The Effectiveness of Australian National and Corporate Regulation

The Effectiveness of Australian National and Corporate Regulation: Evaluating the Constitutional Impediments and Commonwealth-State Rivalry

There is a wide spectrum of areas in which corporate bearing may be in contravention with the law including company and security offenses, restrictive trade practices, consumer affairs, taxation, occupational safety and health, economic offenses against employees, discriminatory practices as well as prudential regulation. While in most scenarios corporate crimes are deliberate duplicitous practices, some arises from negligence, inattention to detail or recklessness.  It should be noted that corporate offenses have the potential to cause more financial losses, death and injury than any other form of crime (Freiberg, 2000).

The intricacy of corporate life and the resultant corporate laws tend to make the definition of the nature and consequences of corporate criminality quite challenging.  It is vital to draw a distinction between corporate crime and illegal corporate behavior. Tomasic (1993) illustrates that an illegal corporate behavior is not necessarily criminal. A more pragmatic definition of corporate crime would be any criminal acts, either of omission or commission, which follows a deliberate decision making or blameworthy negligence by individuals occupying positions of corporate administrators in as structural organization.

The cost of corporate regulation is not only borne by the members of the general public but honest business firms and individuals suffer economic the disadvantage of due to their competitors engaging in corporate wrongdoings (Freiberg, 2000). To this regard, the nature of a corporate wrongdoing involves both criminal and civil liability. For instance, the Corporation law provides both civil and criminal actions to be leveled against the same conduct. This indistinctness can be attributed to the seemingly poorly developed legal concepts of corporate regulation and owing to the fact that the current criminal laws and statutes are as a result of composite of provisions that have advanced over time from models that were meant to deal more specifically with individuals than with corporate organizations (Braithwaite, 2010).

In a conventional setting, the objectives of corporate regulation are geared towards retribution, incarceration and rehabilitation as well as deterrence. Although various countries have adopted different approaches in dealing with corporate regulation, Australia employs a model in which the corporation is not held liable for the acts of individual offenders but instead a corporation is liable because of its culture, policies, practices, management or other characteristics encouraged or permitted the commission of the offence (Robinson, 2008).

An Overview of Corporate Regulation in Australia

Australian’s federal and State laws encapsulates various legislations that are intended to protect competition in free markets. The laws forbid business practices such as market allocation, monopoly and price fixing that uneconomically restrain competition. These laws include a number of federal and state governments’ legislations that regulate the business organization and conduct of corporations with the aim of promoting fair competition whose fundamental purpose is to safeguard the consumers and public welfare (Waddams, 2011).  These pieces of legislation have had enormous effect on the organization of Australian industry and the business practice. The law promotes the benefits of free-trade to the economy, businesses as well as the consumers. In addition, the laws prohibit numerous trade restraints and monopolization. The Australian laws collectively prohibit agreement between competitors, mergers, contractual arrangements between buyers and sellers, and pursuit and preservation of monopoly power

The abuse of the corporate form arising from the marauding of crucial corporate coffers by controllers of corporate groups with an aim to benefit the ends of corporate controllers has over the years been a significant basis for corporate crime. Cases that involve the abuse of the corporate form revolves around misuse of audited accounts, directors moving activities from one corporation to another with each company ending up in financial wreck and insolvent trading. The abuse of corporate form arises from a number of corporate or business frauds (Wagner, 1999). Example of these would include dishonest financial advantage, dishonest destruction of accounting records, publishing dishonest statements to investors and creditors, fraudulent appropriation, embezzlement and incurring debts and engaging in acts too defraud creditors among others. These crimes are regulated under the Crimes Act of 1914, the Criminal Code Act of 1995 and the Corporations Act of 2001.

Another form of corporate regulation in Australia worth consideration is the securities market abuses and insider trading. This forms of regulation involves guarding the industry stakeholders against the practices such as securities prices manipulation, market rigging, insider trading and misleading statements aimed at inducing individuals in investing in market shares and securities. The Corporation Act regulates insider trading and prohibits an insider from trading or procuring another person to trade.

Regulatory Commissions Governing Corporate Regulations

Most of the Australian Government regulations are overseen and implemented by independent commissions and agencies under the federal executive branch as well as state governments (Litan, n.d). Appeals to regulatory legislations can be made to the courts with the purpose of testing their constitutionality as well as ensuring that the regulatory commissions adhere to the due process in the execution and decision making. The Australia’s federal constitution brings regulatory tiers that operate at the national and State levels. In practice, the inter-governmental agreements of 1995 have divided the regulatory tasks over trade and corporations. However, the federal (Commonwealth) government assumes the overall regulatory control. There are three major Commonwealth regulatory agencies that have been established in Australia to oversee the National access regime which incorporates other elements of the National Competition Policy reforms.

The National Competition Council (NCC) is one of the Commonwealth’s regulatory agencies mandated as an independent advisory body for governments tasked with implementing competition policy reforms. The NCC makes recommendations to relevant ministers whose infrastructure services are declared under the National regime. The Council also evaluates the effectiveness of other access regimes.

The Australian Competition and Consumer Commission (ACCC) is another federal agency whose primary mandate is to administer various parts of the Trade Practices Act as well as the Prices Surveillance Act. The ACCC is invested with the power to arbitrate the terms and conditions of access in the event that after a service is declared, there is no agreement by the businesses involved. On the other hand, the Australian Competition Tribunal hears the appeals on decisions reached by the ACCC that regards various trade practices. Additionally, the tribunal hears the appeals ensuing from certain decisions made by relevant Ministers. It is worthwhile to note that there are other institutions with regulatory mandate that fall under the general oversight of the ACCC. Such institutions include the National Electricity Code Administer (NECA) which is the controlling the code and rules that govern the market. The National Electricity Market Management Company (NEMMCO), also under the ACCC oversight acts the administrator of the market as far as electricity is concerned.

The Corporate Culture Approach to Corporate Regulation in Australia

The regulation of corporate laws in Australia is executed in a cooperative scheme of the commonwealth and state authorities. Being a federal system, the constitution only assigns certain legislative powers to the state. Most of these matters do not involve general criminal law. State criminal law varies across the various jurisdictions such that some states have comprehensive criminal laws while others rely on a composite of the common law and statutes (Robinson, 2008). The investigations on corporate crimes are conducted by the Australian Federal Police and prosecutions are vested in the office of the Commonwealth Director of Public Prosecutions (CDPP). The Australian Securities and Investments commission has also been given the mandate to conduct investigations and initiate criminal or civil proceedings as regards the breach of the Corporations Act of 2001.

 Until the year 1995, Australian regulatory laws and legislation applied the concept of vicarious liability (Wagner, 1999). This has however changed to an approach that bases corporate criminal liability on a corporate culture. The corporate culture is considered to enclose a policy, attitude, rule, practice or course of conduct that exist within the body corporate in general and to the parts of the body corporate in which the conduct take place in specific (Robinson, 2008). The statutory provisions involving organizational liability as regards to federal offences are the most fundamental aspect of corporate criminal liability in Australia. It should be noted that Australia has not, unlike other countries, developed a commensurate principles of sentencing as regards to organizational liability.

Organizational liability for corporations is set out in section 12.3 of the Crime Code Act. As from December 2001, this section applied to all offences in federal statutes. However, section 12.3 is limited in scope since it only criminalizes a small range of offenses (Turnill et al, 2012). Nonetheless, there appear to be no theoretical blockade in applying the corporate liability provisions to a broader array of offenses. The section categorically provides that when an agent of a corporation acting within the apparent scope of their employment commits an offence, the bodily aspect of the offence ought to be attributed to the body corporate. In adopting the corporate culture approach, the Australian regulatory system has had a considerable impact on the scope of criminal liability (Turnill et al., 2012). This has been made so by the conceptual shift in the primary aspects of the liability which makes it easier to establish criminal liability on corporations.

The Australian Corporate Regulation system tends to reduce the level of intention prerequisite to a crime to a single fault element which narrows down to permitting or authorizing the offence.  It should be noted that the Australian corporate culture operates in a rather complex setting. The culture is only relevant at the stage of establishing liability but do not have a proportionate legally codified role in determining the sentences (Robinson, 2008). Further, the challenges of the Australian Regulatory System stems from the lack of prosecutorial powers by some of the corporate regulatory agencies. It should be noted that the penalties provided by the corporate crimes laws tend to be significantly unassertive while those that are imposed in the event of sanction and conviction do not get anywhere close to the maximum.

Constitutional Impediments on the Australian Corporate Regulation

While corporate criminals prey on the welfare of the general public, creditors, investors and consumers, the justice system together with the regulatory agencies have seemed to be unwilling in antagonizing corporates with the fear of jeopardizing economic flourish. The regulatory process comes under massive pressure when dealing with corporate regulation in the sense that while they ought to address the criminality involved, they appeal to notions of fairness (Turnill, 2012). One of the challenges in particular is a justice system that is beyond the accessibility of some litigants. Many features of the constitution regarding how the corporate regulation provisions are to operate in practice remain unclear. Sections of ambiguity include how corporate culture is to be established. In addition, the extent on which corporate culture will be evaluated, principally in circumstances in which the corporate culture of a particular corporate group is acceptable is lacking.

Concerning the measure of organizational insufficiencies the provisions of section 12.3 of Corporate Crime Act of 2001 leaves a void for organizations to be held criminally accountable in situations where the corporation is generally law-abiding, but one anomalous business element may be permitting the commission of offences (Braithwaite, 2010). This is not so much of a challenge as a matter of legal principle however, since liability could arise in comparable situations under the vicarious liability approach.

            Another weakness of the Australian Constitution approach to corporate regulation is the fact that corporate culture provisions may pave the way for challenges to the corporate veil. This draws from the concept that they emphasis more on the actual process of decision-making and track of authority as opposed to the legal structure of corporate entities.  It would be plausible if the corporate culture approach could give result in establishment of the bodily component of crimes, give provision for the physical elements to be credited to organizations that effectually well-organized them to be committed. It would be sufficient for the law provisions to look into the sanctions in more realistic approaches in a bid to attain deterrent effects and in rewarding the victims of corporate misconduct (Robinson, 2008). These victims include shareholders, creditors and the corporation. In current circumstances the quest for retribution has tended to overlook the perspective of such sufferers. The need to integrate the role of victims is vital if the regulatory process is to be well-adjusted and not subject to ideology.


The issue of corporate regulation is a multi-faceted and there are no simple solutions to the problems arising in various aspects of the industry. The regulatory laws, whether federal or State, play a vital role in promoting economic efficiency and enhance entry as well as fair competition (Litan, n.d.) The major issues that should be considered in formulating such laws include relevant market, barriers to entry such as capital cost and distribution chains, international competition, fair pricing, and effects of change in technology on the relevant market structure. It is apparent that action should be taken in dealing with corporate regulation in Australia, and it should be noted that the commonwealth laws singlehandedly cannot adequately sufficient to address either the conviction of corporations, or the sanctioning of corporations. In addition, the complexity of the corporate regulation in Australia has always resulted in a superficial portrayal of its statistics. This draws from the fact that detection and prevention of corporate wrongdoings poses considerable challenges since most of the offenses are usually hidden from the public gaze or not sufficiently provided for by the Constitution and the State laws

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