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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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Khaleda son Tarique Rahman arrives to rapturous welcome in Bangladesh

Tarique Rahman returned to Bangladesh after 17 years and, in his first speech, invoked Martin Luther King while outlining what he called a plan for the country’s future.

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Khalida Zia son

Bangladesh Nationalist Party (BNP) acting chairman Tarique Rahman, who returned to Bangladesh on Thursday after 17 years in exile, outlined his political vision in his first public address, drawing a comparison with American civil rights leader Martin Luther King Jr.’s famous “I have a dream” speech.

Addressing a massive gathering in Dhaka, Rahman said that just as Martin Luther King spoke of a dream, he wished to speak of a concrete plan for Bangladesh. He referred to the country as “Beloved Bangladesh” and thanked party leaders, workers and citizens who stood by the BNP during his absence.

Rahman, the son of former President Ziaur Rahman and former Prime Minister Khaleda Zia, said that his plan would succeed only with public support and urged citizens to participate actively in nation-building.

Parallels drawn with 1971 and 2024 movements

In his speech, Rahman linked the 1971 Liberation War with the 2024 uprising against the government of former Prime Minister Sheikh Hasina. He said those who lost their lives in these movements should be honoured by building the country they had envisioned.

“We liberated Bangladesh in 1971, and we liberated it again in 2024,” he said, adding that the events of 2024 were about defending the country’s independence and sovereignty. He stressed the need to “repay the blood debt of the martyrs” through responsible governance.

Emphasis on tolerance, safety and economic rights

Touching upon Bangladesh’s social fabric, Rahman said the country belongs to everyone, irrespective of religion or geography, and underlined the importance of tolerance. He spoke about creating a safe environment where women, men and children can move freely without fear.

He also said the BNP would focus on peace, political reform and strengthening the economy. Referring to student leader Sharif Osman Hadi, Rahman said he had dreamt of a democratic Bangladesh and promised justice in connection with his killing, along with restoring people’s economic rights.

Call to youth and visit to Khaleda Zia

Rahman called upon the younger generation to take responsibility for development and stability, stressing that collective effort would be crucial to implementing his plan for Bangladesh.

After the address, he left to visit his ailing mother, Khaleda Zia, who is undergoing treatment at Evercare Hospital.

Rahman has been living in exile since 2008 following convictions in multiple corruption cases, which he has described as politically motivated. He has also alleged that the previous government attempted to assassinate him through torture.

With the Awami League barred from contesting elections, the political landscape has narrowed significantly. The BNP now holds a dominant position, and Rahman’s return has added fresh momentum and uncertainty to Bangladesh’s political future.

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Tarique Rahman returns to Dhaka after 17 years, massive crowd greets BNP leader

Tarique Rahman returned to Bangladesh after more than 17 years in exile, with thousands of BNP supporters gathering in Dhaka to welcome the party’s acting chairman.

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Tariq Rahman

Thousands of people poured onto the streets of Dhaka on Thursday as Bangladesh Nationalist Party (BNP) acting chairman Tarique Rahman returned to the country after more than 17 years in self-imposed exile in the United Kingdom. Rahman, who is the son of former prime minister Khaleda Zia, landed in the capital along with his wife Zubaida Rahman and daughter Zaima Rahman.

Supporters and party leaders marched from the Banani Airport Road towards Dhaka airport to welcome him, turning the stretch into a sea of BNP flags and slogans. Rahman was later escorted in a bulletproof vehicle as part of heightened security arrangements for his high-profile return.

Bulletproof convoy and reception in Purbachal

After arriving at the airport, Rahman was received by senior BNP leaders before heading to a large reception organised in the Purbachal area. Party workers and leaders lined both sides of the road to greet him during the journey. According to party expectations, a very large gathering assembled at the venue, where Rahman was scheduled to address supporters.

BNP leaders said only Rahman would speak at the event, while other senior figures remained present on the stage. His return is being closely watched as he has emerged as a key political figure ahead of Bangladesh’s upcoming general elections.

Visit to ailing mother and family residence

Following the public address, Rahman was expected to visit Evercare Hospital to meet his mother, former prime minister Khaleda Zia, who has been undergoing treatment there for over a month. After the hospital visit, the family was scheduled to go to Firoza, the Zia family residence in Gulshan.

Security across Dhaka was tightened during Rahman’s movement, with police deploying additional forces to prevent any untoward incident amid recent political tensions in the country.

Political backdrop of the return

Rahman’s return comes at a time when the BNP is seen to be gaining political ground following the ouster of former prime minister Sheikh Hasina in a student-led uprising last year. Surveys conducted in December indicate the BNP could secure the largest number of seats in the upcoming parliamentary elections, while other parties, including Islamist groups, are also in the fray.

Alongside political developments, personal reasons have also played a role in Rahman’s decision to return, particularly his mother’s prolonged illness, which party sources describe as a key factor behind the move.

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Bangladesh student leader killing sparks allegation against Yunus-led interim government over February polls

The killing of Bangladesh student leader Sharif Osman Hadi has led to protests and serious allegations against the Yunus-led interim government over the February national election.

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The killing of Bangladesh student leader Sharif Osman Hadi has triggered sharp political allegations, with his family accusing elements within the Muhammad Yunus-led interim government of attempting to derail the country’s upcoming national election scheduled for February.

Sharif Osman Hadi, spokesperson of Inquilab Moncho — a cultural platform that emerged from the July 2024 uprising — was shot at close range in Dhaka on December 12. He was later airlifted to Singapore for advanced treatment, where he succumbed to his injuries on December 18. His death led to violent protests in parts of the capital, including attacks on offices of newspapers and cultural organisations.

Brother alleges political motive behind killing

At a protest gathering in Shahbagh, Sharif Osman Hadi’s brother, Sharif Omar Hadi, accused a section of the interim government of orchestrating the killing to disrupt the election process.

“You had Osman Hadi killed, and now you are trying to foil the election by using this as an issue,” Omar said while addressing protesters. He claimed that his brother was firm on holding the national election by February and did not align himself with any agency or “foreign masters”.

Omar demanded a swift and transparent trial, warning that delays would damage the election environment. He alleged that the authorities have failed to show any visible progress in the investigation so far.

“If justice for Osman Hadi is not delivered, you too will be compelled to flee Bangladesh one day,” Omar said, drawing an apparent reference to former Prime Minister Sheikh Hasina, who left the country following last year’s nationwide protests that resulted in a change of regime.

Claims of wider conspiracy surface

Leaders of Inquilab Moncho also alleged that the killing was part of a broader conspiracy to undermine the gains of the July uprising and weaken Bangladesh’s sovereignty. They claimed that international intelligence agencies and their local collaborators were involved in the murder.

The group demanded that the government identify and present the accused through an investigation meeting international standards within a fixed timeframe. They warned that protests would intensify if their demands were not met.

Protesters said demonstrations would continue until justice is delivered for Sharif Osman Hadi.

Protest plans and political developments

Leaders of Inquilab Moncho announced that they would not hold any programmes on December 25, the day when Bangladesh Nationalist Party’s acting chairman Tarique Rahman is scheduled to return to the country. They expressed hope that Rahman would extend solidarity to their movement demanding justice.

The allegations and ongoing protests have added to political tensions in Bangladesh as the interim government faces growing scrutiny ahead of the proposed February election.

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