Prof Warwick Sarre1, Prof Liz Campbell1
1University Of South Australia, Adelaide, Australia,
2Monash University, Melbourne, Australia
Part 2.5 of the Commonwealth Criminal Code 1995 in Australia allows prosecutors to highlight a poor corporate culture as a means of providing the required evidence to charge and convict corporations if they have allegedly engaged in criminal conduct such as corporate manslaughter. But this bold wording does not apply to finance offences by virtue of a specific exclusion in Chapter 7 of the Corporations Act 2001.
This means that individual directors or senior managers, even if they presided over a rotten corporate culture that allowed egregious financial dealings to occur, are not covered by the ‘culture’ part of the Code in respect of such offences. The most significant federal statutes relating to organisational wrongdoing explicitly exclude the operation of Part 2.5, thereby watering down the relevance of the corporate culture provisions.
One must now ask, in the light of Hayne Royal Commission Final Report: Why should the linking of a rotten corporate culture to the criminal responsibility of corporate directors, which so enlivened the Criminal Code in 1995, be unavailable to prosecutors in relation to the offences committed by those in the financial services sector? What benefits would accrue from the extension of the corporate culture mechanism to such financial and corporate crimes? Is this a reform that ought to be explored by law-makers? This paper explores each of these questions in detail.
Rick Sarre is the Dean of the Law School at the University of South Australia. Liz Campbell is the Francine McNiff Chair of Criminal Jurisprudence at Monash University.