White-collar crime: Why stricter penalties for perpetrators is long overdue

Around the world, tougher laws and hefty penalties are being introduced regarding white collar crime. From the US, Ireland, Pakistan to Australia, governments are desperately trying to curtail white collar criminals. Justice Minister Charlie Flanagan appealed to Ireland’s cabinet and received its support, introducing new anti money laundering legislation to tackle corporate crime.

 

What is white-collar crime?

Edward H Sutherland, an esteemed American criminologist coined the term white-collar crime in the early 1940’s. His profound work challenged people’s perception of what it meant to be a criminal. He argued that “crime was not exclusively a lower-class phenomenon but was prospering among the middle and upper classes as well”.

It’s fair to say that Sutherland’s important sociological understanding led to the implementation of certain criminal laws. The impact Sutherland made to the field of criminology “cannot be overstated”. He redefined the way we perceive crime and criminals and “developed one of the most influential theories of criminal behavior”.

How is white-collar crime defined in Australia?

The Parliament of Australia report defined white collar crime as “corporate and financial misconduct”. While the term is debated, Professor Adams, Dr Hickie and Mr Lloyd stated that the term refers to certain offences and included:

  • fraud
  • bribery
  • tax evasion
  • multiple regulatory offences involving corporate entities
  • non-violent offences
  • “committed by educated and/or [those] who can be described as ‘well off’ individuals or corporations”

Additionally, while perpetrators of the crime are not reflective of a particular social status, a “white-collar criminal is generally acting from a position of trust and authority”.

 

How does the Australian police define it?

The Australian Federal Police (AFP) defines white-collar crime as “a form of serious financial crime”, one that is financially-motivated and reflects a wide range of criminal acts.

Famous white collar crimes that made headlines internationally

Some of the most high profile stories over the last decade involve both individuals and corporations engaged in extremely deceptive practices. From Bernie Madoff’s infamous ponzi scheme to the downfall of Enron, we are no strangers to the gross misconduct and abuse of power. Even in our own backyard, Alan Bond heralded a new type of criminal. Labelled as the “biggest fraudster in Australian history”, Mr Bond attained his vast fortune, through a “secretive web of shelf companies and trusts”.

White collar criminals help solidify the notion that the rich are getting richer and the poor are getting poorer. It’s simply bad for society at large and yet for too long, these fraudulent practices have not felt the weight of the law. It’s highly understandable that individuals and corporations in positions of power should be held accountable for their crimes.

Why were tougher penalties being sought for Australian perpetrators?

Australian Securities and Investments Commission (ASIC) Chairman, Mr Greg Medcraft suggested that “Australia was a ‘paradise’ for white-collar criminals”. He argued that jail time would act as a great deterrent and stated that penalties were “not strong enough, not tough enough”. In a Q&A in 2014, he told a business audience that currently “all you’re doing is giving them a slap on the wrist [and] that is not deterring people”.

New Australian bill delivers heftier penalties for white-collar criminals

New Australia law has seen to eliminate these often secretive and premeditated actions. The Sydney morning herald’s business section reported that banking executives “face up to 15 years in jail under tough new laws”.

The Australian Financial Review reported on ASIC backing of white-collar court. The recent changes result in the court placing a “greater priority on prosecuting directors and top executives”.

New Australian legislation doubles criminal penalties

In Strengthening penalties for white-collar crime, the government press release detailed how new legislation would double criminal penalties. Additionally, civil penalties would increase “more than tenfold for corporations and more than fivefold for individuals”.

It seems that an overhaul was essential given that the laws hadn’t changed in 20+ years. Australian white-collar criminal laws were lagging behind leading international jurisdictions and needed to be addressed.

White-collar crime Australia: Tougher penalties for both civil and criminal offences

The following chart provides an insight into how noticeably the penalties have changed for both civil and criminal penalties.

The Australian government has taken an active interest in the fight against white collar crime by allowing the courts to “seek additional remedies to strip wrongdoers of profits illegally obtained”.

 

Recent White-collar crime cases that have stunned Australians

Since the newly passed Australian bill, more tales of corporate embezzlement and misappropriation of funds have come to light. Two National Australia Bank employees embezzled approximately $50 million. One of the women was chief of staff to Andrew Thornburn, the CEO of National Australia Bank. Helen Rosamond, Human Group chief executive allegedly facilitated the gross misconduct by approving overly inflated invoices. 

Rosemary Rogers, is the second person who has been arrested for her “alleged role in a large-scale bank fraud worth $40 million”. Ms Rogers was charged with “56 counts of being an agent corruptly receiving a benefit, and dishonestly obtaining financial advantage by deception”.

 

Notable corporate crime examples

The NAB was involved in another scandal and this time the royal commission revealed that the bank charged more than 200,000 customers millions in unwarranted fees.

Both the CEO and chair, Mr Ken Henry resigned from the NAB due to the recent misappropriation of funds that occurred under their watch.

These types of corporate crimes have come under the public’s watchful eye and the overwhelming consensus is one relief. When you consider that in the banking sector alone, there has been more than $1 billion charged by financial institutions for services never received, it’s about time that the new legislation and tougher penalties were introduced.

SCB Legal values our readers’ opinions and invites you to share your thoughts.

What additional laws and penalties would you like to see introduced?

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