Cash for corporate crime victims under new plan

Extract from article in todays Australian

Victims of corporate crime will gain a streamlined method of compensation that will bypass the need for litigation under plans that will be unveiled today by Attorney-General Christian Porter.

The scheme will put the onus on companies to identify and compensate victims of their misconduct — as well as naming individual wrongdoers — to qualify for deferred prosecution deals with the Commonwealth Director of Public Prosecutions. They will also need to co-operate during subsequent prosecutions against individual wrongdoers and in many cases will be required to pay to have their compliance with the law overseen by an independent monitor.

The scheme is outlined in a draft code of practice that shows how the DPP and other federal law enforcement agencies would run the government’s planned deferred prosecution agreement scheme.

The draft code is aimed at cracking down on corporate crime by giving companies strong new incentives to disclose wrongdoing, co-operate with law enforcement authorities and compensate their victims.

Mr Porter said law enforcement agencies faced unique challenges in addressing corporate crime, which could be difficult to identify and easy to conceal.

“The DPA scheme gives prosecutors and investigators an extra tool they can use to hold companies to account for serious corporate crime,” he said.

“At the same time, the scheme will help encourage corporations to self-report misconduct and co-operate with authorities,” Mr Porter said.

It complements legislation that was introduced to parliament in December that permits the DPP to make deferred prosecution agreements with companies — but not individuals — along the lines of similar arrangements that are in force in Britain and the US.

Mr Porter’s plan is also in line with existing arrangements in which companies can reach enforceable undertakings with the Fair Work Ombudsman to avoid prosecution.

The royal commission into financial services uncovered widespread misconduct.

AMP is facing five class actions, some of which are backed by litigation funding companies that charge a percentage of any settlement.

Under the draft code, however, corporate wrongdoers would bear all costs associated with compensating their victims.

The Attorney-General would appoint retired judges as “approving officers” to ensure the obligations imposed by the DPAs are fair, reasonable and proportionate.

After voluntarily disclosing their wrongdoing, companies would be charged with criminal offences but prosecution would be deferred for an agreed period if companies co-operated fully with the DPP, the Australian Securities & Investments Commission and other federal authorities.

They would be required to meet a series of costly obligations but the draft code says they would still have an incentive to take part in the scheme because it would offer greater certainty than litigation.

They could also avoid some of the costs and reputational damage associated with a long criminal investigation and trial.

Information disclosed during negotiations with the DPP over these agreements would be shared with other federal agencies but they would try to ensure it was not made public unless this was compelled by law.

The final DPA, including a statement outlining particulars of the wrongdoing and financial penalty, would generally be published within 10 days on the DPP’s website.

If companies pay all the penalties for their wrongdoing and meet the other requirements set down in the deferred prosecution agreement, the DPP will not be able to prosecute them — unless they have provided misleading information.

The scheme will not give companies immunity from class actions or other civil claims but failure to compensate their victims would generally invalidate any DPA and expose them to prosecution.

And when the DPP takes a company to court for breaching a compensation requirement, the judge will be asked to make reparation orders in favour of the company’s victims.

“It will generally be appropriate for the DPA to require the corporation to pay a quantified level of compensation to these victims,” the draft code says.

An independent monitor, paid for by the corporate wrongdoer, would have a key role in overseeing compensation schemes and the company’s compliance with the law.

Where victims cannot be identified, the draft code says donations to charities that support the people concerned may be appropriate. Companies may also be required to pay costs incurred by federal authorities while investigating the charges.