‘corporate cowboys’ of the 1980s.[31]

ACIC’s poor enforcement record with respect to these matters demonstrated significant limitations upon reliance on criminal sanctions.[32] They included the additional time, cost and resources required to investigate and pursue criminal proceedings over that needed for civil and administrative cases. The need for ASIC to liaise with the DPP over important enforcement matters exacerbated these problems and caused further delays.[33] Additionally, the very complexity of these cases, often involving many interrelated companies and elaborately contrived transactions, combined with the difficulties of proving the criminal offence beyond a reasonable doubt and the ability of the defence to take procedural points meant that few criminal proceedings were completed.[34] Tomasic in particular, has highlighted that defendants in these cases were powerful, well resourced and able to take advantage of the criminal justice system.[35]

Introduction of Pt 9.4B

ASIC”s failure to deal expeditiously with the ‘corporate cowboy’ cases or to conduct successful criminal prosecutions led to the reform of the penalty regime by the introduction of Part 9.4B. Many important provisions, notably those regulating the duties of corporate officers in s 232 Corporations Law,[36] became “civil penalty provisions”.[37] The vast majority of cases attracted civil penalty sanctions,[38] with criminal sanctions applying only to the most serious contraventions.[39] By reducing the role of the criminal law, it was hoped that ASIC could more effectively regulate corporate misconduct and that civil penalties would constitute an alternative enforcement mechanism for the statutory duties owed by company officers.

The regulatory framework underpinning Part 9.4B
Policy source: Cooney Committee Report
The civil penalty reforms arose from two major recommendations of the Cooney Committee[40] report, where the Senate Standing Committee on Legal and Constitutional Affairs conducted an inquiry into the duties and obligations of company directors. These were that criminal liability apply only where conduct is “genuinely criminal in nature”,[41] that is, where directors had acted “fraudulently’ or “dishonestly”,[42] and that civil penalties be provided for breaches by directors where no criminality is involved.[43]

Strategic regulation theory and pyramidal enforcement
Central to these recommendations was the implementation of what has become known as “strategic regulation theory”.[44] This theory provides insights into how regulatory compliance can be secured most effectively. It argues that sanctions should escalate as contraventions of the law become more serious.

Fisse and Braithwaite present a pyramid of enforcement[45] that depicts the hierarchical escalation of sanctions available to the regulator where contravention occurs. At the base are informal methods of control, such as warnings and persuasion, with civil penalties in the middle and criminal liability appearing only at the apex for continued non-compliance or for serious breaches of the law.

This approach was adopted by the Cooney Committee as it sought to construct a pyramid of enforcement mechanisms in the law regulating company officers by proposed reforms to the sanctions for contraventions.[46] The aim of the Cooney Committee’s first reform proposal was to re-assert the importance of criminal sanctions, fines and imprisonment.[47] They were at the apex of the pyramid and provided ASIC with effective enforcement tools for the most serious contraventions, those “genuinely criminal in nature”.[48] This was in contrast to the prevailing law where criminal sanctions applied to all contraventions, in particular to contraventions of statutory duties owed by corporate officers.[49] The Committee criticised the latter stating:

If the breach is criminal in nature, criminal penalties should follow. But it is draconian to apply such penalties in the absence of criminality. This appears to be the case with section 229 of the Companies Code (Corporations Act, s 232).[50]

The Committee considered that the existing law lacked credibility:

Although many sanctions of the Companies Code and Corporations Act provide for gaol terms, in lieu of or in addition to monetary penalties, it appears that the courts are reluctant to impose them. When gaol terms are provided for breach of the law but the courts are disinclined to impose them, ... the law tends to fall into disrepute. The modest fines which are imposed instead caused some discontent in the community.[51]

Despite the difficulties identified with the criminal enforcement regime, the Committee, however, rejected arguments in favour of the “decriminalisation” of company law.[52] It preferred Fisse’s position[53] and decided that:

The criminal law is a necessary means of enforcing proper behaviour. Where offences are genuinely criminal in nature, criminal sanctions are appropriate.[54]

The Cooney Committee’s second proposal was that civil penalties be available to sanction misconduct by directors where “the conduct falls short of a criminal offence”.[55]

The Cooney Committee recommended that the parliament enact an enforcement pyramid, which proposed three vital levels of sanctions to regulate directors by ASIC. There would be civil remedies at the base, civil penalties in between and criminal sanctions at the top, instead of the then existing two levels of criminal and civil sanctions.[56] By increasing the range of sanctions available to ASIC, the Cooney Committee’s proposals rebuilt the former hierarchy into a more cohesive structure. The retention of criminal sanctions at the apex of the enforcement pyramid, so that sanctions could be applied as part of a systematic hierarchy of increasingly severe punishments, meant that a strategic approach to regulatory enforcement could be achieved.[57]

Failure of the original Part 9.4B regime

Although the government adopted the Cooney Committee’s report, it did not accept all its recommendations so that the enforcement pyramid under Part 9.4B differed from that proposed by the Cooney report. Most fundamentally, criminal and civil penalties were placed on the same level instead of civil penalties occupying the middle level of regulation between civil remedies and criminal sanctions proposed by the Cooney Committee. This resulted because the legislation permitted ASIC to pursue either criminal or civil proceedings for many contraventions but placed a bar on subsequent criminal proceedings if civil proceedings were initiated,[58] which meant that criminal and civil penalties in Part 9.4B operated as “separate and mutually exclusive” regimes in competition with one another.[59] The principled and progressive hierarchy of regulatory responses required by strategic regulation theory had not been implemented.[60]

It has been argued,[61] that structural weaknesses in Part 9.4B played a significant role in its failure to operate as an effective enforcement measure. Research undertaken in 1996[62] and 1999,[63] revealed that very few penalty orders were obtained by ASIC. There was only one prosecution commenced under Part 9.4B in its first three years of operation, despite reports of substantial contraventions[64] and ASIC commenced a mere 14 civil penalty applications relating to 10 case situations in the six years from 1993 to 1999.[65]

Introduction of CLERP Act reforms

The CLERP Act[66] reformed the civil penalty rules in Part 9.4B to address the weaknesses identified in the original regime. Most notably, the bar on the use of both criminal and civil proceedings was removed[67] and criminal and civil liability have been placed at separate levels on the enforcement ladder.[68] The issue of penal competition has been overcome. Accordingly, the enforcement pyramid supporting the present Part 9.4B more closely resembles that advanced by the Cooney Committee. Part 9.4B is a more cogent structure and ASIC is better placed to regulate corporate misconduct.

ASIC’s enforcement record

This largely explains why in recent years ASIC has had some success in using the civil penalty regime, particularly in dealing with directors involved in high profile corporate collapses, such as those of HIH and Waterwheel.[69] Research conducted in 2004[70] showed that as at 31 May 2004, a total of 25 civil penalty applications had been issued by ASIC. Welsh has concluded that while the number of applications is not large, ASIC has been making increasing use of the civil penalty regime. Her research revealed that many of the actions issued between 2000 and May 2004 were issued against directors involved in high profile cases and that from 19 out of the 25 applications which were finalised, there was only one case where ASIC was not successful.[71] “Success” was defined for the purposes of her study as the obtaining of a declaration that a contravention of a civil penalty provision had occurred and the subsequent making of civil penalty orders.[72] According to Welsh, the successful use of the civil regime in these cases “sends an important message to the community” that “ASIC has at its disposal enforcement mechanisms which allow it to successfully pursue actions against directors who contravene the provisions of the Corporations Act”.[73]

Continued success of civil regime in view of the decision in Rich v ASIC?

ASIC’s ability to continue to use the Part 9.4B pyramid of enforcement, in particular civil penalties to achieve superior regulatory outcomes may be undermined as a result of the decision in Rich v ASIC.[74]

Rich and Silbermann in an appeal to the High Court in 2004, in relation to the civil penalty proceedings that ASIC had brought against them concerning their management of One.Tel, argued that the disqualification orders sought were penal, in the sense that exposure to disqualification orders exposed them to penalties and that, accordingly, the privilege against exposure to penalties and forfeiture (the penalty privilege) could be relied upon and discovery should be refused. The majority of the High Court upheld their appeal and found that the penalty privilege was available in civil penalty proceedings. Consequently, unless the law is changed,[75] ASIC will be unable to require possibly delinquent company managers to make full disclosure of all documents relating to possible contraventions.[76] Kirby J, who delivered the dissenting judgment, pointed out that:

By this Court’s order, the appellants in the present case will be released from the obligation that the [Corporations] Act would otherwise have imposed on them in civil proceedings for disqualification. They would have had to produce documents in their possession that are relevant to the issues concerning their management of One. Tel Ltd.[77]

ASIC’s task in these proceedings, and in any subsequent proceedings of a similar nature, has been made more difficult than envisaged. The law has gone too far, resulting in what Kirby J has called “the over-reach of ‘prove it’”. [78] Rich and Silbermann by not having to comply with the usual requirement to make discovery and file witness statements were placed in a position where they could refuse any demands that ASIC might have made for discovery if the proceedings against them resumed in the NSW Supreme Court.[79] Moreover, by imposing heightened procedural protections in relation to civil penalties and treating civil penalty proceedings more like criminal proceedings, the case may undermine the ability of the civil penalty regime in Part 9.4B to provide an effective method of corporate regulation.

If ASIC needs to produce the evidence to bring civil penalty proceedings, it could consider using that evidence to obtain criminal convictions, rather than civil penalties, in cases where the contraventions are clearly not inadvertent or minor. Indeed, ASIC should consider changing the balance away from bringing civil penalty proceedings to criminal proceedings in appropriate cases to prove that it is a serious regulator.

The need for the criminal law-
Deterrence
In the area of corporate crime,[80] criminal sanctions are motivated by the desire for appropriate punishment and to serve as an effective general deterrent. Champions of the criminal justice system claim that the criminal process offers a greater deterrent for corporations and managers than other control mechanisms.[81] A criminal conviction damages the defendant’s image and reputation. The bad publicity and stigma of a conviction[82] far outweighs the label attached to an adverse decision in civil proceedings and/or the making of civil penalty orders.

The traditional deterrence model, which assumes that fear of legal sanctions keeps persons law- abiding,[83] thus provides the main justification for criminal sanctions and calls for the criminal justice system to play a larger role in the war against corporate crime.

In the US, this is certainly the position. Criminal sanctions have been used in a number of high profile cases. Most recently, former Enron boss, Skilling “join[ed] a rogues gallery of shamed chief executives who have suffered the ignominy of jail time after falsifying accounts, lying to shareholders and plundering the corporate treasury for their personal enrichment”.[84] Additionally, the shift towards the use of the criminal law with its emphasis on punishment and stigmatisation is evident in so many areas, including environmental law, antitrust cases and health care fraud.[85] In Australia, reliance on criminalisation also seems to be gathering momentum, perhaps most importantly to deal with ‘cartels’, a “cancer” on the corporate world and a “silent extortion that steals billions of dollars from business, from taxpayers and...consumers through higher prices and lower standard of goods and services”.[86]

‘Cartels’ are outlawed under the Trade Practices Act 1974 (Cth), s 45(2), which prohibits contracts, arrangements or understandings which have the purpose, effect or likely effect of substantially lessening competition or contain an exclusionary provision. Under the existing civil penalty regime, corporations involved in cartels face pecuniary penalties of up to $10 million per contravention, while their executives face penalties of up to $500,000 per contravention.[87]

Like ASIC, the Australian Competition and Consumer Commission (ACCC) has experienced some success using the civil penalty regime.[88] However, in February 2005, the Treasurer announced, that the Federal Government would amend the TPA to introduce a new regime of criminal sanctions and massively increased fines for serious cartel conduct, following an independent review of the competition provisions of the TPA (the ‘Dawson Report’), which recommended the introduction of criminal sanctions for hard-core anti-competitive conduct, like cartels and price-fixing.[89]

According to Graeme Samuel, Chairman of the ACCC, the recommendation of the ‘Dawson Report’ to introduce criminal penalties for serious cartel conduct, recognises “the growing international experience that suggests they are effective in deterring” such conduct.[90] Commenting on the maximum penalties for the offence to be introduced under the new regime, which will be a term of imprisonment for five years and a fine of $220,000 for individuals and a fine for corporations that is the greater of $10 million or three times the gain from the contravention or, where the gain cannot be ascertained, 10 per cent of the annual turnover of the body corporate and all of its interconnected bodies corporate (if any), he also said:

The higher penalties will go a long way towards tilting the cost benefit analysis against those considering taking part in cartels. Cartel activity will not be deterred if the potential penalties are perceived by firms and their executives to be outweighed by the potential rewards. Under Australia’s existing penalty regime, there was a real danger that, at least for some of the bigger international cartels, the penalties were simply not a deterrent.

But there’s always the danger that financial penalties will simply be passed on to shareholders, and those levied on executives will be picked up by shareholders.

Imprisonment has no such qualifications- it is a penalty for which no company or shareholder can be forced to pick up the cost.[91]

Unfortunately, these changes to the TPA have yet to be enacted. In October 2005, largely due to the highly publicised objections in the Senate by Barnaby Joyce to the proposed merger provisions in the Trade Practices Legislation Amendment Bill 2005 (Cth), this bill was shelved by the Government which took an all or nothing approach to the proposed reforms.[92] On 19 October 2006, however, the Senate finally passed the bill establishing the new merger regime,[93] clearing the way for the passing of the next bill, now in draft form, which will make these amendments.[94]

In the meantime, however, the ACCC, which has long advocated the need for criminal sanctions to deal with cartels, has taken a strong stance against them and under the stewardship of Samuel, as ACCC Chairman, controversially shifted resources from some of its traditional consumer protection enforcement work to confront them.[95] Undoubtedly, the biggest and most significant legal action it has undertaken is that launched in December 2005, against billionaire Richard Pratt’s Visy Industries for alleged cartel conduct in the corrugated fibreboard container market.[96]

Samuel has described this case as a “watershed” in the ACCC’s fight against cartels:[97]

Amcor Ltd, one of the biggest and most respected companies in Australia, and the country’s leading manufacturer of cardboard packaging, announced it had reason to believe that a number of its current and former executives had engaged in anti-competitive conduct and that it had approached the ACCC... The real significance as far as the Australian Competition and Consumer Commission was concerned was the culture change it had signalled... that such behaviour could not be tolerated, or covered up.[98]

He has also claimed that it is a “validation of the increasingly high profile campaign” that the ACCC has been taking against cartels.[99] This campaign includes the former ACCC leniency policy for cartel conduct,[100] under which Amcor Ltd and its former senior executives have to date received immunity from legal proceedings by the ACCC.[101]

The outcome of this ‘landmark’ case will be interesting, as it appears that the credibility of the ACCC and that of its Chairman have been put on the line by issuing these proceedings.[102] However, parallels that are being drawn to ASIC’s case against Vizard are unfair. Just as there has been a large amount of criticism over ASIC’s handling of the Vizard action, the ACCC may face strong criticism if it fails in this cardboard and paper cartel case. [103] In the Vizard case, it was the decision to take civil, rather than criminal action, that caused resentment, whereas the ACCC must rely on the present civil penalty regime in the Visy litigation.

In addition to the proposed reforms to the TPA to criminalise cartels, there is other evidence of the shift towards the use of the criminal law in Australia. The ACCC, for example, has struck an agreement with the DPP to use criminal prosecutions to seek jail terms for business executives who systematically engage in unconscionable conduct or who mislead the Commission in the course of an ACCC investigation.[104] In the wake of the James Hardie asbestos scandal, the Federal Government is also considering introducing a ten-year jail term for company restructures, which are deliberately aimed at avoiding personal injury compensation.[105] It is proposed that the new offence will be modelled on Part 5.8A of the Corporations Act, which was introduced after the outcry in 2000 when employees of National Textiles were left without their full redundancy entitlements.[106] According to Chris Pearce, the Parliamentary Secretary to the Treasurer, it will apply not only to company directors and executives but will also catch their advisers under the definition of “any person knowingly involved in such a contravention”.[107]

Conventional crime has historically been dealt with punitively in contrast to corporate misconduct which has been handled through administrative agencies or relatively lenient criminal legislation.[108] This is consistent with the pervasive position found principally in sociological studies which distinguish between regulatory offences and traditional crimes and bar the use of the criminal law to regulate conduct that is not regarded as intrinsically ‘immoral’.[109]

This article argues that the criminal law should be accorded a more important role in ASIC’s armoury to deal with serious corporate misconduct and that enforcement by criminal sanctions should be the preferred way of dealing with violators This is because, while the following suggestion may be true of some regulatory offences, in cases of serious corporate contraventions, the public seem to be more reactive,[110] as evidenced by the adverse publicity and resentment surrounding ASIC’s failure to institute criminal proceedings against Vizard:

People simply do not regard many of the modern statutory offences as ‘crimes’ in the same way as murder, robbery, rape and arson. They agree that there have to be rules and regulations ... but they do not see the man who sells bananas off an unlicensed street barrow ... as ‘criminal’. To that extent the law seems to have become an ass.[111]

As Hawkins,[112] whose work made a significant contribution to the scholarship on sociological theories of regulation declares, even though enforcement by punitive sanctions is a strategic tool of last resort where other regulatory measures have failed to secure compliance,[113] the formal machinery of the criminal law is appropriate and should be applied in cases where there is perceived moral blameworthiness in the actions of the violator, where what is really being sanctioned amounts to a “symbolic assault on the legitimacy of the regulatory authority”.[114] The criminal law should also apply in cases where there are criminal acts of dishonesty leading to personal or corporate benefit. Although Vizard did not benefit as a result of his insider trading activities, his case and certainly, the HIH debacle are cases in which criminal proceedings should have been brought.

HIH
In spite of the success of ASIC’s civil penalty proceedings against directors of HIH,[115] justice would not have been served nor would ASIC be viewed as an effective regulator if it had failed to also bring criminal prosecutions,[116] especially when the Royal Commission into HIH’s collapse, “one of the largest and most significant financial failures in Australia’s history”,[117] had recommended criminal proceedings in addition to civil penalty proceedings.[118]

The laying of criminal charges against Adler arising out of his conduct as a director of the HIH group of companies in 2000,[119] was vindicated by the comments made by Dunford J of the NSW Supreme Court in sentencing him to four-and-a-half years jail, with a non-parole period of two-and-a-half years, after he had pleaded guilty to those charges:[120]

The offences are serious and display an appalling lack of commercial morality...Directors are not appointed to advance their own interests but to manage the company for the benefit of its shareholders to whom they owe fiduciary duties... They were not stupid errors of judgement but deliberate lies, criminal and in breach of his fiduciary duties to HIH as a director.

Similarly, when Williams, who was one of the other senior figures associated with the HIH group of companies, was sentenced to four-and-a-half years jail, with a minimum of two years and nine months[121] in relation to the criminal charges to which he pleaded guilty relating to his management of the group in the three-year period 1998 to 2000,[122] Jeffrey Lucy, Chairman of ASIC stated:

ASIC welcomes the strong message that today’s sentencing sends to corporate Australia. ASIC, the courts and the community will not tolerate company directors who do not act honestly and in the best interests of shareholders.

Mr Williams was sentenced today in relation to offences concerning three substantial transactions, which significantly distorted the true financial position of HIH. These matters involved hundreds of millions of dollars and Mr William’s criminal conduct occurred over an extensive period.[123]

To date, ASIC has achieved a number of further jailings as part of its HIH investigation.[124] Terry Cassidy, former Managing Director, Australia of HIH was sentenced to fifteen months imprisonment relating to three criminal charges also arising from his management of the group from 1998 to 2000.[125] More recently, ASIC has won its case against entrepreneur Bradley Cooper, securing his conviction on thirteen charges of bribery and extracting money in the last days of HIH in late 2000 and early 2001.[126] Cooper was sentenced to eight years’ jail, [127] which is one of the longest sentences for a white- collar criminal in Australia in recent years.[128] It has also won its case against Tony Boulden, a former financial controller of FAI General Insurance Company (FAIG), who pleaded guilty to breaching s 590 (1) of the Corporations Act,[129] while Robert Kelly, the former assistant company secretary of HIH Insurance Limited has also pleaded guilty to one charge of concurring in the making of a misleading statement under the Crimes Act 1900 (NSW).[130]

While there are ongoing criminal prosecutions against other former senior executives and directors of HIH, FAI and associated entities, including Fodera,[131] where the outcomes are uncertain, the jailings thus far of Adler, Williams, Cassidy and Cooper demonstrate that ASIC can be serious about enforcement and restore faith in the criminal justice system as an effective device for dealing with corporate crime, notwithstanding the limitations upon reliance on criminal sanctions,[132] which Lucy himself recognised in an ASIC media release on Adler’s sentencing when he said:

[T]hese types of matters are notoriously difficult to investigate and successfully prosecute. ASIC would like to thank the Commonwealth Director of Public Prosecutions, who has worked closely with ASIC’s HIH Taskforce and prosecuted this matter in the courts.[133]

Vizard case

Finally, there is the Vizard case, where the puzzling question must be posed: why hasn’t ASIC decided to launch a criminal prosecution when the evidence seems clear, with ASIC asserting that Vizard had effectively confessed to insider trading? On 4 July 2005, when ASIC announced its decision to bring civil penalty proceedings, it issued a media release, where it stated:

ASIC has filed a Statement of Agreed Facts with the Federal Court of Australia in which Mr Vizard agrees with the facts that give rise to the allegations.

Mr Vizard has agreed with ASIC that it is appropriate for the Federal Court to declare that he contravened his duty to Telstra in using the Telstra information...[134]

It is interesting that Vizard at first tried to deny his insider trading ‘confession’,[135] but later co-operated and admitted his insider trading in telecommunications shares.[136]

ASIC has said that the decision not to pursue a criminal case was not theirs, but was “entirely up to the federal Director of Public Prosecutions”,[137] who stated that “it did not have enough evidence to institute a criminal charge”.[138] When ASIC gave similar reasons in 2000 that the DPP found no evidence to support the laying of any criminal charges in the highly publicised Yannon case, especially against controversial business identity Solomon Lew,[139] Business Review Weekly (BRW) ran a cover story on ASIC describing it as ‘The Watchdog No One Fears’.[140]

Conclusion

In spite of the success of the civil penalty regime in Part 9.4B in recent years, this view of ASIC may not have changed.[141] Even though the civil penalty proceedings ASIC brought against Vizard were ultimately successful and resulted in him being banned for ten years and ordered to pay pecuniary penalties of $390,000,[142] the overwhelming view seems to be that ASIC and the DPP went soft on Vizard: “[H]ere is Steve Vizard, clearly an insider abusing a position of trust, potentially many times- not just once- and he gets a slap on the wrist”.[143] The immediate cause of that perception is ASIC’s failure to ensure that the criminal law is given centre stage, particularly in high profile cases, such as the Vizard case. However, in the longer term, the perception is likely to remain because of the difficulties that will arise in relying on the civil penalty regime following Rich v ASIC.[144]

However, with ASIC maintaining that its insider trading file on Vizard remains open, it will be interesting to see if criminal charges will be laid in the future in view of the evidence of Vizard’s former accountant, Lay, a witness at the hearing of the civil proceedings that Westpac bank has brought against Vizard’s former bookkeeper, Roy Hilliard, to recoup nearly $3 million it repaid to Vizard.[145] Lay told the Victorian Supreme Court on 8 September 2006, that share trading by the vehicle known as Creative Technology Investments (CTI) was made under instruction from Vizard, thus connecting Vizard to the shelf company that was used to hide his illegal investments in companies connected to Telstra.[146] Further, Lay said that CTI was structured to give Vizard “a level of confidentiality”.[147] Lay’s previous silence and refusal to sign a witness statement had been the reason why the DPP had not originally brought a criminal charge against Vizard,[148] but presumably, ASIC could prevail upon Lay to provide similar evidence against Vizard in a criminal case.

Additionally, Vizard is at risk of perjury charges stemming from Hilliard’s 2003 committal hearing, where he denied on oath that he had engaged in insider trading. Vizard’s sworn testimony appears to contradict sections of the Statement of Agreed Facts referred to earlier[149] that resulted in his banning and fine. The maximum penalty for perjury is 15 years jail.[150]

ASIC’s successful criminal case against Tony Oates, the former finance director of Bond Corporation is also a good sign. In a surprise deal, on 18 July 2005, Oates pleaded guilty in the WA Supreme Court to three criminal charges of misusing his position as a director of Bell Resources, relating to the stripping of $500 million from that company in favour of Bond Corporation using a complex series of deposits, loans and accounting entries in complete disregard of the interests of Bell Resources.[151] Oates’ guilty plea brings to a close not only the long-running case against him extending all the way to Poland, where he resided from 1991, after the Bond group’s collapse, until his extradition in June 2003, pending the sentencing hearing,[152] but also brings final closure to “the Bond saga 17 years after the inner cabinet plundered Bell Resources to keep Bond Corporation afloat”.[153] Lucy stated:

This was part of a serious and calculated fraud perpetrated on an Australian company.[154]

Prosecutor Stephen Hall, SC, went further when he said:

This was a fraud that was enormous in its magnitude, audacious in its execution and redolent of the most serious dishonesty.[155]

Although the case took a long time to finalise, it demonstrates that, if ASIC persists, it may succeed in using the criminal justice system to punish corporate misconduct and thus prove that it is a serious regulator. The same approach would seem to be appropriate in the future for the ACCC, Australia’s competition and consumer watchdog, especially to enable it to better deal with hard-core cartel conduct. Moreover, the string of recent successes by the SEC in the criminal arena, particularly the case against Enron’s previously high-flying executive, Skilling, whose sentence of twenty-four years and four months is tantamount to life imprisonment should embolden corporate regulators to pursue criminal sanctions in serious cases.

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∗ BA, LLB (Hons), LLM (Queensland). TC Beirne School of Law, The University of Queensland. I wish to thank Dr. Keith Fletcher, Reader in Law at the Law School for comments on a draft of this article. An earlier version of this article was presented at the Corporate Accountability Conference, Melbourne, 8-9 February 2006.
1 See Cornell A, Johnston E and Hughes D, ‘Steve Vizard quits over share-trading offences’, The Australian Financial Review (AFR), 5 July 2005, p 1.
[2] See ‘ASIC commences civil proceedings against Stephen Vizard’, ASIC Media Release 05-190, 4 July 2005.
[3] Sexton J, ‘Vizard was ‘too well connected’ for jail’, The Australian, 6 July 2005, pp 1-2.
[4] Sexton, n 3, p 2.
[5] In the academic literature, however, a distinction is usually made between regulatory offences and ‘real crimes’, that is, indictable offences, such as murder and robbery, as opposed to summary or simple offences. Those who deny the criminal status of regulatory offences argue the opposite. They contend that regulatory offences are ‘lesser matters’, which people do not regard in the same way as traditional crimes so that their criminalisation is inconsistent with public morality. For a brief but good discussion of not only the legal debate about the use of the criminal law as a regulatory tool, but also sociological studies of white-collar crime, see, eg, Hutter B, The Reasonable Arm of the Law? The Law Enforcement Procedures of Environmental Health Officers (Clarendon Press, Oxford, 1988), pp 30-34.
[6] See, eg, Holland R, “Public Perceptions of White Collar Crime Seriousness: A Survey of an Australian Sample” (1995) 19 International Journal of Comparative and Applied Criminal Justice 91. Empirical data collected from other Western nations, including Great Britain and the US also support this view, see, eg, Levi M and Jones S, “Public and Police Perceptions of Crime Seriousness in England and Wales” (1985) 25 British Journal of Criminology 234.
[7] See, eg, Miller J, Rossi P and Simpson J, “Felony Punishments: A Factorial Survey of Perceived Justice in Criminal Sentencing” (1991) 82 Journal of Criminal Law and Criminology 396.
[8] Eg, Professor Seumus Miller, who made a plenary address to the 1995 National Corporate Law Teachers Conference, ‘The Current Simplification Process and Questions of Corporate Ethics’, Melbourne, 6-7 February 1995, stated, that the “problem of a corrupt or incompetent corporate leader is of an entirely different order of magnitude from that of a crooked or inept corner store grocer”.
[9] For the purposes of this article, the term ‘corporate crime’ is used simply to refer to serious corporate misconduct or wrongdoing. It is not used in a technical sense. Nor is it used to make the distinction often found in the academic literature between ‘corporate crime’ (violations of the criminal law) and ‘illegal corporate behaviour’ (violations of administrative and civil law), see, eg, Baucus M and Dworkin T, “What is Corporate Crime? It is not Illegal Corporate Behaviour” (1992) 13 Law & Policy 231.
[10] For a discussion of these costs, see, eg, Ffrench H, Guide to Corporations Law (4th ed, Butterworths, Sydney, 1994) p 348.
[11] See Farrar J, “The ASC and the criminal process” (1993) 67 LIJ, 603 at 603-604. Professor Farrar, however, also defends ASIC’s litigation program of enforcing the law through civil, criminal and administrative actions, claiming that, “[i]n the past Australia has made too much of criminal sanctions in its corporate laws”. See also Ffrench, n 10, who believes that the social costs are unquantifiable and that corporate crimes have the capacity to destroy countries not only economically, but socially and politically.
[12] In HIH Insurance Ltd (in prov. liq); Australian Securities and Investments Commission v Adler ( Adler) [2002] NSWSC 171; (2002) 41 ACSR 72; 20 ACLC 576, ASIC obtained pecuniary penalties, banning orders and compensation against Rodney Adler, a former director of HIH Insurance Limited (HIH), and Ray Williams, its former Chief Executive Officer, as well as, compensation against Dominic Fodera, its former Chief Financial Officer. Adler, for instance, was disqualified for twenty years and ordered to pay approximately $7 million compensation jointly with Adler Corporation Pty Limited and Williams in addition to a pecuniary penalty of $450,000. On appeal, the NSW Court of Appeal upheld the disqualifications, pecuniary penalties and compensation ordered against the defendants: see ASIC v Adler (2003) 46 ACSR 504; 21ACLC 1810. Leave to appeal to the High Court was refused in May 2004.
[13] In the subsequent criminal proceedings issued against the defendants, both Adler and Williams pleaded guilty. Adler was sentenced to four-and-a-half years imprisonment with a non-parole period of two-and-a-half years, while Williams was also sentenced to four-and -a -half years, but with a non-parole period of two years nine months: see ‘Rodney Adler sentenced to four-and-a-half years’ jail’, ASIC Media Release 05-91, 14 April 2005 and ‘Ray Williams sentenced to four-and-a -half years’ jail’, ASIC Media Release 05-94, 15 April 2005. The criminal proceedings against Fodera are continuing. There are also ongoing criminal prosecutions against other former senior executives and directors of FAI, HIH and associated entities.
[14] In ASIC v Plymin and Others [2003] VSC 123; (2003) 46 ACSR 126; (2003) 21 ACLC 700, ASIC obtained banning orders, pecuniary penalties and compensation against Bernard Plymin, John Elliott and William Harrison in relation to their conduct as directors of Water Wheel and its subsidiary Water Wheel Mills Pty Ltd in allowing the companies to incur further debts after they became insolvent.
[15] Although in December 2001, ASIC commenced civil penalty proceedings in the Supreme Court of NSW against John David (Jodee) Rich and Bradley Keeling, its former Joint Managing Directors, Mark Silbermann, its former Finance Director and John Greaves, its former Chairman, seeking declarations that they had breached their duties, including the duty to exercise the standards of care and diligence required by company officers and allowed the company to trade whilst insolvent, orders that each of the defendants be disqualified from managing a corporation and $93 million compensation, only proceedings against two defendants, Keeling and Greaves have been finalised. For a discussion of the One.Tel proceedings, see Comino V, “High Court relegates strategic regulation and pyramidal enforcement to insignificance” (2005) 18 Aust Jnl of Corp Law 48.
[16] See Bayot J, New York, ‘Tyco chief jailed, fined $222m’, AFR, 21 September 2005, p 13.
[17] See Guy R, New York, ‘Jury’s still out on Enron’s impact’, The Weekend AFR, 27-28 May 2006, p 29. Guy provides an interesting discussion of Enron’s impact on corporate America, pointing out that while the jury’s decision clearly linked Skilling and Lay to the spectacular implosion of the former $US70 billion energy trader, they did not act alone. There have been other successful criminal cases against former Enron executives, including its chief accountant, Richard Causey, who has agreed to a plea-bargain agreement of seven years in prison, its chief executive energy divisions, David Delaney, who pleaded guilty and was sentenced to two years in prison, its treasurer, Ben Gilson, who pleaded guilty and agreed to serve five years, but whose sentence was reduced to three years for good behaviour, its director investor relations, Mark Koenig, who pleaded guilty and may get up to ten years in prison, as well as, its Chief Financial Officer, Andrew Fastow, who pleaded guilty and was sentenced to six years in jail on 28 September 2006 for stealing from the company and devising schemes to deceive investors about its true financial position. Fastow received a more lenient sentence than the ten years stipulated in his 2004 plea-bargain agreement, because of his co-operation with the authorities. He will do two years of community service after his jail time. The assistance Fastow has also given to lawyers suing Enron’s former banks on behalf of investors by providing them with a 25-page declaration before he was sentenced, should give them added confidence that they can force those banks that helped construct the company’s complex financial structures to settle claims, or prevail at trial, if necessary. To date, the plaintiffs’ lawyers have won settlements for $US 7.3 billion ($9.8 billion) of the $US 40 billion investors claim they lost in Enron’s collapse. Most of that money has come from banks, such as JP Morgan Chase, Citigroup, Bank of America and Canadian Imperial Bank of Commerce: see Barrionuevo A, New York, ‘Enron CFO draws road map’, AFR, 4 October, 2006, p 18.
[18] Although Skilling’s co-defendant, Lay, was convicted of 10 counts of conspiracy and fraud, those charges were vacated and the indictment against him dropped after he reportedly died of a heart attack on 5 July 2006.
[19] See Guy R, New York, ‘Skilling sentenced for Enron collapse’ and Barrionuevo A, New York, ‘Enron scandal stalks Skilling’, AFR, 25 October 2006, pp 19 and 68. Not surprisingly, Skilling’s lawyers have filed an appeal.
[20] See earlier discussion at nn 3-5.
[21] See Guy, ‘Jury’s still out on Enron’s impact’, n 17, quoting Paul Mc Nulty, US deputy Attorney- General.
[22] See Guy R, New York, ‘Guilty verdicts for Enron bosses’, The Weekend AFR, 27-28 May 2006, p 8 quoting prosecutor, Sean Berkowitz.
[23] See Durie J, Chanticleer, The Weekend AFR, 27-28 May, p 64. Durie claims that Enron has a lot to answer for. Still, it is rare for corporate regulators to have had such a complete victory. In the aftermath of Enron’s collapse, not only have its top brass been snared, but the reputations of leading investment banks such as Merrill Lynch and Citigroup have been tarnished, while the accounting firm, Arthur Anderson has been destroyed given its close relationship to Enron. Its collapse also set the anti-business climate for the introduction of the Sarbanes-Oxley law, which holds companies to much higher legislatively based governance rules.
[24] The provisions relating to these duties are now found in Corporations Act 2001 (Cth) (Corporations Act), ss 180-184, formerly Corporations Law, s 232, and Companies Code (Code), s 229.
[25] The civil penalty regime in Part 9.4B of the Corporations Act was introduced by the Corporate Law Reform Act 1992(Cth) and became effective from 1 February 1993. The original civil penalty rules in Part 9.4B were reformed and rewritten by the Corporate Law Economic Reform Program Act 1999 (Cth) (CLERP Act), which became operative on 13 March 2000. More recently, the operation of the regime was amended by the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) (CLERP 9 Act).
[26] The NCSC was the national body established in 1980 under the earlier co-operative scheme of companies and securities regulation. That scheme, which had clear weaknesses and did not prevent the corporate excesses of the 1980s, comprised State and Federal corporate regulatory agencies, the State and Territory CACs and the peak federal NCSC see, generally Comino V, “National Regulation of Corporate Crime” (1997) 5 Current Commercial Law 84.
[27] ASIC began operating on 1 January 1991 as the Australian Securities Commission (ASC). Its sole responsibility was for regulation of companies and securities and futures markets but, on 1 July 1998, when it was renamed ASIC, it took on further responsibilities. Although ASIC is the primary investigative body in relation to complex criminal matters involving corporate law and has the power to prosecute these matters under ASIC Act 2001 (Cth), s 49 and Corporations Act, s1315, major offences are generally prosecuted by the Commonwealth Director of Public Prosecutions (DPP) in accordance with a Memorandum of Understanding (MOU) between the DPP and ASIC. A new MOU, entered into in March 2006, has replaced the earlier MOU dated 22 September 1992 “to substantially the same effect”: see MOU dated 1 March 2006 available on the ASIC website <www. asic.gov.au> viewed on 15 June 2006.
[28] When the Corporations Law commenced operating on 1 January 1991, the criminal penalty regime mirrored the provisions of the Code. For instance, contraventions of the statutory duties owed by corporate officers in the Corporations Law, s 232, formerly the Code, s 229 were offences. The criminal sanctions which could be imposed were a fine or imprisonment for up to five years or both under Corporations Law,
s 1311, formerly the Code, s 570.
[29] See discussion below at nn 32-35.
[30] In September 1991, Tony Hartnell, then ASIC Chairman, announced a ‘hit list’ of sixteen companies which would be investigated by ASIC as a matter of priority because of their complexity or public significance. The Bond, Qintex, Lintner, Budget, Duke and Equiticorp Groups, as well as Rothwells, Spedley and Estate Mortgages appeared as part of this famous ‘hit list’: see ASC, Annual Report 1991/92, pp 40-1, which sets out a table showing the progress made in the sixteen ‘priority matters’. While 252 charges had been laid in these matters, there were only 6 prosecutions. In its 1992/93 Annual Report, ASIC noted that while charges had been laid in thirteen of those sixteen major 1980s matters, legal proceedings were already “proving protracted and costly”: see ASC, Annual Report 1992/93, p 6.
[31] They included well-known business identities such as Christopher Skase, Laurie Connell, Alan Bond and John Elliott, see Comino, above note 26, which discusses not only the NCSC’s regulatory failure, but also ASIC’s poor enforcement record in relation to the ‘corporate cowboys’ of the 1980s. There have, however, been some successful criminal cases, notably those against Bond, Peter Mitchell and recently, Antony (Tony) Oates, who after a special investigation by John Sulan, QC, and a five-year ASIC investigation into the spectacular collapse of Bond Corporation, were charged in January 1995 over conduct that stripped $1.2 billion out of Bond Corporation subsidiaries, including the one-time cash cow of the Bond empire, Bell Resources Ltd (Bell Resources).
[32] See, eg, Schlegel K, Just Desserts for Corporate Criminals ( Northeastern Uni Press, Boston Mass, 1990).
[33] See earlier discussion n 27.
[34] For instance, in the Spedley litigation, the accused delayed proceedings by claiming a denial of natural justice. For a discussion of this case, see Tomasic R, “Corporate Crime and Corporations Law Enforcement Strategies in Australia” Discussion Paper 1/193 (Centre for National Corporate Law Research, Canberra, 1993) p 17, n 70. Of the many cases involving Spedley see, eg, Yuill v Spedley Securities Ltd (in liq) (1992) 8 ACSR 272 and Spedley Securities Ltd (in liq) v BR Yuill (No. 4) (1991) 5 ACSR 758.
[35] Tomasic R, “Corporate Crime” in Chappell P and Wilson P (eds) The Australian Criminal Justice System: The Mid 1990’s (Butterworths, Sydney, 1994) p 263.
[36] The provisions relating to these duties in s 232 Corporations Law are now found in ss 180-183 Corporations Act.
[37] Pursuant to s 1317DA, now s 1317E of the Corporations Act, certain provisions of the Corporations Law were defined as civil penalty provisions. In addition to s 232, designated civil penalty provisions were, until 30 June 1998, ss 243ZE(2) and (3) – giving financial benefits to related parties, s 344(1) (formerly s 318(1)) – contraventions in relation to company accounts and s 588G – duty to prevent insolvent trading. On 1 July 1998, by virtue of reforms made to the law by the Company Law Review Act 1998 (Cth) and the Managed Investments Act 1998 (Cth), the application of civil penalties was extended to s 254L(2) – contraventions of requirements regarding redemption of redeemable preference shares,
s 256D(3) – contravention of requirements regarding capital reductions, s 259F(2) – contravention of restriction on company acquiring its own shares and taking security over its own shares, s 260D(2) – contravention of restriction on company providing financial assistance in connection with the acquisition of its shares, and ss 601FC(1), 601FD(1), 601FE(1), 601FG and 601JD(1) – contravention of duties imposed on those involved in the management of managed investment schemes. The Financial Services Reform Act 2001 (Cth) extended the civil penalty regime to also apply to offences relating to all market misconduct provisions, such as insider trading, s 1043A and continuous disclosure, ss 674-5, thus creating two kinds of civil penalties: financial services civil penalties and corporation/ scheme civil penalties.
[38] Where a civil penalty provision was breached, the consequences could include the court, under s 1317EA, prohibiting the person from managing a corporation for a specified period of time and/or imposing a pecuniary penalty of up to $200,000 upon that person.
[39] Under s 1317FA, a person who contravenes a civil penalty provision is guilty of a criminal offence if that person contravened the provision knowingly, intentionally or recklessly and (i) was dishonest and intended to gain an advantage or (ii) intended to deceive or defraud someone. The criminal sanctions which applied for a successful prosecution of the criminal offence were a fine of up to $200,000 or imprisonment for up to 5 years or both.
[40] Senate Standing Committee on Legal and Constitutional Affairs, Company Directors’ Duties: Report on the Social and Fiduciary Duties and Obligations of Company Directors (AGPS, Canberra, 1989) (the Cooney Committee). See also House of Representatives Standing Committee on Legal and Constitutional Affairs, Corporate Practices and the Rights of Shareholders (AGPS, Canberra, 1991) (the Lavarch Committee) , p 211. The Lavarch Committee reported that “much greater emphasis should be placed on the use of administrative action and civil litigation to prevent harm to investors and to recover assets”. For a discussion on the history and theory of civil penalties in Australian corporations law: see Bird H, “The Problematic Nature of Civil Penalties in the Corporations Law” (1996) 14 C&SLJ 405; Gething M, “Do We Really Need Criminal and Civil Penalties for Contraventions of Directors’ Duties?” (1996) 24 ABLR 375 and Gilligan G, Bird H and Ramsay I, Research Report: Regulating Director’s Duties – How Effective are the Civil Penalty Sanctions in the Australian Corporations Law? (Centre for Corporate Law and Securities Regulation, The University of Melbourne,1999) Part III, pp 4-17.
[41] Cooney report, n 40, p 190.
[42] Cooney report, n 40, p 188.
[43] Cooney report, n 40, p 191.
[44] Cooney report, n 40, p 190.
[45] Fisse B and Braithwaite J, Corporations, Crime and Accountability (Cambridge University Press, Melbourne, 1993) pp 141-142. Braithwaite developed the core strategic concept of pyramidal enforcement: see Braithwaite J, To Punish or Persuade: Enforcement of Coal Mine Safety (State University of New York Press, Albany, 1985). It was later elaborated by Ayres I and Braithwaite J, Responsive Regulation: Transcending the Deregulation Debate ( Oxford University Press, New York, 1992).
[46] See Cooney report, n 40, p 190.
[47] Section 1311 Corporations Law, formerly s 570 Code established these sanctions. Criminal sanctions continue to be prescribed by
s 1311(2)-(3) Corporations Act, Schedule 3, Penalties, although the penalties have been increased. This is because of the Cooney Committee’s criticism of the level of fines. Breach of the directors’ duties provisions in s 232 Corporations Law, for instance, had exposed wrongdoers to a maximum penalty of $20,000 or imprisonment for five years or both. The Committee stated: “Penalties must suit the offence. They will have no deterrent value if their level is insufficient”, see Cooney report, n 40, p 191.
[48] See also discussion in Gilligan et al, n 40, p 8.
[49] These duties in the Corporations Law, s 232, were formerly found in the Code, s 229.
[50] See Cooney report, n 40, p 176.
[51] Cooney report, n 40, p 188.
[52] For the arguments of, eg, Professor Baxt, see Cooney report, n 40, p 189.
[53] Cooney report, n 40, p190. Fisse said: “The main trouble with the offence under s 229(2) as it now stands is that it is defined in terms of negligence rather than in terms of subjective blameworthiness. Generally speaking, the approach adopted in our system of criminal justice is to require proof of guilty intention, knowledge or recklessness, especially where the offence carries the possibility of a jail sentence. The sensible course, in my opinion, would be to redefine the offence under s 229(2) accordingly. Thus criminal law for breaches of s 229(2) could be confined to situations where a corporate officer knows or is aware of the likelihood that his or her conduct falls short of the standard of care expected. This approach would make the offence narrower in scope and yet would retain liability in the worst instances of violation”.
[54] Cooney report, n 40, p 190.
[55] Cooney report, n 40, p 80.
[56] Cooney report, n 40, pp 190-191.
[57] See also Bird, n 40, p 410.
[58] Part 9.4B contained detailed provisions to ensure that a person who contravened a civil penalty provision would be punished only once for the contravention whether by criminal sanction or civil penalty: Corporations Law, s 1317FB; ss 1317GA-1317GL. In particular, where civil penalty proceedings were instituted for contravention of a civil penalty provision, this precluded later criminal proceedings (irrespective of the outcome of the civil penalty proceedings): s 1317FB. The reverse was not the case: ss 1317GC-1317GD.
[59] See Bird, n 40, p 411.
[60] Bird, n 40, p 411. See also Dellit C and Fisse B, “Civil and Criminal Liability under Australian Securities Regulation: The Possibility of Strategic Enforcement” in Walker G and Fisse B (eds), Securities Regulation in Australia and New Zealand (Oxford University Press, Auckland, 1994) p 588. This chapter was not retained in the later 1998 edition. The required election by ASIC to pursue either criminal or civil proceedings weakened ASIC’s ability to operate as a “benign big gun” in securing enforcement by co-operation. It removed criminal sanctions as an additional deterrent threat if ASIC opted to take the civil route. Pursuit of criminal penalties in Part 9.4B was possible only if an additional evidentiary burden was satisfied. (Under s 1317FA Corporations Law, a person who contravened a civil penalty provision was guilty of an offence if that person contravened the provision knowingly, intentionally or recklessly and (i) was dishonest and intended to gain an advantage or (ii) intended to deceive or defraud someone). The reduced opportunity for criminal convictions lessened the deterrent value of criminal sanctions: see also Mann K, “Punitive Civil Sanctions: The Middleground Between Criminal and Civil Law” (1992) 10 The Yale Law Journal 1795 at 1845.
[61] See Bird, n 40, p 405. In addition to structural weaknesses, Bird blamed the uncertainty surrounding the evidentiary requirements for proceedings under Part 9.4B, particularly problems of interpretation of the directors’ duties provisions in s 232 Corporations Law, and time delays in ASIC prosecution activity for the failure of Part 9.4B to operate effectively, see pp 413- 420. See also Gilligan et al, n 40, pp 51-52, 55 and 57, whose report found that lack of clarity in s 232 Corporations Law and delays caused enforcement problems.
[62] Bird, n 40.
[63] Gilligan et al, n 40.
[64] For statistical evidence, see Bird, n 40, pp 420-427. The statistical analysis presented by Bird relies upon the annual Litigation Reports in the ASIC Digest (1991-1995) - a compilation of literature produced by ASIC on its activities under the Corporations Act and other national legislation, including Litigation Reports in both numerical and descriptive forms and on the ASIC Annual Reports covering the periods 1 June 1991 to 30 June 1995.
[65] See Gilligan et al, n 40, pp vii, 23-24.
[66] The CLERP Act was passed in October 1999 and became operative in March 2000.
[67] Under s 1317P Corporations Act criminal proceedings can now be brought against a person who has previously been the subject of civil proceedings. Evidence used in any civil proceedings is not admissible in criminal proceedings if the conduct alleged to constitute the offence is substantially the same as the conduct which gave rise to the civil proceedings: s 1317Q.
[68] Part 9.4B now deals only with civil penalties. Criminal sanctions remain, but are contained in the substantive provisions of the Corporations Act, eg, the new s 184 deals with criminal breaches of the statutory duties of corporate officers and s 1311 provides a general penalty provision.

[69] See discussion, nn 12 and 14.
[70] Welsh M, “Eleven years on- An examination of ASIC’s use of an expanding civil penalty regime” (2004) 17 Aust Jnl of Corp Law 175 at 187 and Table 1, “Number of civil penalty applications issued by ASIC by year” at 193. Table 1 contains a breakdown of the number of civil penalty proceedings issued by ASIC per year until the end of May 2004. The data has been taken from ASIC media releases. Table 2 at 194, sets out the “No of applications by ASIC alleging contraventions of specific provisions”. While the application of the civil penalty regime has been expanded to include other provisions of the Corporations Act, the vast majority of the applications (23 out of 25) allege a breach of directors’ duty or insolvent trading provisions. For a detailed discussion of ASIC’s enforcement patterns generally, see Bird H, Chow D, Lenne J and Ramsay I, Research Report: ASIC Enforcement Patterns (Centre for Corporate Law and Securities Regulation, The University of Melbourne, 2003).
[71] That case was the application issued against Nicholas Whitlam, see Welsh, n 70 at 190. See also Table 3 “ASIC’s success rate- civil penalty orders obtained” at 194 and Table 4, “ASIC’s success rate- Contraventions established and orders obtained” at 195. Table 4 sets out a more detailed consideration of the applications and shows that, of the 13 out of the 19 matters which were finalised where the details of the alleged contraventions and orders sought were available, all contraventions alleged were established in 11 of these cases and in 8 cases, all of the civil penalty orders that ASIC sought were obtained.
[72] Welsh, n 70, p 190.
[73] Welsh, n 70, p 188.
[74] [2004] HCA 42; (2004) 78 ALJR 1354; 209 ALR 271 (HC of A, Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ, Kirby J dissenting).
[75] In reaching their decision, the majority relied on the fact that Parliament had not excluded common law rights in the case of company officers in relation to discovery in civil penalty proceedings: see [2004] HCA 42; (2004) 78 ALJR 1354 at 1360. The author argues that Parliament must act to remedy the position by removing this common law right.
[76] Civil libertarians would undoubtedly argue, however, that no one should be compelled to expose themselves to penalties.
[77] [2004] HCA 42; (2004) 78 ALJR 1354 at 1381.
[78] [2004] HCA 42; (2004) 78 ALJR 1354 at 1375.
[79] Despite the expectation that the hearings in front of Justice Robert Austin of the NSW Supreme Court which began in September 2004 would have concluded by Christmas of that year, they only finished in August 2006, where the court has yet to hand down its judgment. Indeed, there were difficulties for ASIC, which led to further delays in its long-running case against these defendants. After Rich filed a 511-page statement in his defence, plus 233 pages for Silbermann, and another 8,977 pages of related information in March 2006, Austin J announced that he was forced to hold off the restart of hearings until 5 June 2006. This was to allow ASIC’s barristers to check recollections with the many reported participants in phone calls with Rich, where much of Rich’s statement was comprised of his recollections of phone calls with directors, colleagues and One.Tel staff. It is also significant that the case cost ASIC an estimated $20 million up until that time, which was before Rich and Silbermann had actually had their defences tested in court and where it had twice been granted special funding by the Treasurer to keep running the case. Rich’s legal costs, on the other hand, were reported to be approximately $11 million at that time: see Main A, ‘One.Tel: from Rich dream to costly nightmare’, AFR, 29 May 2006, p 6.
[80] See earlier discussion at n 9.
[81] See, eg, Braithwaite J, “The limits of Economism in Controlling Harmful Corporate Conduct”, (1981-82) 16 Law & Society Review 481.
[82] See Baucus and Dworkin, n 9, pp 237-238.
[83] Bentham J, An Introduction to the Principles of Morals and Legislation with an introduction by Lafleur LJ (Hafner Publishing Co, New York, 1948).
[84] See Guy, ‘Jury’s still out on Enron’s impact’, n 17 and discussion at n 19. Besides Skilling, other shamed former chief executives include WorldCom chief executive Bernie Ebbers who will probably die in jail after being sentenced to twenty-five years, John Rigas, founder of cable group Adelphia, sentenced to fifteen years and former Tyco chief, Kozlowski who will spend a minimum of eight years in jail, see earlier discussion at n 16.
[85] For a discussion of the criminalising of the corporate control process in the US, as well as, a critical examination of that process, see Simpson S, Corporate Crime, Law, and Social Control ( Cambridge University Press, New York, 2002).
[86] See Samuel G, ‘Cartels, criminal penalties and the leniency policy’, Paper, presented at the International Competition Enforcement Conference, Tokyo, 21 April 2005, see ACCC website <www.accc.gov.au> viewed on 11 January 2006.
[87] These penalties are found in the TPA, ss 76 (1A) and (1B).
[88] For a discussion of some recent examples of cartels against which the ACCC has successfully taken action, including the power transformer cartel where record penalties of $ 35 million were awarded against the companies and senior officers involved, see Samuel, n 86.
[89] The ‘Dawson Report’ released in April 2003 and the Federal Government’s Response are available on the Treasury website, see <www.treasury.gov.au> viewed on 11 January 2006.
[90] Samuel, n 86.
[91] Samuel, n 86.
[92] See Kohler A, ‘As Barnaby plays political twister, risk lies in monopolies’, 15 October, The Age, p 1.
[93] The new regime will permit companies to seek approval for mergers directly from the Australian Competition Tribunal, rather than the current process which requires informal or formal approval from the ACCC before an appeal to the court. Importantly, the ACCC will have the right to appear as a party to those tribunal proceedings.
[94] See Crowe D, ‘Surprise go-ahead for merger law reform’, AFR, 19 October 2006, p 3.
[95] See ‘ACCC sets sights on price fixing cartels’, Interview by Stephen Long, ABC Finance Correspondent, with Samuel, 22 December 2005, Australian Broadcasting Corporation Transcripts, accessed via 2006 Dow Jones Reuters Business Interactive LLC (trading as Factiva) on 11 January 2006.
[96] In December 2005, the ACCC instituted proceedings against Visy Industries Holdings Pty Ltd, Visy Industries Australia Pty Ltd and Visy Board Pty Ltd. Proceedings have also been brought against Richard Pratt, Chairman of the Visy Group, Harry Debney, the Chief Executive Officer of the Visy Group and Rod Carroll, the former General Manager of Visy Board for allegedly being knowingly concerned in or party to the contravening conduct by the Visy respondents with the potential for up to $ 427 million in penalties, more than ten times the largest amount awarded in a trade practices case in Australia. The ACCC alleges that the respondents engaged in conduct in the corrugated fibreboard container industry that was anti-competitive, including engaging in price-fixing and market sharing, in contravention of s 45 of the TPA. It also alleges that between 2000 and late 2004, the Visy respondents entered into and gave effect to anti-competitive arrangements with Amcor Ltd in the supply, throughout Australia, of corrugated fibreboard containers: see “Proceedings instituted against Visy group, senior executives for alleged cartel in the corrugated fibreboard container market’, ACCC Media Release 327/05, 21 December 2005.
[97] Samuel, n 86.
[98] Samuel, n 86.
[99] Samuel, n 86.
[100] The ACCC leniency policy, now superseded by the ACCC immunity policy for cartel conduct, was released in 2003 and can be viewed on the ACCC website. That policy, which offered immunity for cartel participants who blew the whistle on cartels, was subject to conditions. It was only available if those seeking leniency, eg, gave full and frank disclosure, co-operated fully, expeditiously and continuously with the ACCC and were first through the door. The current ACCC immunity policy, which was released on 26 August 2005, can also be viewed on the ACCC website. The latter policy was created to provide even greater certainty for immunity applicants by providing full immunity with the aim of enabling the ACCC to better detect and break up hard –core cartels.
[101] See ACCC Media Release, n 96. However, the recent allegations of former Amcor executive Jim Hodgson, who is suing the company for unfair dismissal should be noted. He has claimed that in March 2000, Amcor Australia boss, Peter Brown, planned a meeting with Visy Chief Executive, Harry Debney, to discuss pricing in the corrugated box sector. “The allegation flies in the face of Amcor’s claims that the cartel was initiated by Visy and throws doubt on the board’s decision to blow the whistle on the cartel to gain immunity”: see Lee T, ‘Insider claims Amcor spied on greenies’, AFR, 3 October 2006.
[102] See, eg, Myer R, ‘Visy and Pratt to face court’, The Age, 22 December 2005, p1.
[103] See, eg, Bartholomeusz S, ‘Samuel’s credibility on the line’, The Western Australian, 22 December 2005, p 50.

[104] See Crowe D, ‘ACCC extends prison terms for executives’, AFR, 2 November 2005, pp 1 and 8. This shift in enforcement policy does not rely on new laws and is not based on the cartel laws. Instead, it makes stronger use of existing trade practices legislation, which includes rarely used provisions for criminal action. The criminal prosecutions would be based on, eg, TPA, s 155, which empowers the commission to issue formal subpoenas and force individuals to provide information or give evidence under oath, but see s 155(7) on the inadmissibility in evidence in criminal proceedings against the person, which may cause problems.
[105] See Sexton E, ‘Canberra tackles Hardie ruse’, AFR, 19 October 2005, pp 19-20.
[106] National Textiles came under intense scrutiny in January 2000, after it went into voluntary administration owing former employees in excess of $11million in accrued entitlements.
[107] See Sexton, n 105.
[108] See Simpson, n 85, p 2. She explains that while corporate sanctions often include a criminal element, research shows that in the past, civil and administrative remedies have been the preferred method of pursuing corporate violators, eg, Richard Posner’s study in the antitrust area for the period 1890 to 1969: Posner R, “A Statistical Study of Antitrust Enforcement” (1970) 13 Journal of Law and Economics 385.
[109] See earlier discussion at n 5. See also Hawkins K, Environment and Enforcement: Regulation and the Social Definition of Pollution (Clarendon Press, Oxford, 1984), pp 12-13. Importantly, Keith Hawkins discusses the lack of a ‘moral mandate’ as a crucial problem of enforcement for regulatory agencies and their staffs, because ‘their authority is not secured on a perceived moral and political consensus about the ills they seek to control’, which he argues threatens the legitimacy of the regulator as an enforcement authority. He compares water pollution control, the subject of his study with that of the police to make the point that, in pollution control work “there is none of the sacredness of the policing of the traditional code...” and also that, “it is more difficult to dramatise the threat of pollution than to portray the symbolic assaults on the community from criminals, addicts, vandals, and other sinister figures on the fringe of the moral order”. Despite this problem, however, in the US, there has been a shift towards criminalising a number of environmental statutes to increase both the number of criminal cases pursued by the Environmental Protection Agency (EPA) and to achieve more punitive outcomes, see discussion at n 85.
[110] See earlier discussion at n 7.
[111] See Justice, Breaking the Rules (Justice, London, 1980), p 6.
[112] Hawkins, n 109.
[113] Hawkins, n 109, p 8. See also earlier discussion above, Strategic regulation theory and pyramidal enforcement. Strategic regulation theory forms part of the sociological theories of regulation.
[114] Hawkins, n 109, p 205.
[115] See discussion at n 12.
[116] HIH is the only high profile case to date in which both civil penalty and criminal proceedings have been brought, although this has occurred in some other less publicised cases, including Harris Scarfe and Clifford Corporation Limited Group. ASIC’s investigation into the collapse of Harris Scarfe in 2001 resulted in criminal charges being laid against the company’s former Chairman, Adam Trescowthick, Chief Operating Officer, Daniel Mc Laughlin and Chief Financial Officer, Alan Hodgson. Hodgson has since been jailed for six years, while prosecutions of the other defendants are proceeding: see Drummond M, ‘Scarfe action settled’, AFR, 13 October 2006, p 16.
[117] See ‘HIH Insurance Investigation’, ASIC Media Release 01-152, 16 May 2001, Statement by David Knott, then Chairman, ASIC. Until its collapse in March 2001 with a A$5.3 billion shortfall, HIH was Australia’s second largest general insurance company.
[118] See HIH Royal Commission website<www.hihroyalcom.gov.au> viewed on 10 August 2005. In its three-volume report published in April 2003, the HIH Royal Commission, eg, recommended that Fodera be investigated on eleven different issues, the most of any executive at the commission, for possible civil and criminal charges.
[119] The four criminal charges against Adler were: two counts of disseminating information on 19 and 20 June 2000, knowing it was false in a material particular and which was likely to induce the purchase by other persons of shares in HIH contrary to Corporations Act, s 999; one count of obtaining money by false or misleading statements, contrary to Crimes Act 1900 (NSW), s 178BB; and one count of being intentionally dishonest and failing to discharge his duties as a director of HIH in good faith and in the best interests of that company contrary to Corporations Act, s 184(1)(b).
[120] See ‘Rodney Adler sentenced to four-and-half years’ jail’, ASIC Media Release 05-91, 14 April 2005 (emphasis added). See also R v Adler [2005] NSWSC 274; (2005) 53 ACSR 471 and Adler v R [2006] NSWCCA 158; (2006) 57 ACSR 675, where Adler’s appeal against this sentence was dismissed by the NSW Court of Criminal Appeal.
[121] William’s non-parole period is slightly longer because he is serving cumulative sentences, whereas Adler’s are concurrent.
[122] The three criminal charges against Williams were that he was reckless and failed to properly exercise his powers and discharge his duties for a proper purpose as a director of HIH when, on 19 October, he signed a letter that was misleading; that he authorised the issue of a prospectus by HIH on 26 October 1998 that contained a material omission; and that he made or authorised a statement in the 1998-99 Annual Report, which he knew to be misleading, that overstated the operating profit before abnormal items and income tax by $92.4 million: see ‘Ray Williams sentenced to four-and-a-half years’ jail’ ASIC Media Release 05-94, 15 April 2005. See also R v Williams [2005] NSWSC 315; (2005) 216 ALR 113.

[123] See ASIC Media Release, n 122 (emphasis added).
[124] William Howard, a former senior executive of HIH, had also been convicted in the NSW Supreme Court on 23 December 2003 on two counts of criminal conduct under s 184 (2) of the Corporations Act and sentenced to a total term of three years imprisonment, but his prison sentence was fully suspended because of his undertakings to provide the prosecution with assistance in the future: see ‘Former HIH executive sentenced’, ASIC Media Release 03-416, 23 December 2003.
[125] See ‘Former HIH managing director jailed’, ASIC Media Release 05-108, 29 April 2005. In sentencing Cassidy to only fifteen months, to be released on 28 February 2006 after serving ten months, Wood J of the Supreme Court recognised the assistance that he has, and will continue to provide to ASIC during the course of its investigations just as the assistance that Howard would provide was recognised by Kirby J in fully suspending his prison sentence.
[126] See Main A, ‘Cooper joins HIH mates behind bars’, AFR, 1 November 2005, pp1 and 4. Interestingly, Cooper is the first defendant who has pleaded not guilty to go down before a jury, unlike Charles Abbott, the former Deputy Chairman of HIH. In June 2005, Abbott walked free from the District Court in Sydney after a magistrate found that there was insufficient evidence to justify a trial. The criminal charge against Abbott was that the day before HIH went into liquidation, he had dishonestly used his position as a director to procure a payment to a company associated with him, namely Ashkirk Pty Limited: see ‘Charge dismissed against Charles Abbott’, ASIC Media Release 05-151, 7 June 2005. It is also interesting, that Howard provided evidence, which was instrumental in ASIC’s successful prosecution of Cooper lending credence to Jan Redfern’s comment, that “to get convictions, we need whistleblowers and informants”. Jan Redfern, who is Executive Director, Enforcement of ASIC, made this comment when she presented a paper, ‘ASIC and Enforcement’, at the ‘Directors’ Duties: Recent Developments and Their Implications for Directors and Advisors’ Centre for Corporate Law and Securities Regulation Seminar, Melbourne, 4 August 2004.
[127] See ‘Bradley cooper sentenced to eight years’ jail’, ASIC Media Release 06-210, 23 June 2006.
[128] See Main A, ‘Cooper gets eight years for bribes’, The Weekend AFR, 24-25 June 2006, pp 1 and 3.
[129] See ‘Former FAI financial controller pleads guilty’, ASIC Media Release 06-177, 2 June 2006.
[130] See ‘Another HIH guilty plea’, ASIC Media Release 06-220, 4 July 2006.
[131] The prosecutions against former FAI executives, Daniel Wilkie, Timothy Mainprize and Stephen Burroughs, however, concluded with their acquittal on 14 November 2005: see ‘FAI officers acquitted’, ASIC Media Release 05-357, 14 November 2005. On 22 November 2005, fresh charges were laid against Wilkie along with Ashraf Kamha and Boulden, former officers of FAIG: see ‘ASIC lays charges against FAI officers’, ASIC Media Release 05-363, 22 November 2005. To date, only the proceedings against Boulden have been finalised, although he still awaits sentencing, see discussion at n 129.
[132] See discussion above at nn 32-35.
[133] See ‘Rodney Adler sentenced to four-and-a-half years’ jail’, ASIC Media Release 05-91, 14 April 2005.
[134] See ASIC Media Release, n 2.
[135] See Speedy B, ‘Vizard denies inside trading confession’, The Australian, 18 July 2005, p 29.
[136] See Johnston E, ‘Disgraced director Vizard ‘motivated by greed’’, AFR, 22 July 2005, p 1. It was because of Vizard’s admission and contrition, that ASIC requested just a five-year ban on managing companies and $390,000 in fines from Federal Court judge Ray Finkelstein, who heard Vizard’s case, compared to what would otherwise be recommended- up to $525,000 in fines and a seven-to- twelve-year ban.
[137] See Speedy, n 135.
[138] See Hewett J, ‘Two men and a case to answer’, AFR, 23-24 July, p 20. The DPP would not prosecute Vizard in the absence of a signed witness statement from his accountant, Greg Lay, who refused to provide one. This is despite the fact that Lay had already given sworn evidence to ASIC concerning Vizard’s insider trading activities and could have been compelled to testify against Vizard- although not himself- under the ASIC Act 2001 (Cth), s 19.
[139] See ASIC News, “Yannon too hard: ASIC bows out” (2000) 1 Australian Corporations Law- Bulletin, 14 January 2000 <http://online.butterworths.com .> viewed on 21 March 2000.
[140] Ferguson A, “The Watchdog No One Fears” BRW, 1 September 2000, p 58. The cover story discussed a number of high profile ASIC investigations, including the Yannon case, which were embarrassing for ASIC and undermined its credibility.
[141] See, eg, Chanticleer, ‘Vizard makes a mockery of ASIC’, AFR, 22 April 2005, p 76.
[142] ‘Steve Vizard banned for 10 years and fined $390,000’, ASIC Media Release 05-215, 28 July 2005.
[143] See Mc Cullough J, ‘One law for rich, another for richer’, The Courier Mail, 30-31 July 2005, p 27.
[144] [2004] HCA 42; (2004) 78 ALJR 1354; 209 ALR 271.
[145] Vizard testified that he trusted Hilliard with his financial affairs, and alleged the bookkeeper embezzled the money by writing unauthorised cheques on his companies’ accounts. Hilliard has claimed that he was acting on Vizard’s instructions to set up a secret stash of cash for his former boss: see, eg, Glyas R, ‘Back off’ on Vizard accounts, The Australian, 9 September 2006. See also Binnie C, ‘Bank in awe of Vizard: former manager’, The Courier Mail, 1 August 2005, p 2, for some interesting comments made by Vizard’s former bank manager on Westpac’s eagerness to pay Vizard the $2.8 million he claimed was stolen from his accounts that, his bosses “appeared to be influenced by Vizard’s celebrity status and power”.
[146] See Johnston E and Phillips, ‘Lay links Vizard to hidden share deals’, The Weekend AFR, 9-10 September 2006, p 3.
[147] Ibid.
[148] See discussion at n 138.
[149] See discussion at n 134.
[150] See Drummond M, ‘Vizard urges resolution of Hilliard perjury matter’, The Weekend AFR, 9-10 June 2006, p 4.
[151] See ‘Antony Oates pleads guilty to criminal charges’, ASIC Media Release 05-201, 18 July 2005. Initially, in January 1995, Oates was charged with 17 offences, but in return for his agreement not to contest the 3 criminal charges to which he pleaded guilty, the other 12 charges relating to the demise of the Bond group of companies were dropped. Two charges had also been dropped because of the Polish Statute of Limitations. See also Chenworth N and Main A, ‘The good times are over for Bond’s money man’, AFR, 19 July 2005, p 54, who discuss how Oates always insisted on his innocence- until now, finding his claim ‘remarkable’ in his trial in 2004 that he, as finance manager of Bond Corporation, did not have an intimate knowledge of the relevant transactions.
[152] Oates was sentenced in September 2005 to 40 months’ jail. However, he walked free from Perth’s Hakea prison on 9 September, 2005, only two days after his sentencing. This was because Western Australian sentencing laws permit offenders sentenced for less than four years to serve a minimum period of 50% of their sentence and Oates had been held in custody for more than 20 months: see Cheesman B, ‘Fraudster Oates out on parole’, AFR, 10-11 September 2005, p 4.
[153] See Cheesman, n 151.
[154] See Pheasant B, ‘Bond Corp fraud: Oates pleads guilty at last’, AFR, 19 July 2005, p 9.
[155] See Chenworth and Main , n 151. Hall made this statement to the jury in Oates’ 2004 aborted trial in the WA Supreme Court.