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Westpac’s scandal highlights a system failing to deter corporate wrongdoing

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Elise Bant, University of Melbourne and Jeannie Marie Paterson, University of Melbourne

The news that Australia’s anti money-laundering regulator has accused Westpac of breaching the law on 23 million occasions points to the prospect that powerful members of corporate Australia are still behaving badly.

This despite the clear lessons offered by the Banking Royal Commission.

Regulators are still struggling to find the right balance between pursuing wrongdoers through the courts – an admittedly costly, time-consuming and highly risky business – and finding other means to punish and deter misconduct.

Australia’s anti money-laundering regulator, AUSTRAC, is seeking penalties against Westpac in the Federal Court.

Each of the bank’s alleged contraventions attracts a civil penalty of up to A$21 million. In theory, that could equate to a fine in the region of A$391 trillion.
In practice, it is likely to be a mere fraction of that sum. Commonwealth Bank breached anti-money-laundering laws and faced a theoretical maximum fine of nearly A$1 trillion, but settled for A$700 million.

No doubt the reality that companies can minimise penalties is a factor in why breaches continue.

This impression is reinforced by revelations last week that financial services company AMP continued to charge fees to its dead clients despite the shellacking it received at the hands of the royal commission.

Last month a Federal Court judge refused to approve a A$75 million fine agreed between the Australian Competition and Consumer Commission and Volkswagen to settle litigation over the car company’s conduct in cheating emissions tests for diesel vehicles. The judge was reported to be “outraged” by the settlement, which meant Volkswagen did not admit liability for its misconduct.

The A$75 million is a drop in the ocean of the likely profits obtained from this systemic wrongdoing and pales into insignificance next to fines imposed in other countries.

Proposals for law reform

So business as usual, right?

Maybe not for long. The Australian Law Reform Commission has just released a discussion paper on corporate criminal responsibility.

It points out that effective punishment and deterrence of serious criminal and civil misconduct by corporations in Australia is undermined by a combination of factors.

These include a confusing and inconsistent web of laws governing the circumstances in which conduct is “attributed” to the company. Similar problems of inconsistency arguably also undermine other key areas, such as efforts to give courts the power to impose hefty fines based on the profits obtained by the wrongdoing

The repeated attempts to come up with new and more effective attribution rules arise because corporate wrongdoers are “artificial people”. For centuries, courts and parliaments have struggled with how to make them pay for what is done by their human managers, employees and (both human and corporate) agents. All too often a company’s directors disclaim all knowledge of the wrongdoing.

To fix this, the ALRC recommends having one single method to attribute responsibility. It builds on the attribution rule first developed in the Trade Practices Act 1974 (Cth) and now used, in various forms, across various statutes.

The ALRC proposes that the conduct and state of mind of any “associates” (whether natural individuals or other corporations) acting on behalf of the corporation should be attributable to the corporation.

This goes well beyond the traditional focus on directors and senior managers and would provide some welcome consistency in the law.

Importantly, serious criminal and civil breaches that require proof of a dishonest or highly culpable corporate “state of mind” can be satisfied either by proving the state of mind of the “associate” or that the company “authorised or permitted” the conduct.

A “due diligence” defence would protect the corporation from liability where the misconduct was truly attributable to rogue “bad apples” in an otherwise a well-run organisation. There would be no protection in the case of widespread “system errors” and “administrative failures” so pathetically admitted during the royal commission.

The ALRC also proposes that senior officers be liable for the conduct of corporations where they are in “a position to influence the relevant conduct and failed to take reasonable steps to prevent a contravention or offence”.

This would place the onus on those in a position to change egregious corporate practices to show they took reasonable steps to do so.

Removing the penalty ceiling

These recommendations, if adopted could prove a game-changer for regulators asking themselves “why not litigate?” and corporations used to managing the fall-out of their misconduct as simply a “cost of business”.

The ALRC’s recommendations that the criminal and civil penalties should be enough to ensure corporations don’t profit from wrongdoing will be welcomed by many. Some academics have gone further and argued that the law should be changed to make it clear that civil, not just criminal penalties, should be set at a level that is effective to punish serious wrongdoing.

The ALRC also raises the question whether current limits on penalties should be removed. The Westpac scenario might be just the kind of case to make that option attractive.The Conversation

Elise Bant, Professor of Law, University of Melbourne and Jeannie Marie Paterson, Professor of Law, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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PM Modi receives Ethiopia’s highest civilian honour, first world leader to get award

PM Modi has become the first global leader to be awarded Ethiopia’s highest civilian honour for strengthening bilateral ties and global leadership.

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PM modi Ethiopias highest civillian award

Prime Minister Narendra Modi on Tuesday was conferred with ‘The Great Honour Nishan of Ethiopia’, the highest national award of the African nation, becoming the first head of government or state globally to receive the honour.

The award was presented during a special ceremony held at the Addis International Convention Centre, where Ethiopian Prime Minister Abiy Ahmed Ali honoured Modi for his role in strengthening bilateral relations between India and Ethiopia and for his leadership on global issues.

Recognition of India-Ethiopia partnership

According to an official statement, the honour recognises Prime Minister Modi’s contribution to deepening the long-standing partnership between the two countries and his engagement with issues concerning the Global South. The conferment is being seen as a milestone in India-Ethiopia relations and reflects the growing diplomatic and development cooperation between the two nations.

Prime Minister Modi acknowledged the award and dedicated it to the people of India. In a post on X, he said he was honoured to receive Ethiopia’s highest recognition and attributed it to the collective strength and aspirations of 140 crore Indians.

‘Accepted with humility and gratitude’

Speaking at the ceremony, Prime Minister Modi said it was a privilege to accept the honour from one of the world’s most ancient civilisations. He expressed humility and gratitude while thanking Prime Minister Abiy Ahmed and the people of Ethiopia for the recognition.

He also praised the Ethiopian Prime Minister’s leadership and initiatives aimed at promoting national unity, sustainability and inclusive development. Highlighting the role of knowledge and education in nation-building, Modi noted that Indian teachers have been contributing to Ethiopia’s progress for more than a century.

The Prime Minister dedicated the award to both Indians and Ethiopians who have nurtured bilateral ties over generations and conveyed appreciation on behalf of India’s population for the honour bestowed upon him.

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Trump administration expands US travel ban to 20 more countries, Palestinians also affected

The Trump administration has widened its travel ban, adding 20 more countries and fully restricting entry for Palestinians, citing security and vetting concerns.

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The Trump administration has widened its travel restrictions, adding 20 more countries to the existing list and imposing a complete ban on travel for people holding documents issued by the Palestinian Authority. The decision significantly expands the scope of the travel limits announced earlier this year and will come into force from January 1.

According to the proclamation issued on Tuesday, the latest move doubles the number of nations impacted by US travel and immigration restrictions. Five additional countries now face a full ban, while 15 others have been placed under partial restrictions. The administration said the measures apply to both visitors and those seeking to immigrate to the United States.

Countries facing full travel ban

The newly added countries under the full ban include Burkina Faso, Mali, Niger, South Sudan and Syria. In addition, people travelling on Palestinian Authority-issued passports or documents have been fully barred from entering or emigrating to the US. South Sudan had already been subject to significant restrictions before this announcement.

Earlier, the administration had imposed a complete ban on travellers from Afghanistan, Myanmar, Chad, the Republic of Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan and Yemen.

15 countries under partial restrictions

The list of countries now facing partial travel restrictions includes Angola, Antigua and Barbuda, Benin, Ivory Coast, Dominica, Gabon, Gambia, Malawi, Mauritania, Nigeria, Senegal, Tanzania, Tonga, Zambia and Zimbabwe.

These join the earlier partially restricted countries such as Burundi, Cuba, Laos, Sierra Leone, Togo, Turkmenistan and Venezuela. The administration also said restrictions on Laos and Sierra Leone have been upgraded, while some limits on Turkmenistan have been eased after an improvement in vetting standards.

Who is exempt from the restrictions

The proclamation clarifies that certain categories of travellers are exempt. These include people who already hold valid US visas, lawful permanent residents, diplomats, athletes, and individuals whose entry is considered to be in the national interest of the United States.

Reasons cited by the administration

The US administration said many of the affected countries suffer from widespread corruption, unreliable civil documents and weak criminal record systems, making proper vetting difficult. It also pointed to high visa overstay rates, refusal by some governments to accept deported nationals, and broader concerns related to immigration enforcement, foreign policy and national security.

The expansion follows the arrest of an Afghan national accused in the shooting of two National Guard troops near the White House during the Thanksgiving weekend. The accused has pleaded not guilty to murder and assault charges.

Criticism and concerns over Afghan visas

The decision has drawn criticism from rights groups and immigration advocates, who argue that national security is being used to justify broad restrictions on entire populations. Concerns have also been raised over the removal of an exception for Afghans eligible for the Special Immigrant Visa, a category meant for those who assisted US forces during the war in Afghanistan.

Advocacy groups said these individuals undergo extensive vetting and that restricting their entry could undermine commitments made by the United States.

New restrictions on Palestinians

The full ban on people holding Palestinian Authority passports marks a further tightening of restrictions imposed earlier, which had already made it extremely difficult for Palestinians to travel to the US for work, education, business or tourism. The administration justified the move by citing the presence of US-designated terrorist groups in the West Bank and Gaza, as well as challenges in vetting due to ongoing conflict.

Governments of some newly affected countries said they were reviewing the decision and seeking clarity from US officials on the implications of the restrictions.

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Luthra brothers deported from Thailand in Goa nightclub fire case

The Luthra brothers, owners of the Goa nightclub where a fire killed 25 people, have been deported from Thailand and are returning to India.

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Saurabh and Gaurav Luthra, the owners of a Goa nightclub where a massive fire led to the deaths of 25 people, have been deported from Thailand and are on their way back to India. The two brothers boarded a flight to India after Thai authorities sent them back from Bangkok.

According to information available, the Luthra brothers had left the country within hours of the tragic incident and travelled to Thailand’s Phuket. At the time the fire broke out at the Goa nightclub, both Saurabh and Gaurav Luthra were in Delhi.

The fire at the club triggered widespread outrage and raised serious questions over safety measures at nightlife venues in Goa. The incident resulted in the deaths of 25 people, making it one of the deadliest nightclub fires in the state.

After their departure from India soon after the tragedy, the whereabouts of the club owners became a key focus of the investigation. Their deportation from Thailand and return to India is seen as a significant development in the case related to the deadly fire.

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