The Australian Securities and Investments Commission (ASIC) investigates and prosecutes certain strict liability criminal offences by directors before local and Magistrates’ courts across Australia. Until December 2011, ASIC made public the details of each successful case by periodically releasing conviction reports on its website and through media releases. In this paper, an analysis of the raw information in ASIC conviction reports for the five calendar years 2006 to 2010 is presented to provide statistical data on convictions and fines obtained by ASIC under its court-based enforcement activities, with an emphasis on insolvency offences. The analysis reveals that under its summary prosecution program, ASIC’s focus turned almost exclusively to insolvency crimes committed by directors of collapsed, insolvent companies, where they have failed to assist liquidators. The analysis reveals a trend toward fewer convictions (except in New South Wales) and smaller fines for these ‘fail-to-assist’ offences between 2006 and 2010.
This paper also provides background information about the traditional role played by insolvency practitioners in detecting corporate crime and assisting with prosecution, as well as the character and significance of summary insolvency offences. It suggests that prosecution of these summary insolvency offences may be important to the integrity of Australia’s regime of corporate insolvency law.
By arrangement with the Commonwealth Director of Public Prosecutions, ASIC is permitted to conduct its own prosecutions of what the Commonwealth Director of Public Prosecutions describes as minor regulatory offences against the Corporations Act 2001 (Cth) (the Act). Under this arrangement, ASIC commenced an expanded summary prosecutions program in 2002 and as part of this, received special funding for a Liquidator Assistance Program.
ASIC’s first report on the outcomes of these initiatives showed that most of the convictions achieved between 2002 and 2005 were in respect of offences relating to failure by company officers to assist insolvency practitioners (ASIC 2005). Analysis of similar ASIC reports since 2005 reveals that convictions for such insolvency offences now predominate. Further, analysis of these reports shows a reduction in the average fine being imposed by the courts, a fall in the actual number of defendants convicted and offence rates varying between jurisdictions.
The purpose of this scoping study is to analyse and document changes in the number of convictions achieved by ASIC for failure to assist-type insolvency offences identified during the liquidation process, to examine changes in the penalties awarded by the courts for such offences, to illuminate enforcement and prosecution action being taken in an area of white collar crime that is rarely discussed outside the insolvency industry and to point to the nature of the issues that should be examined through additional research.