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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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Azerbaijan plane crash sparks speculation of missile strike

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Wreckage of Azerbaijan Airlines plane with visible damage near Aqtau, Kazakhstan

An Azerbaijan Airlines Embraer 190 jet, which crashed near Aqtau in Kazakhstan on Christmas Day, has raised questions about a possible accidental strike by a Russian missile. The flight was en route from Baku to Grozny, Russia, when it went down, killing 38 of the 67 people on board. Among the survivors were two young girls, aged 11 and 16.

Investigation points to missile damage

Aviation and military experts have suggested that the crash may have been caused by a surface-to-air missile or anti-aircraft fire. Reports from media outlets such as the Wall Street Journal and Euronews highlighted shrapnel-like damage to the plane’s fuselage and tail section, consistent with missile strikes.

Footage shared online showed holes resembling shrapnel marks, adding weight to this theory. Matt Borie, Chief Intelligence Officer at Osprey Flight Solutions, told the Journal that the wreckage and security conditions in the region suggest the aircraft may have been hit by anti-aircraft fire.

The crash occurred in an area where Ukrainian drone activity had been reported. Grozny, the destination city, is heavily guarded by Russian anti-aircraft systems due to the ongoing conflict with Ukraine.

Survivors report explosions

Passengers seated in the tail section of the plane, where all survivors were located, reported hearing loud explosions shortly after the plane’s request to land at Grozny airport was denied. Visuals captured the aircraft struggling to maintain altitude before crashing into a field about three kilometers from Aqtau airport.

Azerbaijan Airlines initially attributed the crash to a bird strike but later withdrew this claim. The plane’s black box has been recovered, and investigators will examine flight data and cockpit recordings for further insights.

Potential precedent

If a Russian missile is confirmed as the cause, this would mark the second time a commercial plane has been shot down in the region. In 2014, Malaysian Airlines flight MH-17 was downed by a Russian-made missile over eastern Ukraine, killing all on board.

Official responses

Kazakh officials, including Senate Speaker Maulen Ashimbayev, have urged patience until the investigation concludes, stressing that no party has an interest in concealing information. Kremlin spokesperson Dmitry Peskov condemned premature speculation.

National mourning in Azerbaijan

Azerbaijan President Ilham Aliyev declared a national day of mourning and canceled a planned visit to Russia. In a statement, Aliyev expressed condolences to the victims’ families and called for a thorough investigation.

As the investigation continues, questions remain about the safety of civilian aircraft in a region embroiled in conflict.

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Washington Sundar’s inclusion in the fourth Test: Will he make a significant impact for India?

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Washington Sundar

Washington Sundar has been thrust into the spotlight once again as he made his return to India’s playing XI for the fourth Test against Australia at the Melbourne Cricket Ground. His inclusion, which came at the expense of Shubman Gill, has sparked a flurry of discussions, both on social media and among cricket experts, about his role in the team, his credentials as an all-rounder, and what his performance will mean for India’s chances in the ongoing Border-Gavaskar Trophy.

Sundar, who has previously impressed with his all-round abilities, has had a tumultuous journey with the Indian cricket team, especially in the Test format. Known for his ability to bowl tight off-spin and contribute with the bat, Sundar’s most memorable performance came in India’s historic win over Australia in the 2020-21 series. However, it is his return to the Test squad for this high-profile series that has gotten the cricket world talking.

His inclusion comes in the wake of Ravichandran Ashwin’s retirement from limited-overs cricket and his exclusion from the playing XI in the first few Tests of the series. With Ashwin’s absence, Sundar was given an opportunity to step into the spin department alongside Ravindra Jadeja, especially after a stellar performance against New Zealand earlier this year. Sundar claimed seven wickets in a single innings during that match, putting in a performance that elevated his reputation as a reliable bowling option. This made his re-entry into the squad even more anticipated, with many hoping for him to make an immediate impact.

However, while Sundar’s return has been welcomed by many, not all are convinced about his role as an all-rounder in the traditional sense. Former cricketer Sanjay Manjrekar, known for his insightful commentary, expressed his doubts over Sundar’s credentials as an all-rounder, suggesting that the young player’s contributions with the bat and ball have not always been consistent enough to fulfill the high expectations that come with such a role. Manjrekar also included Nitish Reddy in his criticism, questioning whether both players could truly fulfill the versatile role needed in modern Test cricket.

For Sundar, however, his performance will likely speak louder than any criticism. The pressure on him to perform in a Test series as crucial as this one against Australia is immense, and many eyes will be on him to prove his worth. With the likes of Marnus Labuschagne, Usman Khawaja, and Steve Smith in Australia’s formidable lineup, Sundar’s ability to deliver with the ball could be pivotal in the context of the game.

Despite the debate, Sundar’s skills as a bowler have been widely recognized. His calm demeanor and knack for bowling tight lines have helped him earn the confidence of the Indian team management. What sets him apart is his maturity at a young age, especially in pressure situations. Though his batting has not always been as consistent as his bowling, his ability to contribute with the bat adds another dimension to his utility in the team.

The 24-year-old has made his way through the ranks, and this series offers him another chance to prove his mettle. His role in the ongoing series could prove vital, particularly in India’s bid to retain the Border-Gavaskar Trophy. If Sundar can deliver with both bat and ball, he could become a regular feature in the Indian Test team, solidifying his position as a key all-rounder in the squad.

With the series tied and both teams fighting hard for supremacy, Sundar’s performance could be a game-changer for India. His return is symbolic not just of the changes in the Indian squad but of the continued shift towards integrating youth and fresh talent into the team. As the series progresses, all eyes will be on Sundar, who now faces the challenge of turning potential into performance and answering the critics who have questioned his place in the Test team.

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India fight back as Australia take the edge on Day 1 of Boxing Day Test

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Day 1 of the fourth Test between India and Australia at the iconic Melbourne Cricket Ground saw Australia end the day at 311/6, holding a slight advantage despite a spirited Indian fightback led by Jasprit Bumrah.

Steve Smith, steady as ever, remained unbeaten on 68, joined by Pat Cummins (8*) at the crease. The day belonged to Australia’s batting lineup, which delivered a solid performance on a favorable pitch.

Debutant Sam Konstas was the highlight of the Australian innings, crafting an impressive 60 runs in his first Test appearance. The 19-year-old showcased maturity beyond his years, dispatching the Indian bowlers with confidence. His knock complemented the contributions from Usman Khawaja (57) and Marnus Labuschagne (72), who anchored Australia’s innings with composed fifties.

India’s bowling unit, spearheaded by the ever-reliable Jasprit Bumrah, kept the visitors in the contest. Bumrah’s figures of 3/75 reflected his knack for breaking partnerships at crucial moments. Supporting him, Ravindra Jadeja, Washington Sundar, and Akash Deep each claimed a wicket to prevent Australia from running away with the game.

Australia’s playing XI featured a formidable lineup, including skipper Pat Cummins, Mitchell Starc, and spinner Nathan Lyon. India fielded an interesting combination, with Rohit Sharma leading a side that featured young talents like Yashasvi Jaiswal and Nitish Kumar Reddy alongside experienced campaigners Virat Kohli and Rishabh Pant.

As Day 1 concluded, the match remained finely poised. While Australia’s top order laid a strong foundation, India’s bowling ensured they stayed in contention, setting the stage for an intriguing Day 2 of the Boxing Day Test in the Border-Gavaskar Trophy 2024/25.

The stakes remain high as both teams seek to assert dominance in this crucial encounter.

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