Subject line removed by order of the
In order to assist
the Committee’s deliberations on the above matter the following comments are
provided in relation to the specific questions posed by the Committee.
How the Commonwealth Prosecution Policy is
applied to Criminal Charges brought under the Corporations Act 2001
The Corporations Act 2001 is a Commonwealth
Act. The Prosecutions Policy of the
Commonwealth is applied to prosecutions under this Act in the same way that is
applied to prosecutions under any other Commonwealth Act.
In practical terms
the Prosecution Policy requires that for a prosecution to be instituted:
- there is admissible, substantial and
reliable evidence that a criminal offence known to the law has been
committed by the alleged offender;
- there is a reasonable prospect of
- it is in the public interest to
requires an evaluation of how strong the case is likely to be when presented in
court. It requires the prosecutor to
take into account matters such as the availability, competence and credibility
of witnesses and their likely impression on the court as well as the
admissibility of other evidence such as any confession by the offender. The prosecutor must have regard to any likely
defences open to the offender.
Under what circumstances, if any, the DPP
would be prepared to rely on the evidence of potentially hostile witnesses
The DPP has a duty
to call all witnesses who are credible and can give relevant evidence. This is the case even though the witness’s
evidence may not assist the prosecution case.
However, if the DPP forms the view that the witness is not telling the
truth or will not give truthful evidence when called the DPP may decline to
call that person to give evidence. In
some cases as a matter of fairness and, if requested by the defence, the DPP
may call that witness to be made available for cross examination by the
In other cases a
potential witness may not be willing to cooperate with the investigatory agency
and provide a statement which sets out truthfully and accurately the evidence
that the person is able to give in court if called as a witness. In these cases an inquiry must be made as to
the reason why the person is not willing to cooperate. In some cases it may be clear that the
witness is concerned as to their own position and is fearful of being
prosecuted for an offence. In these
cases the witness may be invited to provide to the investigators an induced
statement which sets out the evidence the person can give in the matter which
will be used for the purpose of assessing whether that witness is suitable to
receive an indemnity from the DPP. The
induced statement cannot be used against the witness in court. There is close liaison between the
investigatory agency and the DPP prior to inviting a witness to give an induced
statement to ensure that it is appropriate.
Under the Prosecution Policy an indemnity, or more correctly an
undertaking under section 9(6) or section 9(6D) of the DPP Act, is given as a
last resort to secure a witness’s testimony and only where the witness can be
regarded as significantly less culpable than the defendant. Generally the Prosecution Policy requires
that the witness be dealt with in relation to their criminality and that their
cooperation be taken into account as a mitigatory factor in their sentencing.
In other cases the
witness may not be willing to cooperate for a reason other than self
incrimination. Examples of this might be
professional advisers who may regard such cooperation as a potential breach of
their duty of confidentiality. Generally
where there is sufficient evidence to justify a prosecution even without that
witness’s evidence, and the DPP is confident that if called the witness will
give truthful and relevant evidence, the DPP may subpoena the person to give
evidence even if that person has failed to cooperate with the investigation.
Whether evidence obtained in accordance with
notices issued under section 19 of the ASIC Act assist the DPP to undertake
Section 19 is a
powerful investigatory tool that is of great utility in ASIC
investigations. In the context of
investigations with a view to establishing a criminal offence section 19 can be
used to examine potential defendants with a view to establishing what those
persons would say in relation to the allegations. It provides an insight into likely defences
and may assist in avoiding unwarranted prosecutions.
Section 19 is also a
useful tool in establishing what a potential witness might be able to say. However, because it is an investigatory tool
section 19 examinations may not have the required degree of focus to always be
of use in a prosecution. For example a
section 19 examination may be wide ranging and be at an early stage in the
investigation, it may not explore areas of criminality as fully as required to
bring criminal charges and if the examiners are not precise in their questions
may give rise to ambiguities and uncertainties.
Further because such examinations are conducted in a relatively formal
atmosphere some witnesses may not be at ease and ready to volunteer information
as distinct from a willing cooperation with the investigation.
will still be a need for investigators to focus a witness’s attention to the
specific matters required to be proved to establish the elements of an
offence. Practical experience has shown
that if a person is approached as a potential witness with a view to taking a
statement they may be more willing to cooperate than if required to attend a compulsory
examination under section 19.
Where a professional
witness is unwilling to provide a statement but otherwise willing to tell the
truth in a section 19 examination the process may be useful in determining what
the witness will say when called to give evidence in court. In this case the DPP would be confident that
even though the witness has not cooperated in providing a statement, that
witness would give relevant and truthful evidence in court.
Whether the MOU between the DPP and ASIC
remains an appropriate instrument to facilitate successful criminal
The MOU between the
DPP and ASIC was first agreed in September 1992. Understandably some of the procedural
concepts in the MOU are now dated. For
example ASIC’s investigatory techniques have changed and developed. However, many of the fundamental concepts
contained in the MOU are still relevant to the relationship between ASIC and
the DPP. The DPP regards it as important
that there be full and early consultation between the regulator and the
prosecutor as to potential criminal cases.
We recognise that ASIC is the investigator and the decision to
investigate and carriage of the investigation are matters for ASIC. However, where the DPP can assist ASIC by
advising as to potential evidentiary difficulties or areas of potential criminality,
we feel that we can add value to the process to assist in focussing the
investigation and assist ASIC in producing a brief of evidence that is able to
be successfully prosecuted.
The DPP and ASIC
have recognised that the MOU requires updating and have commenced work on a
project to produce a new MOU that both recognises the roles and
responsibilities of each organisation as well as the principles of cooperation
to be employed in achieving a proper and appropriate outcome in the area of
corporate criminal enforcement.
Whether the DPP would recommend any
amendments to the Corporations Act in order to remove obstacles to just
There are 3 areas of
law reform that the DPP has suggested or supported in the past.
The DPP has for some
time suggested that consideration be given to inserting a general fraud
provision in the Corporations Act. In
our 2000 – 2001 Annual Report we noted that if a case that has been
investigated by ASIC involves a fraud on a company, or a fraud using a company
structure, it is often necessary for the DPP to lay charges under the fraud or
theft provisions of State Acts. In some
case the DPP has laid only State offences and this has led to challenges to the
DPP’s power to prosecute or appeal inadequate sentences imposed in those
cases. Further Commonwealth criminal law
has developed over the years and now differs in marked respect to State
law. The introduction of the
Commonwealth Criminal Code has meant that different principles of criminal
responsibility apply to Commonwealth offences than State offences. In some case it may not be possible to
prosecute State offences on the same indictment. All these developments have created the need
to consider the enactment of more general fraud offences in the Corporations
The second area of
reform concerns section 184(1) of the Corporations Act 2001 and was referred to
in the DPP’s 2001 – 2002 Annual Report.
This provision relates to conduct which involves a breach by a director
or officer of a corporation of duties they owe to that corporation. Section 184(1) makes it an offence if a
director is reckless and fails to exercise his or her powers in good faith in
the best interests of the corporation for a proper purpose.
principles of criminal responsibility in Chapter 2 of the Criminal Code now
apply to offences against the Corporations Act, including offences against
section 184. However, the effect of
applying these general principles to section 184 is that there is uncertainty
as to how the concept of recklessness can apply as drafted. The DPP has suggested it would be appropriate
to amend the law to provide some certainty.
The final area of
law reform that the DPP supported was a proposal put by ASIC to enable ASIC to
require a person who is examined under section 19 and who can give relevant
evidence in a prosecution to provide ASIC with a statement of the evidence for
the purposes of a criminal prosecution.
As currently framed it is not certain that the power in section 49 of
the ASIC Act will enable ASIC to require a person to give such a statement.
Damian Bugg AM QC
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