Criminals face loss of shares
The Sunday Telegraph
By chief writer NATHAN VASS
03feb02
COMPANIES convicted of serious crimes will be forced to hand over shares to compensate their victims under new moves to fight corporate misconduct.
Courts will also be given the power to order corporations to publish advertisements owning up to their criminal actions to shame them.
And judges could soon brandish a new "corporate death penalty", allowing them to wind up companies convicted of the most heinous of crimes.
Attorney-General Bob Debus said yesterday the NSW Government was committed to ensuring corporate criminals faced stiff penalties when they broke the law.
The changes, which the Government is considering making law this year, follow recommendations from the State's peak legal advisory body, the Law Reform Commission.
"The law applies equally to all – from individuals to large companies – and major corporations are not above the law," Mr Debus told The Sunday Telegraph.
"Appropriate sentencing for corporate criminals is a serious issue for the whole community."
The commission has urged the Government to get tough on corporate offenders, saying white-collar crime can cause great community harm.
"In the area of workplace safety, for example, there was a total of 163 employment fatalities in NSW 163 employment fatalities in NSW in 1998-99 and 55,492 injuries," the commission said in a new report to the Government.
"The gross incurred cost of employment injuries for that year was $854 million.
"The potential for both economic and physical harm caused by a corporation is great."
The Government will strengthen courts' powers to deal with misconduct such as environmental pollution, dangerous workplace practices, fair trading breaches, poor building and construction standards and unhealthy food preparation.
The commission has told the Government that cash fines – the most common penalty used by the courts – are not taken seriously by big companies.
"Fines trivialise the gravity of corporate crime," the commission said.
"They convey the message to the community that corporate crime is less serious than other crime and that corporations can buy their way out of trouble."
Commission executive director Peter Hennessy said companies could even "budget" to pay a fine, figuring such a penalty was a cheap way to illegally achieve an objective.
But so-called "equity fines" – under which the company issues shares to the victims' compensation fund – would hurt a corporation much more.
"An equity fine is much more related to the value of the company than a cash fine, which is a risk a firm can build into its day to day activities," Mr Hennessy said.
"Human life can be at stake and environmental devastation can take generations to restore.
"This is about fostering better corporate behaviour, making good corporate citizens."
The commission said "shame" advertisements would "inflict a loss of corporate prestige" which is so highly valued by many major firms.
"The shame generated by negative publicity punishes the offending corporation and deters it from reoffending," the commission report said.
Other new powers would allow courts to wind up businesses in extreme cases of misconduct. In the past, courts have only been able to close down insolvent businesses.
Courts could also order firms to cease trading temporarily or send in "probation officers" to ensure the company has improved its performance.
Community service orders could also be made against firms forcing them to "undertake a socially useful project involving a commitment of their time, effort and skills".
Opposition leader Kerry Chikarovski said: "We believe the judiciary should have the ability to creatively punish corporate criminals.
"Corporate Australia must realise it has to behave responsibly and not be dismissive of community expectations."