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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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Mojtaba Khamenei named Iran’s new supreme leader after death of Ali Khamenei

Iran’s Assembly of Experts has selected Mojtaba Khamenei as the country’s new supreme leader following the death of Ali Khamenei amid escalating regional conflict.

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Mojtaba Khamenei has been appointed the new Supreme Leader of Iran, replacing his father Ali Khamenei, according to state media reports.

The decision was taken by the Assembly of Experts, an 88-member council responsible for selecting the country’s supreme leader. The body said it had chosen Mojtaba Khamenei through a decisive vote, naming him the third leader of the Islamic Republic.

Mojtaba Khamenei, a mid-ranking cleric with strong connections within Iran’s security establishment, had long been seen as a potential successor to his father. His influence within the powerful Revolutionary Guards and networks associated with his father’s office had made him a prominent figure in Iran’s political structure.

His appointment comes amid a sharp escalation in tensions in the region. Ali Khamenei was reportedly killed in strikes carried out during the ongoing conflict involving Iran, the United States and Israel. The situation has led to rising hostilities and military exchanges in recent days.

The role of supreme leader in Iran carries ultimate authority over key state institutions, including the military, judiciary and major political decisions.

The development may further strain relations between Tehran and Washington. Donald Trump recently said the United States should have a say in who leads Iran, a remark likely to draw criticism from Iranian authorities.

Meanwhile, fighting linked to the conflict has continued across the region. Strikes targeting infrastructure in Tehran have caused fires at fuel facilities, sending thick smoke into the sky and raising environmental concerns.

Iranian officials have condemned the attacks as dangerous escalation, while Israeli authorities have defended the strikes, saying the targeted facilities were connected to Iran’s military operations.

As the conflict continues, Iran’s new leadership now faces the challenge of navigating both internal political pressures and rising regional tensions.

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India says it never depended on permission to import Russian oil

India says it continues to import Russian oil based on competitive pricing and national interest, while energy supplies remain stable despite global tensions.

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India on Saturday reiterated that it has never relied on permission from any country to purchase Russian oil, even as the United States recently issued a temporary waiver allowing certain shipments to continue.

The Centre said India’s energy strategy remains focused on securing crude oil at the most competitive prices while maintaining stable supplies despite rising tensions in global shipping routes.

India continues Russian oil imports

According to the government, India continues to import Russian crude and has done so consistently throughout the Russia-Ukraine conflict.

Officials said Russia remains India’s largest crude oil supplier, with imports rising significantly after 2022 due to discounted prices and the demand from domestic refineries.

“India has never depended on permission from any country to buy Russian oil,” the Centre said in a statement, adding that purchases are based on affordability and national interest.

Energy supplies remain secure

The government said India’s energy supply remains stable despite disruptions along the Strait of Hormuz route amid tensions linked to the Iran-US-Israel conflict.

To strengthen energy security, India has expanded its crude oil sourcing network from 27 countries to 40 countries, creating multiple supply options.

The Centre also said the country currently holds more than 250 million barrels of crude oil and petroleum products across its reserves and supply chain. This stockpile provides a buffer equivalent to around seven to eight weeks of consumption.

India’s refining capacity stands at 258 million metric tonnes per annum, which the government said exceeds current domestic demand.

US waiver and global oil market volatility

The United States on Thursday temporarily eased sanctions on Russia to allow oil already loaded on vessels at sea to be sold to India.

Officials in New Delhi said describing the waiver as enabling such purchases overlooks the fact that the trade has continued for years.

“India is a net exporter of refined products to the world — a position that reinforces, not undermines, its energy security,” the Centre said.

Meanwhile, tensions in the Middle East have affected global oil markets. Military actions involving the United States and Israel against Iran, along with retaliatory strikes by Tehran across the Gulf region, have disrupted shipping routes and energy flows.

Global oil prices surged 8.5 per cent on Friday and had climbed nearly 30 per cent over the previous week, following remarks by US President Donald Trump that the conflict would end only with Iran’s “unconditional surrender”.

Earlier in February, Washington removed a 25 per cent tariff on Indian exports under an interim trade agreement. The US administration said the decision followed a commitment by India to halt Russian oil purchases. However, no such commitment appears in the joint statement issued at the time, and the Indian government has not confirmed or denied the claim.

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Trump’s handling of India ties a major mistake, says former Australia PM Tony Abbott

Former Australian prime minister Tony Abbott says Donald Trump’s tariffs and engagement with Pakistan leadership unnecessarily strained relations with India.

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Former Australian prime minister Tony Abbott has said that one of the biggest mistakes made by US President Donald Trump so far has been the way he handled relations with India.

Speaking in an interview with media, Abbott said he does not fully support Trump’s foreign policy approach and highlighted several steps that, in his view, unnecessarily strained ties with New Delhi.

Abbott said these included the imposition of punitive tariffs on Indian goods, claims by Trump that he had mediated tensions between India and Pakistan, and the hosting of Pakistan’s army chief Asim Munir at the White House.

According to Abbott, these actions “gratuitously alienated” India, particularly given New Delhi’s longstanding concerns about terrorism originating from Pakistan.

Tariff dispute and trade deal

Tensions between the United States and India had earlier escalated after Washington imposed 25 per cent reciprocal tariffs on several Indian products. An additional 25 per cent levy was also linked to India’s continued purchases of Russian oil.

However, a trade agreement announced by Trump in February signalled a partial easing of those tensions. Under the arrangement, the US reduced tariffs on several Indian goods.

Trump said the decision followed a commitment from Prime Minister Narendra Modi to halt purchases of oil from Russia while the war in Ukraine continued.

The agreement helped ease months of friction between the two countries over energy purchases, which Washington had argued were helping fund the ongoing conflict.

Trump has also repeatedly referred to his close personal ties with Modi, describing the Indian leader as one of his greatest friends.

Abbott comments on Middle East conflict

Abbott also spoke about the uncertainty surrounding the ongoing conflict involving Iran, Israel and the United States.

He said it was impossible to predict whether the situation would lead to a regime change in Tehran, noting that the current leadership still enjoys support among sections of the Iranian population.

At the same time, Abbott suggested that the weakening of Iran’s nuclear capabilities could significantly limit the country’s ability to project aggression in the future.

He also said the intensity of the conflict could gradually decline.

According to Abbott, Iranian attacks had already reduced compared to earlier phases of the conflict, while Israeli and American strikes had intensified and largely focused on regime facilities rather than civilian infrastructure.

Fresh attacks reported

In the hours following his remarks, Iran launched new missiles and drones targeting Israel and several Gulf countries hosting US military bases.

Explosions were reported inside Israel as air defence systems intercepted incoming projectiles.

Countries including the United Arab Emirates, Kuwait, Qatar, Bahrain and Saudi Arabia also reported attacks.

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