In 2019, the Attorney-General of Australia, the Hon Christian Porter MP, asked the ALRC to undertake a comprehensive review of the Commonwealth corporate criminal responsibility regime, emphasising the need for effective law to hold corporations to account for criminal misconduct. This report outlines the findings from that review.
The Australian Law Reform Commission (ALRC) was also asked to review Commonwealth criminal procedure laws and rules as they apply to corporations, including the interaction between Commonwealth and state and territory criminal procedure laws, with a particular focus on committal hearings in criminal matters.
- Following the Financial Services Royal Commission in particular, there are widespread concerns that corporations, and senior officers within those corporations, are not adequately held to account for serious corporate misconduct. While further data is required to thoroughly assess the validity of those concerns it is true that prosecutions of corporations, relative to individuals, are extremely rare, even in heavily regulated sectors where corporations are most active.
- Prosecutors withdraw a significantly higher number of charges against corporations than they withdraw against individuals for corporate crimes. This suggests that existing laws present real difficulties for prosecuting corporations.
- An unsophisticated response, such as simply initiating more criminal prosecutions against corporations, is not the solution. Instead, the ALRC has endeavoured to understand why there are so few prosecutions against corporations. The ALRC has examined the fundamental principles underpinning the regulation of corporations, and the proper role of the criminal law.
- For corporations, regulators, investigators, and prosecutors, there is significant complexity in the Commonwealth legislative landscape. Despite the emphasis on civil enforcement, there has been a proliferation of criminal offences applicable to corporations. The ALRC has identified over 3100 offences across the 25 Commonwealth statutes most relevant to corporate misconduct. The unnecessary complexity and over particularisation of offence provisions may enable misconduct to go unchecked.
- There is concern that the paucity of corporate criminal prosecutions, and regulators’ frequent reliance on civil penalty provisions, have led to a mindset that the penalties imposed are little more than a cost of doing business.