The corporate regulator says Australia is too soft on white
collar crime and that civil penalties here are a slap on the wrist compared to
other parts of the world.
In a major report comparing penalties, the Australian
Securities and Investments Commission (ASIC) says the rewards of corporate
crime can often outweigh light penalties.
"Clearly what we found was with criminal penalties, we're
reasonably consistent but in relation to civil and administrative penalties,
we're actually somewhat inconsistent," commission chairman Greg Medcraft told ABC's AM.
Mr Medcraft says one of the big problems for ASIC is that
penalties for corporate crime are often small in comparison to the proceeds of
the crime.
A recent example is the insider trading case against the
former Gunns chairman, John Gay.
"Often [internationally] the penalty is you get to
disgorge your financial gain and in fact the concept in many jurisdictions is
triple damages," Mr Medcraft said.
"You actually have a penalty that is three times your
gain and if you think about it, that is actually what having a deterrent is all
about is that if you wanted to consider breaking the law then there will be a
significant penalty."
The report suggests that access to disgorgement laws, which
allow the seizure of any ill-gotten gains of convicted corporate criminals,
would improve the situation.
"Frankly, if in fact you are considering whether to break
the law and it's a risk/reward decision, many people weigh up what the penalty
will be or may be versus the gains to be obtained," Mr Medcraft said.
"And you've actually got to incent the right behaviour
and those that intentionally break the law should be well aware that there's
going to be a significantly adverse outcome and they won't get a financial
gain.
"Now what we've got to have is penalties that actually
inject fear and that overcome that urge perhaps to break the law via
greed."
Currently the maximum civil penalty for crimes like insider
trading and market manipulation in Australia is around $200,000.
ASIC says in Canada the equivalent penalty is around $1
million, and in the United States the penalty is three times the profit gained
or loss avoided.
"What you have to do is have a system that makes it very
clear that if you cross the line, there will be significant penalties and I
think that is very important," Mr Medcraft said.
Mr Medcraft also confirmed ASIC is monitoring Leighton
Holdings amid reports the company is sitting on undisclosed write-downs of more
than $2 billion.
"Directors, under continuous disclosure, have an
obligation that if it is a material fact that would have a significant impact
on price or material impact on price, it is something that they need to
disclose," Mr Medcraft said.
"What we'll do is see how they approach that issue."
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