Introduction to Business Law Lecture 4 - Business Crime PDF

Introduction to Business Law nIntroduction to Business Law Lecture 4 Business Crime CRICOS Provider Code 00301J  Introduction Readings: Textbook (Introduction to Business Law) pgs. 753-772 (Note that these page number...

Introduction to Business Law nIntroduction to Business Law Lecture 4 Business Crime CRICOS Provider Code 00301J  Introduction Readings: Textbook (Introduction to Business Law) pgs. 753-772 (Note that these page numbers relate to the hardcopy. If you have the ebook, simply look up each week’s topics found in the PowerPoint slides) Sources of criminal law Classification of offences Criminal proceedings White collar crime Criminal law relating to business situations Corporations and criminal law CRICOS Provider Code 00301J  What is a crime? Essentially, a crime is an offence against the state. Offenders are prosecuted by the state and if found guilty beyond a reasonable doubt are sanctioned by financial penalty or incarceration in a facility such as a prison. On occasion, there may be an overlap between an offence and a civil action however. E.g. Assault can lead to a prosecution under the criminal law and a civil action instigated by the victim (plaintiff) against the offender (defendant). Note also fraud which can be a crime and a tort. CRICOS Provider Code 00301J  Civil and Criminal law CRICOS Provider Code 00301J  Sources of Criminal Law Law and order are state residual powers so states for example have legislative powers to enact laws in that area. So, in Western Australia the Criminal Code Compilation Act 1913 (W.A) contains the criminal law for the state although other statutes also have an impact such as the Misuse of Drugs Act Act 1981 (W.A) and the Road Traffic Act 1974 (W.A). Note that the Criminal Code is derived from the common law existing at the time. CRICOS Provider Code 00301J  Sources of Criminal Law There are also aspects of Commonwealth criminal law. For example, the Australian Consumer Law (ACL) does contain some criminal sanctions as does the Corporations Act 2001 (Cth). CRICOS Provider Code 00301J  Criminal Law Fundamentals Crown v Accused Minor offences are dealt with in Magistrates’ or Local Court- low level courts The onus is on the Crown to establish a case ‘beyond reasonable doubt’ Penalty is established by statute – due doctrine of separation of powers Innocent until proven guilty as everyone deserves a fair trial CRICOS Provider Code 00301J  Parties in a criminal case (the first time in court) CRICOS Provider Code 00301J  Key differences between Criminal and Civil Law Who commences action? Criminal-state Civil- individual Enforcer? Criminal-state Civil- individual Standard of proof Criminal-Beyond reasonable doubt Standard of proof Civil-Balance of probability Guilty mind required? Criminal-yes (usually) Civ no Onus of proof Criminal-State Civil-plaintiff Punishment Prison/fine etc Civ damages etc CRICOS Provider Code 00301J  Classification of offences Three main categories Wrongs against morality-murder, manslaughter, assault against the person Eg murder manslaughter assault Threats to peace and public order-property offences such as robbery, stealing Property crimes such as robbery Statutory offences-maintenance of public health/consumer safety etc Against laws CRICOS Provider Code 00301J  Summary and Indictable offences Indictable offences Summary offences Indictable Offences dealt with summarily- Magistrate must be Magistrate is given Eg loss or damage of satisfied that there statutory powers to property up to are no serious issue deal with an certain monetary involved and that an indictable offence value appropriate sentence can be imposed CRICOS Provider Code 00301J  Criminal Proceedings Commencement Summons – notice to a person at a certain court Arrest- person taken to custody by a police officer Committal- CRICOS Provider Code 00301J  Criminal Proceedings (Trial) Arraignment- accused is formally read the charges Pleading- guilty or not guilty Jury- decide all question of fact Crown case Conclusion CRICOS Provider Code 00301J  Elements of a Crime The Actus reus refers to the act or omission that comprise the wrongful physical elements of a crime as required by statute. Actus reus act (Actus includes only a voluntary affirmative act, or an omission (failure to act), causing a criminally proscribed result. Reus) Mens rea refers to criminal intent. The literal translation from Latin is "guilty mind." The plural of mens rea is mentes reae. The guilty Mens rea​is the state of mind statutorily required in order to convict a particular defendant of a particular crime. mind Establishing the mens rea of an offender, in addition to the (Mens actus reus (physical elements of the crime) is usually necessary to prove guilt in a criminal trial. The prosecution Rea) typically must prove beyond reasonable doubt that the defendant committed the offense with a culpable state of mind. CRICOS Provider Code 00301J  White Collar Crime- economic offences WCC can be described as a crime committed by an individual within a commercial operation/business or government organisation. WCC is often difficult to identify and often victims are unaware of the offence. Also known as economic offences Examples include embezzlement, bribery, insider trading, computer crimes CRICOS Provider Code 00301J  White Collar Crime Embezzlement/Misappropriation Fraudulent conversion of property by an individual that has been entrusted with that property- falsification of accounts and records to hide misapropriation of funds or other property Usually requires accounting falsification Much is unreported CRICOS Provider Code 00301J  White Collar Crime Bribery When a person provides property, money, favour in return for an advantage or preferential treatment Note ‘Secret Commission’ CRICOS Provider Code 00301J  White Collar Crime Fraud Simply put, fraud is the taking of property from another without their permission. Can be very minor in nature Insider trading – accessed to confidential information and use to make a profit or avoid a loss –price sensitive information DPPP v Hill and Kamay VSC 86 CRICOS Provider Code 00301J  White Collar Crime Industrial Espionage/Sabotage Disruption of efficient operations of a competitor Requires access to confidential information Results from weakness in organizational security CRICOS Provider Code 00301J  White Collar Crime Money Laundering in Australia Simply put, money laundering is where illegally gained funds are used to buy legitimate property or fund legitimate business operations, buy shares etc. Both natural and corporate citizens can commit money laundering offences. Has led to recent introduction of Financial Transaction Reports Act 1988 (Cth) enforces taxation laws in addition to the administration of information relevant to cash transactions so Commonwealth and State law enforcement agencies can detect criminal activities and money laundering. The Act imposes fines and imprisonment penalties on for non- compliance. Any person exiting Australia can be required to make a CRICOS Provider Code 00301J  White Collar Crime Money Laundering The Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) extends and supports the Financial Transaction Reports Act 1988 (Cth) in order to identify, mitigate and manage money laundering and terrorism financing activities. These obligations are imposed on the financial sector, money transfer and gambling sectors amongst other professional services who are referred to as ‘reporting entities’. The Australian Transaction Reports and Analysis Centre known as AUSTRAC is the agency responsible for compliance with the legislation. CRICOS Provider Code 00301J  White Collar Crime Money Laundering Under Division 5A of the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) an individual entity can be identified through disclosure of personal information by a credit reporting body (CRB) and reporting entities for matching purposes. Business operators subject to the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) are also obligated to comply with the Privacy Act 1988 (Cth) when accessing personal information. CRICOS Provider Code 00301J  White Collar Crime Money Laundering (recent developments) In December 2020, the Commonwealth Parliament passed the Anti-Money Laundering and Counter Terrorism Financing Act and Other Legislation Amendment Bill 2020. This amendment was introduced to enhance reporting and inter government information sharing. Specifically, changes include: Stricter controls on banking arrangements Update the ‘tipping off’ defence which provides protection for the reporting agency against the person in question Increased information sharing CRICOS Provider Code 00301J  White Collar Crime Money Laundering (recent developments) In December 2020, the Commonwealth Parliament passed the Anti-Money Laundering and Counter Terrorism Financing Act and Other Legislation Amendment Bill 2020. This amendment was introduced to enhance reporting and inter government information sharing. Specifically, changes include: Update AUSTRAC secrecy offences and provisions Update provisions for reporting entities customer due diligence obligations-background check Consolidate reporting of cross border movement of physical and negotiable instruments CRICOS Provider Code 00301J  White Collar Crime Money Laundering (recent developments) In December 2020, the Commonwealth Parliament passed the Anti-Money Laundering and Counter Terrorism Financing Act and Other Legislation Amendment Bill 2020. These changes were introduced over the 2021-2022 period. CRICOS Provider Code 00301J  White Collar Crime Money Laundering (recent developments) The current Albanese Government has also commenced consultation on further reform to ML & CT laws in particular to address child abuse, illicit drug trade and terrorism criminality. The Commonwealth remains committed to protecting Australians and preventing criminalisation of the financial system. This requires updates to anti-money laundering and counter-terrorism financing (AML/CTF) to ensure effective deterrence, detection and disruption of money laundering and terrorism financing in addition to meeting Financial Action Task Force (FATF), the global financial crime watchdog, international standards. CRICOS Provider Code 00301J  White Collar Crime Money Laundering offence defined 1. Money or property exists; 2. Unlawfulness-Dealing in some way (physical conduct like receiving, possessing, concealing or disposal of money or property, importation or export, engagement in banking transactions) in the money or property because the proceeds are in fact proceeds of crime, or potentially used in the commission of facilitation of a crime; and 3. Recklessness of negligence by the person who believed that the money or property was the proceeds of a crime. CRICOS Provider Code 00301J  White Collar Crime Environmental Vandalism Disposal of waste products contrary to environmental law. E.g. toxic waste buried illegally or disposal of liquid waste into waterways Computer-Related Crimes Unauthorised funds transfer from bank accounts, CRICOS Provider Code 00301J  Statutory Criminal Liability in Commercial Contexts Competition and Consumer Act 2010 (Cth) This legislation contains multiple criminal offences in addition to civil liability provisions. Penalties can amount to $10M for a corporation and $500000 for an individual. The following activities are prohibited under the Act: Misuse of monopoly power, Price fixing, Boycotts, Resale price maintenance, collusion Note also the Privacy Act 1988 (Cth) CRICOS Provider Code 00301J  Statutory Criminal Liability in Commercial Contexts Work Health and Safety legislation Work Health and Safety Act 2020 (WA) Aims to create and maintain safe workplaces and imposes penalties for workplace injury and death. Essentially, anyone conducting a business or undertaking that negligently causes a death of a worker may be charged under criminal law for industrial manslaughter. Penalties include 20 years imprisonment and fines up to the value of $16M for corporations. CRICOS Provider Code 00301J  Statutory Criminal Liability in Commercial Contexts Privacy Act 1988 (Cth) Controls credit reporting and personal information. Data breach by an organisation can lead to penalties up to the value of $2M for corporations. CRICOS Provider Code 00301J  Statutory Criminal Liability in Commercial Contexts Bankruptcy Act 1966 (Cth) Under this legislation it is an offence for a bankrupt to fraudulently conceal property with the intention to defraud creditors. A penalty of up to 5 years imprisonment is available under the Act. CRICOS Provider Code 00301J  When can a Company Face Criminal Liability? Liability of a company Although not a ‘natural’ person a corporation or company most definitely is a person for legal purposes. For a company to be responsible for a crime when: An employee of the company commits the physical element of an offence If intention, knowledge or recklessness is an element of the offence, that state of mind will in fact be attributed to the company when the board or senior management impliedly permit or authorise the offence Corporate culture encouraged or tolerated the offence The Company failed to create or maintain a corporate culture or code that required legal compliance CRICOS Provider Code 00301J  When can a Company Face Criminal Liability? Management of a company Company individuals may be liable for breach of duties under the Corporations Act 2001 (Cth) which can result in imprisonment for up to 15 years and fines of up to $945000 in circumstances where:s588g Insolvent trading occurred Failure to exercise powers and discharge of duties in good faith for the best interests of the company Misuse of position to gain advantage or cause detriment to the company Personal responsibilities CRICOS Provider Code 00301J  Civil or Statutory Penalties Although not strictly a criminal punishment, civil penalties can still be referred to as punishment although they are imposed in civil proceedings with civil standards of proof and are, consequently, easier to establish. National Credit Code Corporations Act 2001 (Cth) Spam Act 2003 (Cth) CRICOS Provider Code 00301J  Summary of Statutory Criminal Liability in Commercial Settings Statutory Source of Liability Nature of Business Australian Consumer Law Consumer Protection Provisions Competition and Consumer Act 2010 (Cth) Restrictive Trade Practices Privacy Act 1988 (Cth) Use of credit reporting information Financial Transactions Reports Act 1988 (Cth) Information regarding cash trans. Anti-Money Laundering & Counter Terrorism Financing Act 2006 (Cth) Money laundering/finance of terrorism Work Health and Safety Act 2011 (Cth) Work health and safety Bankruptcy Act 1966 (Cth) Actions by bankrupts to defeat or delay seizure of CRICOS property Provider Code 00301J  Conclusion Sources of criminal law Classification of offences Criminal proceedings White collar crime Criminal law relating to business situations Corporations and criminal law CRICOS Provider Code 00301J  Business Crime example Stealing under s. 371 Criminal Code Adriana works for Carmela at a real estate company. She needs $550 to pay for a new gold bangle. She knows that Carmela has been leaving money in a cashbox and decides to ‘borrow’ the money from Carmela. She takes the cash but leaves a note to say he will replace it on Monday of the following week. Has Adriana committed an offence? intention = Act= taking money without consent CRICOS Provider Code 00301J  Business Crime example Step 1 Stealing under s. 371 Criminal Code (WA) Step 2 Elements; Person Fraudulently takes or fraudulently converts to their own use Intent to permanently deprive the owner In the case of money an intent to use it at the will of the person who takes or converts it although there may be a intention to repay Lack of owner’s consent Kennison v Dair (1986) Fraudulent intention at the relevant time R v Ilich (1987) CRICOS Provider Code 00301J  Business Crime example Step 3 There was no consent from Carmela Was there Fraudulent intent by Adriana? Yes-money has particular requirements Step 4 Adriana is probably guilty. CRICOS Provider Code 00301J