If Commissioner Cole does recommend
criminal charges against AWB, it may well constitute the first instance of a
corporation being held criminally liable under Australian law for maintaining a
criminogenic corporate culture.

It appears likely that AWB will be charged
with breaching the anti-bribery offence, bought in by an amendment to the
Commonwealth Criminal Code Act in
1999. Under that same Criminal Code
, a company can be made criminally liable in two ways – either by proving
criminal actions were carried out on its behalf by the board of directors or
high management, or by proving that the company maintained a criminogenic
corporate culture (that is, a culture where compliance with the criminal law was
not ensured.)

Liability on the basis of corporate culture
is a relatively new development in Australian criminal law, introduced in
commonwealth legislation in 1995. That legislation constituted a radical
departure from the days of only holding companies liable if fault could be
directly attributed to high management.

The introduction of these laws in Australia
was partly in deference to society’s concerns that, in the face of disasters or
scandals involving large, unwieldy corporations, the criminal law was impotent.
If no one individual could be found criminally liable, the company could get off
scot-free even if the cause of the disaster or scandal was organisational
failure bought on by poor management. It also recognises that today’s
corporations are increasingly vast and complex with much discretion in the hands
of middle and lower management.

And so while AWB directors may feign
ignorance to save their own behinds, this strategy should be of little comfort
to AWB shareholders if AWB finds itself in the dock some time soon. And AWB
shareholders may well feel discomfort – one criticism of the Criminal Code Act is that by holding
companies criminally liable, it is ultimately the innocent shareholders who
suffer if the company must pay substantial fines.

While it may well be that
those who benefit from wrongdoing must also be prepared to incur the costs,
there is little to suggest AWB shareholders could have possibly
protected themselves against the risks of the grubby corporate culture festering
in Ceres House.

Commissioner Cole should keep this in mind – if some kind of
moral retribution is sought from the inquiry, any prosecution may well be better
placed concentrating on pursuing individual rather than corporate liability.

PS. Re: Friday’s article on AWB’s potential criminal penalties (April 28 Item 5). The
maximum penalty for a company breaching anti-bribery offences (under
division 70 in the schedule of the Criminal Code Act 1995 (Cth) –
amended in 1999 to include the anti-bribery offence) is in fact
$330,000 per offence, not $65,000 as the article suggested. This is
because the penalty imposed is ten years prison, however, under s.4B of
the Crimes Act 1914, this can be translated into a pecuniary penalty.
For individuals that penalty can be calculated by multiplying the
maximum prison term in months by five, equal to the number of penalty
points which at the moment are $110 per point. For a corporate body,
the maximum fine is five times the maximum for a natural person.

Peter Fray

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