Crikey correspondent Terry Maher wrote the first book on Bondy and laments how Australia’s ridiculous legal system allowed our biggest corporate crook to get away with it.
Like Kerry Packer, I used to think you only get one Alan Bond in your life and I’ve already had mine. Unlike Paul Barry (who is being paid $200,000 a year to spruik his new book on the front pages of the Age and the SMH), I won’t be writing another book on Bond because frankly, I don’t think anyone is interested in dredging through the minutia of a 12-year-old crime – even if it was the biggest in Australian corporate history.
What I am interested in is reading Bond’s own account of how he got away with it and where he stashed the loot. This should make fascinating reading because Bond will not be able to contain his hubris at having single-handedly defeated, in slow progression, the WA Companies Office, the National Companies and Securities Commission and now the Australian Securities and Investments Commission, during a 40-year life of corporate crime.
The importance of Alan Bond to corporate regulation and shareholder protection is making sure he, or someone of his ilk and disposition, doesn’t happen again. Throughout his colorful corporate career, Bondy showed nothing but contempt for corporate rules and regulations. He treated shareholders’ assets as if they were his own. Even now, he is probably telling friends (and he’s got mobs of them in Perth) at the Blue Duck Cafe in Cottesloe that he only “borrowed” the $1.2 billion from Bell Resources in 1988 and that he had every intention of giving it back when his boat came in.
A New Alan Bond is a lot more dangerous proposition today than the Old Alan Bond of last century for three reasons:
– Privatisations and demutualisations have created a much vaster and, more gullible, shareholding public. In fact, Australia has passed Canada with the highest level of shareownership. A sea of new faces is just the sort of environment that a shark like Bondy loves to operate in.
– We are going through an amazing sharemarket boom at the moment. The bubbledot-com boom is starting to make the Poseidon boom of the late 60s look like small beer. It is feed by mutual funds, gripped by greed and controlled only by avarice. Every time Bondy went down in the 1960s, 70s, 80s and 90s, he always bounced back with a new boom. The bubbledot-com boom is designer-made for the New Alan Bond.
– Bondy’s release from Karnet Prison Farm on Thursday was based on a High Court technicality that casts serious doubts on the ability of the Federal Government to control corporate regulation, competition policy and consumer protection through a range of co-operative federal schemes. High Court judge Michael Kirby has described these unintended gaps in legislation as having “grostesque complications” for corporate regulation. So, just when we thought it was safe to go back into the water because the Alan Bonds of this world couldn’t get away with Greedy Eighties crimes in the 21st century we find out that we are less protected than ever before in the Naughty Noughties. Are we about to slip back into what Bentham called “the dark chaos of Common Law.”
Once again, Alan Bond has shown us the way to rort the system. Perhaps you do get two Alan Bonds in your lifetime, after all. Karl Marx, who was hardly the father of shareholder protection, once said: “Historical phenomena always happen twice – the first time as tragedy, the second as farce.”
The “technicality” that sprung Bondy from Karnet Prison is called a nolle prosequi. What the High Court’s Gleeson CJ, Gaudron, McHugh, Gummow, Kirby and Hayne JJ found was that, under the Constitution, the Commonwealth DPP “did not have the power or authority to institute the appeal against the sentence (Bond’s initial sentence of four years under the WA Companies Code)? and that the appeal was invalid and incompetent.” The JJs asked themselves this rhetorical constitutional curler: “Can one integer of the Federation unilaterally vest functions in officers of another integer of the Federation?”
There was also an element of double jeopardy in Bond’s appeal that did not rely on this constitutional technicality and will probably prevent him being jailed again for the same crime. The High Court said a prosecution against a sentence put “in jeopardy for a second time the (convict’s) freedom beyond the sentence imposed.”
So Bondy got off fair and square because the system is buggered. On December 4, 1996 he (and Peter Mitchell) pleaded guilty to two counts of offences against the then WA Companies Code. That between 29/10/88 and 29/4/89, Bond and Peter Mitchell with intent to defraud Freefold Pty Ltd and its shareholders “had failed to act honestly in the exercise of their powers and the discharge of their duties.”
The charges were brought to court by the WA DPP at the behest of the then National Companies and Securities Commission that then ran the co-operative scheme known as the Uniform Companies Act. The State Code was repealed on 1/1/91 and replaced by the new Corporations Law run by the Australian Securities and Investments Commission but it is still a co-operative scheme in certain aspects. Because the $1,200,000,000 theft took place before the Corporations Law came in they had to be charged under the old State law. So when the Commonwealth DPP appealed the leniency of the original four-year sentence on 21/2/97 and it was extended to seven-years on 22/9/97, Bondy had the beginnings of his nolle prosequi and his double jeopardy. Had the appeal been brought by the WA DPP, there is little doubt that Bondy would still be behind bars at Karnet.
The precedent that exposed the “technicality” that gave Bondy his shot at freedom and helped blow the Corporations Law out of the water is known as Byrnes v. The Queen and Hopwood v. The Queen and was given a good run up the flagpole by the JJs of the High Court on August 12, last year. Basically, Byrnes and Hopwood were two relatively-small time South Australian businessmen who were convicted of offences against the SA Companies Code and fined in 1997. The Commonwealth DPP subsequently appealed and Byrnes and Hopwood were jailed.
Their lawyers were said to be intrigued by the combination of a federal prosecutor and state offences: “They entered the maze of corporate law created by a federation, with two sets of laws, and clever government lawyers working their way around High Court obstacles – and sometimes leaving gaps,” says Bernard Lane, the Australian’s High Court correspondent. The High Court agreed, Justice Kirby talked about “the grotesque complications” and Bond’s Melbourne lawyer Melasecca “Zyg” Zayler began the special leave to appeal on “issues of considerable and general public importance” that led to Bond’s release last week.
But wait, there’s more! Although Bond was possibly one of the last challengers to get away with the Byrnes and Hopwood argument that relies on federal intervention to old companies code offences, lawyers say there is another legal monster lurking in “the dark chaos of Common Law” that has even far-greater implications for the modern Corporations Law, the State-based co-operative regime that replaced the companies codes.
Craig Allen Hughes, a Perth company director, was charged in 1997 with offences under Corporations Law. Lawyers say that if Hughes challenge to the High Court succeeds, federal prosecutors may be unable to prosecute Corporations Law offences. Then where would we be to deal with the new Alan Bonds of this world?
I have included the High Court summary of the Hughes case below because the future of investor protection may depend upon it:
HUGHES v. THE QUEEN (P58/1999)
Order for Removal: 20 October 1999
By indictment dated 15 July 1997, the Commonwealth Director of Public Prosecutions commenced proceedings in the District Court of Western Australia against the defendant and another. The indictment alleged breaches of the Corporations Law. The trial was listed for hearing on 8 December 1998 at which time the presiding District Court Judge amended the allegations in the counts. In the course of pre-trial argument, counsel for the prosecutor submitted that the provisions of the Criminal Code (WA) did not apply to the conduct of the trial, as the offences before the Court were Commonwealth offences.
By notice of motion dated 23 August 1999, the defendant applied to Healy DCJ to quash the indictment on the grounds that it failed to disclose an offence against the laws of the Commonwealth or an offence against the laws of Western Australia. It was submitted on behalf of the defendant that the application involved a matter arising under the Constitution or involving its interpretation and accordingly notices pursuant to s78B of the Judiciary Act 1903 were required. His Honour accepted this submission and vacated the trial date to enable the defendant to bring an application under s40 of the Judiciary Act 1903 for removal into the High Court of Australia of so much of the cause as is involved in the defendant’s motion to quash the indictment.
On 20 October 1999 the High Court ordered the removal of that part of the proceedings pending in the District Court of Western Australia.
On 29 November 1999 Justice Gummow stated a case for the consideration of the Full Court, raising the following questions:
(i) Is s45 of the Corporations Act 1989 (Cth) (“the Principal Act”) as amended by s4(1) of the Corporations Legislation Amendment Act 1990 (Cth) a valid exercise of legislative power of the Commonwealth of Australia in so far as, with respect to Western Australia, it purports to require offences to be ” taken to be ” offences against the “laws of the Commonwealth”?
(ii) If yes, against which laws of the Commonwealth are the offences alleged in the indictment committed?
(iii) Is s43(2) of the Principal Act a valid and effective conferral of function or power upon ” an officer or authority of the Commonwealth ” to prosecute offences against the Corporations Law of Western Australia.
(iv) Is s29 of the Corporations (Western Australia) Act 1990 (“the State Act”) a valid exercise of the legislative power of the Parliament of Western Australia in so far as it purports to create offences which are “taken to be”
offences against the laws of the Commonwealth?
(v) If offences by the State Act are “taken to be” offences against the laws of the Commonwealth, against which laws of the Commonwealth are the offences alleged in the indictment committed?
(vi) Are offences which, by the State Act, are “taken to be” offences against the laws of the Commonwealth, offences against the laws of the Commonwealth or offences against the laws of Western Australia?
(vii) Do ss31 and 33 of the State Act constitute a valid and effective conferral of function or power upon ” an officer or authority of the Commonwealth ” to prosecute offences against the Corporations Law of Western Australia?
(viii) By what legislative authority is the Commonwealth Director of Public Prosecutions empowered to exercise the purported conferral, pursuant to ss31 and 33 of the State Act, of function or power to prosecute offences against the Corporations Law of Western Australia?
(ix) Does the indictment in the matter herein disclose an offence known to the law of:
(a) The Commonwealth?
(b) The State of Western Australia?
(c) The Australian Capital Territory?
The Attorneys-General of the Commonwealth, Victoria and Western Australia will intervene in this matter.
You bet they will.
When I sat in Perth Central Criminal Court on August 20 1996 and saw Alan Bond sentenced to three years jailed for the La Promenade fraud, I thought I would never see his type and times again. But this Hughes case could be start of a whole new cowboy culture for the corporate regulators to deal with. Let’s hope not.