Two important Senate inquiries of 2014 and 2015 that lapsed at the election have been reinstated, but still with long reporting dates into 2017; and there is a new inquiry into ASIC’s enforcement powers. Many of these issues have been the subject of recommendations in earlier inquiries, with no action taken. Meanwhile, tax breaches, phoenix activity and other corporate misconduct continues.
Corporate Tax Avoidance
Over two years ago, on 2 October 2014, the Senate referred an inquiry into corporate tax avoidance to the Senate Economics References Committee for it to report by June 2015.
On 15 June 2015, the Senate granted an extension to 13 August 2015; then further extensions were regularly granted, up to 30 September 2016.
But the inquiry lapsed at the July 2016 election.
Back again, on 11 October 2016, the Senate agreed to the committee’s recommendation that the inquiry be re-adopted and that it report – not soon, but by 30 September 2017.
It was examining tax avoidance and aggressive tax minimisation with a focus on transparency to deter tax avoidance; the opportunities to collaborate internationally and/or act unilaterally; the performance and capability of the ATO to investigate and pursue “in the wake of drastic budget cuts to staffing numbers”; and, the role and performance of ASIC in supporting the ATO to protect public revenue.
This committee did produce an interim report, upon which no action has been taken. One recommendation was that the government introduce a director identity number (DIN).
Criminal, civil and administrative penalties for white collar crime
Back in November 2015, the Senate referred this inquiry to the Senate Economics References Committee. That inquiry also lapsed mid-2016.
On 11 October 2016, the Senate agreed to the committee’s recommendation that this inquiry report by 28 February 2017.
This inquiry was examining the inconsistencies and inadequacies of penalties with particular reference to evidentiary standards; custodial sentences; banning orders; monetary penalties; and mechanisms to recover wrongful gains. Penalties applied in other countries, particularly those of the OECD, were to be examined.
Submissions?
It appears that all submissions previously received for both inquiries do not need to be re-submitted. The committees will press on with what they have.
Comment
These inquiries are all very well but the reality is that Senate recommendations do not often go anywhere. The Australian political process has an emphasis on inquiries, rather than decisions made on inquiry recommendations.
And the world moves on, and other things are happening that impact upon each inquiry, including of course further government inquiries that cut across both of these.
ASIC Enforcement Review Taskforce
One is the government’s 19 October 2016 announcement of the detail of an ASIC Enforcement Review Taskforce to “assess the suitability of the existing regulatory tools available to ASIC to perform its functions adequately”.
The Taskforce is to report to the government “in 2017” and is said to be the government’s response to the 2014 Financial System Inquiry Report. Separately, there was the ASIC Capability Review. The government now says it wants to “accelerate” the implementation of that review.
Terms of this ASIC enforcement review (not the ASIC capability review or the Senate ASIC reviews)
Aspects of the terms of reference include
- the adequacy of civil and criminal penalties for serious contraventions relating to the financial system (including corporate fraud);
- the need for alternative enforcement mechanisms, including infringement notices, and the use of peer disciplinary review panels (akin to the existing Markets Disciplinary Panel) in relation to financial services and credit businesses generally; and
- the adequacy of existing penalties for serious contraventions, including disgorgement of profits.
The Review is also examining the adequacy of
- ASIC’s enforcement powers and of ASIC’s power to ban corporate offenders from being involved in company management.
- ASIC’s information gathering powers and whether ASIC might be permitted to use information from telephone interception warrants or to have the equivalent of Crimes Act search warrant powers for market misconduct or other serious offences.
- the obligations of certain parties to notify ASIC of breaches of law, including the timing and triggers for those obligations; and whether the obligation should be expanded to a general obligation. This is, according to the terms of reference, is currently confined in the Corporations Act to auditors, liquidators, and licensees.
As a ‘catch all’, the Review can look at any other matters which “appear necessary to address any deficiencies in ASIC’s regulatory toolkit”, but overall, not to impose an undue regulatory burden on business.
Let’s put all this in perspective
As to ‘white collar’ penalties, the government has a report from the Australian Law Reform Commission on Commonwealth Penalties and Regulation – ALRC 95. This report covered tax avoidance and minimisation, the penalties available to the ATO and ASIC, and other regulators; the inconsistencies and inadequacies of some penalties and their evidentiary standards; the value of custodial sentences; banning orders; monetary penalties and proceeds of crime remedies. Penalties that applied in other countries were examined.
Nothing much happened with that ALRC report and its numerous recommendations.
And while the government is examining the existing regulatory tools available to ASIC, it may recall that it commissioned a similar review of the powers of APRA, in 2012, about which no action has been taken.
Then we have the 2014 Financial System Inquiry Report and the ASIC capability review, which the government says it wants to “accelerate”.
Offer of assistance
In a spirit of begrudging but constructive assistance, any of these Senate or other inquiries, and ones still to be announced, might therefore like to see:
- ALRC 95;
- The crisis management powers of APRA 2012;
- The 2015 Senate construction industry report, including on the powers of ASIC;
- The House inquiry into ASIC’s 2015 annual report;
- The latest UK Companies House Report on corporate penalties and prosecutions; and
- the various commentaries on this website with a theme of “why and how a focus on prevention is better than a focus on penalties” (regulatory practice and criminology 101).
Contact me here.
Michael Murray
More (and more) government inquiries
Two important Senate inquiries of 2014 and 2015 that lapsed at the election have been reinstated, but still with long reporting dates into 2017; and there is a new inquiry into ASIC’s enforcement powers. Many of these issues have been the subject of recommendations in earlier inquiries, with no action taken. Meanwhile, tax breaches, phoenix activity and other corporate misconduct continues.
Corporate Tax Avoidance
Over two years ago, on 2 October 2014, the Senate referred an inquiry into corporate tax avoidance to the Senate Economics References Committee for it to report by June 2015.
On 15 June 2015, the Senate granted an extension to 13 August 2015; then further extensions were regularly granted, up to 30 September 2016.
But the inquiry lapsed at the July 2016 election.
Back again, on 11 October 2016, the Senate agreed to the committee’s recommendation that the inquiry be re-adopted and that it report – not soon, but by 30 September 2017.
It was examining tax avoidance and aggressive tax minimisation with a focus on transparency to deter tax avoidance; the opportunities to collaborate internationally and/or act unilaterally; the performance and capability of the ATO to investigate and pursue “in the wake of drastic budget cuts to staffing numbers”; and, the role and performance of ASIC in supporting the ATO to protect public revenue.
This committee did produce an interim report, upon which no action has been taken. One recommendation was that the government introduce a director identity number (DIN).
Criminal, civil and administrative penalties for white collar crime
Back in November 2015, the Senate referred this inquiry to the Senate Economics References Committee. That inquiry also lapsed mid-2016.
On 11 October 2016, the Senate agreed to the committee’s recommendation that this inquiry report by 28 February 2017.
This inquiry was examining the inconsistencies and inadequacies of penalties with particular reference to evidentiary standards; custodial sentences; banning orders; monetary penalties; and mechanisms to recover wrongful gains. Penalties applied in other countries, particularly those of the OECD, were to be examined.
Submissions?
It appears that all submissions previously received for both inquiries do not need to be re-submitted. The committees will press on with what they have.
Comment
These inquiries are all very well but the reality is that Senate recommendations do not often go anywhere. The Australian political process has an emphasis on inquiries, rather than decisions made on inquiry recommendations.
And the world moves on, and other things are happening that impact upon each inquiry, including of course further government inquiries that cut across both of these.
ASIC Enforcement Review Taskforce
One is the government’s 19 October 2016 announcement of the detail of an ASIC Enforcement Review Taskforce to “assess the suitability of the existing regulatory tools available to ASIC to perform its functions adequately”.
The Taskforce is to report to the government “in 2017” and is said to be the government’s response to the 2014 Financial System Inquiry Report. Separately, there was the ASIC Capability Review. The government now says it wants to “accelerate” the implementation of that review.
Terms of this ASIC enforcement review (not the ASIC capability review or the Senate ASIC reviews)
Aspects of the terms of reference include
The Review is also examining the adequacy of
As a ‘catch all’, the Review can look at any other matters which “appear necessary to address any deficiencies in ASIC’s regulatory toolkit”, but overall, not to impose an undue regulatory burden on business.
Let’s put all this in perspective
As to ‘white collar’ penalties, the government has a report from the Australian Law Reform Commission on Commonwealth Penalties and Regulation – ALRC 95. This report covered tax avoidance and minimisation, the penalties available to the ATO and ASIC, and other regulators; the inconsistencies and inadequacies of some penalties and their evidentiary standards; the value of custodial sentences; banning orders; monetary penalties and proceeds of crime remedies. Penalties that applied in other countries were examined.
Nothing much happened with that ALRC report and its numerous recommendations.
And while the government is examining the existing regulatory tools available to ASIC, it may recall that it commissioned a similar review of the powers of APRA, in 2012, about which no action has been taken.
Then we have the 2014 Financial System Inquiry Report and the ASIC capability review, which the government says it wants to “accelerate”.
Offer of assistance
In a spirit of begrudging but constructive assistance, any of these Senate or other inquiries, and ones still to be announced, might therefore like to see:
Contact me here.
Michael Murray
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