Parliament House

CANBERRA ACT

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 conviction; and,
• it is in the public interest to prosecute.

The decision 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 defence.

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 successful prosecutions

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.

Accordingly there 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 prosecutions

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 prosecutions

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 Act.

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.

The general 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.

Yours sincerely

Damian Bugg AM QC