Weekly Blog #4 - Criminal Fraud and the Law

Q: There are a number of crimes that can be committed in the business world that fall under the banner of fraud, bribery and corruption and the Corporations Act 2001 (Cth) attempts to address these criminal matters.  However, strict or vicarious liability is really what matters in attempts by legislators and the courts to address this continuing problem in the corporate world.

I agree with the statement above because the nature of the Corporations Act 2001 forces organisational action in controlling activities (ComLaw, 2012).  In simple terms, Chief Executive Officers (CEO) and Directors may be liable for their employees’ actions thus needing appropriate policies in place to minimise these risks. 

The major crimes categories in the business world (white-collar crime, organised crime, computer crime and regulatory crime) often involve misuse or manipulation of organisational resources.  Extension of liability allows the legislators to ensure proper code of conduct (Wattford, 2011) policies are embedded in organisations. These extensions encourage the company to implement and monitor compliance controls to govern activities and minimise risk of these crimes occurring (Stewart, 2006).

Thinking ahead as a CEO or Director, liability for the actions of employee’s could threaten my own livelihood or freedom.  Ensuring that governance controls within the organisation, aligned with protecting the organisation from such risks, would also protect myself. Implementation of appropriate code of conduct, operational controls and training policies will minimise risk and the potential liability. My recommendations would include implementation of: (Dundas Lawyers, 2012);

1.      Code of conduct.  

2.      Pre-employment screening checks.

3.      Electronic activity monitoring.

4.      Regular audits and review of policies. 

References

ComLaw. (2012). Australian Government: Federal Register of Legislation. Corportations Act 2001. Retrieved from https://www.legislation.gov.au/Details/C2015C00336

Dundas Lawyers. (2012). Can employees be vicariously liable for the criminal acts of employees? Retrieved from https://www.dundaslawyers.com.au/can-employers-be-vicariously-liable-for-the-criminal-acts-of-employees/

 

Stewart, J. (2006). White collar crime: Fraud, bribery and corruption - all alive and well? Credit Control, 27(4), 50-60. Retrieved from http://gateway.library.qut.edu.au/login?url=http://search.proquest.com/docview/208172593?accountid=13380

Wofford, J. (2011, Oct 03). Major crimes drop in September, data show. McClatchy - Tribune Business News Retrieved from http://gateway.library.qut.edu.au/login?url=http://search.proquest.com/docview/895862966?accountid=13380


Additional links to relevant information regarding strict and vicarious liability for stakeholders:

http://www.inc.com/articles/1999/11/15396.html

http://law.jrank.org/pages/2255/Vicarious-Liability.html