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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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Kremlin denies US media reports on Donald Trump’s phone call with Vladimir Putin

Donald Trump said on the campaign trail that he could end the fighting within hours and has indicated he would talk directly with Russian President Putin.

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Kremlin denies US media reports on Donald Trump’s phone call with Vladimir Putin

The Kremlin today denied a US media report that Russian President Vladimir Putin and US president-elect Donald Trump had spoken on the phone last week about the Ukraine conflict.

Earlier on Sunday, The Washington Post reported that Donald Trump spoke to Vladimir Pution on call, urging him not to inflame the conflict. Speaking on the matter, Kremlin spokesman Dmitry Peskov told the media that the report was completely false information, and denied any phone call took place.

It was reported that US President-elect Donald Trump has spoken to Russian President Vladimir Putin and urged him not to escalate the war in Ukraine. It said that Donald Trump held the call from his Mar-a-Lago estate in Florida on Thursday, just days after his stunning election victory over Democratic rival Kamala Harris. The report also mentioned that both the leaders expressed an interest in further conversations to discuss the resolution of Ukraine’s war soon.

Notably, Donald Trump said on the campaign trail that he could end the fighting within hours and has indicated he would talk directly with Russian President Putin. However, the US President elect has not said how he intends to strike a peace deal or what terms he is proposing.

Donald Trump’s election is seen as carrying the potential to upend the almost three-year Ukraine conflict, as he insists on a quick end to the fighting and casts doubt on Washington’s multi-billion dollar support for Kyiv.

Meanwhile, Ukrainian President Volodymyr Zelensky spoke with Trump on Wednesday, with the Republican’s billionaire backer Elon Musk also notably joining them on the call. Volodymyr Zelensky described the call as excellent, adding that he and Trump had agreed to maintain close dialogue and advance our cooperation.

Additionally, the outgoing Democratic administration of President Joe Biden has confirmed that it will send as much aid as possible to Ukraine before Trump’s inauguration on January 20.

Joe Biden’s National Security Advisor Jake Sullivan said the White House aims to put Ukraine in the strongest possible position on the battlefield so that it is ultimately in the strongest possible position at the negotiating table.

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India calls out Canada’s move to ban Australia Today for airing S Jaishankar’s press conference

The MEA said that these actions yet again highlight the hypocrisy of Canada towards freedom of speech.

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India calls out Canada’s move to ban Australia Today for airing S Jaishankar's press conference

A few hours after Australia Today aired External Affairs Minister S Jaishankar’s press conference in Australia, Canada banned the outlet. The External Affairs Minister gave remarks on the India-Canada diplomatic standoff. 

Reacting to this, India on Thursday said it was surprised by Canada’s move to ban the outlet and emphasized that it highlighted Ottawa’s hypocrisy towards freedom of speech. Australia Today, which is an important outlet for the Indian community in the country, had aired the joint press conference of S Jaishankar and his Australian counterpart Penny Wong in Canberra.

In a weekly media briefing, MEA spokesperson Randhir Jaiswal said that they understand that the social media handles, pages of this particular outlet, which is an important diaspora outlet, have been blocked and are not available for viewers in Canada. He continued that this happened just an hour or a few hours after this particular handle carried the press conference of S Jaishankar with Penny Wong. He called out the incident, mentioning that they are surprised, and the matter looks strange to them.

He further underlined that these are the actions which yet again highlight the hypocrisy of Canada towards freedom of speech. He noted that the External Affairs Minister spoke about three things: Canada making allegations and a pattern had developed without any specific evidence, surveillance of Indian diplomats in Canada, which he termed as unacceptable, and  the political space which has been given in Canada to anti-India elements. 

With this one can draw conclusions, why Australia Today channel was blocked by Canada, the spokesperson said. Australia Today focuses on news and analytical pieces related to the Indian community in Australia and elsewhere across the world.

This incident follows days after devotees were attacked by pro-Khalistani at a Hindu temple in Canada’s Brampton, with S Jaishankar calling it deeply concerning. Furthermore, Prime Minister Narendra Modi also condemned the attack and said that there were cowardly attempts to intimidate Indian diplomats.

The diplomatic standoff between India and Canada began in September last year when Canadian Prime Minister Justin Trudeau alleged that Indian government agents might have been involved in the killing of Khalistani terrorist Hardeep Singh Nijjar, a claim outrightly rejected by New Delhi.

Later in October 2024, ties between both the countries nosedived when Canada termed the Indian High Commissioner a person of interest in its investigation into Nijjar’s murder. Issuing a strongly worded statement, India dismissed the fresh charge and recalled the envoy and some diplomats, while expelling six Canadian officials, including Canada’s acting High Commissioner.

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PM Modi congratulates Donald Trump on winning US President election

The Prime Minister urged Trump to work for the betterment of the people and to promote global peace, stability and prosperity.

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Prime Minister Narendra Modi on Wednesday congratulated Donald Trump on winning the 2024 US Presidential election and said he is looking forward to renewing their collaboration to further strengthen the India-US partnership.

The Prime Minister urged Trump to work for the betterment of the people and to promote global peace, stability and prosperity.

“Heartiest congratulations my friend @realDonaldTrump on your historic election victory. As you build on the successes of your previous term, I look forward to renewing our collaboration to further strengthen the India-US Comprehensive Global and Strategic Partnership. Together, let’s work for the betterment of our people and to promote global peace, stability and prosperity,” PM Modi posted on his X handle.

With the results being announced for the 2024 US election on November 6, Trump became the 47th President of the United States.

Former US President Trump appeared to be on track for a remarkable political comeback in the White House race. Projections suggested that he was poised to secure the necessary 270 electoral college votes, effectively blocking Democratic candidate Kamala Harris from winning the election.

The relationship between Trump and Modi has been characterised by robust diplomatic ties, strategic collaboration, and a noticeable personal rapport. Their friendship was prominently displayed during major events such as “Howdy, Modi” in Houston in 2019 and “Namaste Trump” in Ahmedabad in 2020, where they addressed large audiences and expressed their mutual respect.

On a strategic level, Trump and Modi found common ground in matters of defense and security, both adopting a strong stance against terrorism, which reinforced their alliance, particularly concerning threats from Pakistan.

As he approaches a notable victory in the US election, Republican Presidential candidate Trump expressed gratitude to his supporters today, calling it a magnificent victory for the American people. He also referenced the assassination attempt on July 13, stating, “God spared my life for a reason.”

The 78-year-old candidate is currently projected to secure 267 electoral college votes, just three shy of the decisive 270, while his opponent, incumbent Vice President Kamala Harris, holds 224 electoral votes.

Trump described the Republican campaign as the greatest political movement of all time, asserting, “We are going to help our country heal, secure our borders, and we made history for a reason tonight. This is an incredible political victory. I want to thank the American people. I will fight for you and your family with every breath I have.”

He noted that Democrats are now looking at a projected total of 315 electoral votes.

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