Chapter 3 - Key Issues
3.1
The committee received four submissions, only two of which made
substantive comment on the Bill. Some of the issues raised in submissions, as
well as issues explored by the committee at the public hearing, are discussed
below.
Consultation
3.2
The committee questioned representatives from the Attorney-General's
Department (Department) and the Department of Foreign Affairs and Trade (DFAT)
about the form and extent of consultation with respect to development of the Bill.
The representatives informed the committee that consultation has occurred
internally within government but that consultation has not taken place with
industry stakeholders specifically in relation to the Bill.[1]
3.3
As the representative from DFAT explained:
We have consulted, primarily, since the tabling of the
government's response [to the Cole Inquiry Report], with the financial sector,
but we have not consulted with industry on the particular terms of this bill.
This is because we had made available on 3 May to the exporting-trading sector
the terms of the government's response and the intended content of the bill.
Between then and the time that we required to get the bill drafted and before
the parliament, in order to get the bill effective in the most expedient time,
there was not time to discuss further with industry the terms of the government
response to the bill. To accommodate for that fact we have made sure that the
bill will not commence until we have been able to negotiate with the various
sectors that have an interest in the operation of sanctions in Australia the
terms of the implementing regulations on those aspects of the bill that will
affect industry. These will be given effect to in the form of the regulations.
3.4
The representative from DFAT advised that specific consultation will
take place with industry stakeholders in relation to the drafting of the
regulations:
At present all United Nations sanctions are implemented in part
through regulations to the Charter of the United Nations Act. As a consequence
of the amendments to that act proposed in this bill, we will be seeking to
amend a number of those regulations to reflect, in particular, the increased
level of penalty provided for in the act and also to provide for the mechanism
by which individual companies may apply for permits and other forms of
communication between those companies. That consultation process will begin at
the end of this month and carry on until September and October. Once that
consultation process is concluded and we have the necessary regulations drafted
following that consultation, at that point we will seek for the terms of this
bill to commence, and simultaneously with that we will commence the
regulations.[2]
3.5
In broad terms, the representative from DFAT noted that DFAT and
Austrade 'remain in regular dialogue with Australian industry and business on
the application of UN sanctions generally'.[3]
DFAT also retains a database for correspondence with banks and other financial
institutions on the operation of particular financial sanctions that might
affect them.[4]
Automatic incorporation by regulation
3.6
Dr Ben Saul from the Sydney Centre for International and Global Law at
the University of Sydney welcomed the Bill but raised two issues. The first
issue relates to the risk, in Dr Saul's view, that automatic incorporation via
regulation of persons or entities proscribed by the Security Council in Item 5
of the Bill may give rise to procedural fairness and human rights concerns.[5]
3.7
However, a representative from DFAT explained that it is not possible to
accommodate a procedural fairness element in the Bill:
The automatic incorporation by reference provision would apply
to the broad financial sanctions imposed by the Security Council as they relate
to the nomination by the Security Council of specific individuals and entities.
These are binding obligations imposed by the Security Council which do not
allow for the member states to make any kind of allowances in terms of the
question of procedural fairness. In other words, we do not have either the
opportunity or the right, under the operation of the Charter of the United
Nations, to provide for any deferral of the registration, under the Australian
law, of individuals named by the Security Council as being individuals to whom
sanctions ought to be applied. Bearing this in mind, we are not able to build
in a procedural fairness element because that would not be consistent with our
obligations under the UN charter.[6]
Responsibilities of the Australian Government
3.8
Dr Ben Saul submitted that the Bill focuses largely on the conduct of
individuals or companies rather than on the specific responsibilities of the
Australian Government in upholding UN sanctions.[7]
3.9
Dr Saul noted further that:
The Cole Inquiry was not empowered, and did not report on, the
wider questions of whether Australia breached its international
obligations in relation to the Iraq sanctions. Specifically, there remain
international legal questions as to whether Australia had a duty to ensure (as
a matter of strict liability) that its companies were not in breach of
sanctions, and whether that duty could – or could not – be discharged by
relying on the United Nations vetting of commercial contracts.[8]
3.10
Dr Saul suggested that the Bill should, at a minimum, include a specific
provision creating a strict liability offence where any Australian official or
Minister (intentionally or recklessly) authorises or permits the export or
import of UN-sanctioned goods (additional to the proposed offences in the Bill
of actually importing or exporting such goods). In Dr Saul's view, such an
offence 'would make it clear to Australian officials that a proper inquiry must
be made into whether proposed trade may violate sanctions – and that negligence
is not a sufficient defence'.[9]
3.11
The representative from DFAT told the committee that, with respect to
overarching responsibility for breaches in international law of Australia's
sanctions obligations:
We respectfully disagree with his position that if an Australian
company in breach of Australian law acts inconsistently with UN sanctions, that
represents a breach by the Australian government of the sanctions obligation.
This is a very well understood principle of public international law and so,
from that point of view, so long as the Australian government has in place the
necessary measures to implement sanctions and to take action against those who
would seek to breach those measures, Australia has met its international
obligations.[10]
3.12
The representative from the Department commented on Dr Saul's suggestion
to apply a specific offence to Australian officials or Ministers as follows:
...as a matter of policy, the view has consistently been taken
that criminal responsibility should not be imposed on the Crown under
Commonwealth law. To create a specific offence as proposed by Dr Saul would be
a significant departure from this policy, and this is not under consideration.
Regarding officials, depending on the facts of any case, (P)art 2.4 of the
Criminal Code, which deals with extensions of criminal responsibility, may
apply to some officials for breaches of offences in the bill. This would really
depend on the facts, but, for example, an official who aids, abets, counsels or
procures the commission of an offence by another person may be open to
prosecution. Commonwealth officials are also subject to the disciplinary regime
under the Public Service Act.[11]
Penalties
3.13
Transparency International Australia (TIA) expressed general support for
the Bill but was of the view that it should go further, particularly in
relation to penalties and protection for whistleblowers.[12]
In particular, TIA submitted that it 'had hoped that the opportunity would
finally be taken...to increase the level of maximum monetary penalties applicable
to an offence under Part 70'.[13]
TIA's view was that the current level of penalties 'are not "effective,
proportionate and dissuasive criminal penalties" as required by the [UN] Convention,
even when combined with the possibility of confiscation of benefits or the
rather remote risk of jail'.[14]
TIA argued further that the maximum fine for corporations upon conviction should
be increased to $10 million.[15]
3.14
TIA also considered that special legislative protection should be afforded
to whistleblowers in the context of bribery of foreign officials:
U[nited] S[tates] experience over a long period confirms that
the willingness of corporate witnesses to come forward will continue to be an
important if not an essential ingredient in successful investigation of bribery
cases. The well understood reluctance and risk faced by potential witnesses
must be offset as far as possible by legislative protection...[16]
3.15
The committee questioned representatives from the Department and DFAT in
relation to whether executives of companies are specifically covered by the
offence provisions in the Bill.
3.16
A representative from the Department explained that there are two tiers
of offences that are either created or amended by the Bill:
- offences directed at individuals, which in some circumstances
could cover the actions of company officials; and
- offences directed at bodies corporate.
3.17
The representative explained further that, where an officer of a company
is acting within their ostensible authority, 'clearly corporate liability is
going to be the more appropriate course, and obviously the offences apply
there'.[17]
However, 'if you have somebody who is acting outside that kind of realm and for
their own personal benefit, there are the individual offences that we would
have thought would apply in that instance'.[18]
Offences of strict and absolute liability
3.18
The committee questioned the representatives from the Department and
DFAT about the rationale for inclusion of strict and absolute liability
offences in the Bill and possible inconsistencies with relevant guidelines in A
Guide to Framing Commonwealth Offences, Civil
Penalties and Enforcement Powers.[19]
3.19
A representative from the Department explained that the inclusion of
strict liability offences for bodies corporate was a specific recommendation
from the Cole Inquiry Report. He explained further that:
Consideration was, of course, given to the normal Commonwealth
policy that applies, as articulated in the guide. These offences do not fall
strictly within the normal exceptions, although I think it is important to note
that one of the key elements we try to avoid in Commonwealth policy is strict
liability offences that have imprisonment as a form of punishment, and that
does not apply in this case, because we are talking about bodies corporate. For
the offences that apply to individuals strict liability is not applied to
critical culpability elements.[20]
3.20
The representative from the Department also advised that the inclusion
of strict liability offences in such circumstances is consistent with other
Commonwealth legislation:
Certainly for these types of provisions where you are trying to
establish whether an element of the offence is compliant with some element of
law then, yes, it is very common to apply strict liability in those instances.
There is no need to form some kind of belief with regard to it or that the
standard fault element that would apply would be recklessness. There is no need
for recklessness with regard to whether that statute exists or whether the law
had been complied with.[21]
3.21
With respect to the inclusion of absolute liability offences in the Bill,
the representative noted that absolute liability applies only to very limited
elements in the offences in question:
It does not apply to the entirety of an offence, so we would not
call it strictly an absolute liability offence. It is confined to what is
traditionally regarded as the knowledge of law problem. It is confined to
whether the particular importation was prohibited under an Act or whether it
was prohibited subject to some kind of licensing scheme. It focuses only on
those two circumstantial elements of the physical elements and not on the
entirety of the offence.[22]
3.22
For example, in proposed section 233BABAB, the first two elements of the
offence (namely that the individual intentionally imported goods; and the goods
were UN-sanctioned goods and the individual was reckless as to that fact)
contain fault elements. As such:
...it is not an absolute liability offence...The choice to go for
absolute liability in this case was consistent with the remainder of the
Customs Act. There are very similar offences on which these are ostensibly modelled
which is absolute liability in exactly the same instances.[23]
3.23
In its response to a question on notice, the Department stated that the
matters listed at Part 4.5 of the Guide to Framing Commonwealth Offences,
Civil Penalties and Enforcement Powers were considered when framing the absolute
liability offences in the Bill but that 'it is appropriate to depart from the
general policy set out in the Guide in these circumstances'.[24]
3.24
The Department reiterated that defences are available for the physical
element of the new offences:
...proposed sections 233BABAB and 233BABAC and existing sections
233BAA and 233BAB provide that strict liability applies to the physical element
that an approval had not been obtained at the time of the importation or
exportation. This means the defence of honest and reasonable mistake of fact
would be available for this element of the new offences.[25]
Committee view
3.25
The committee considers that the Bill will effectively strengthen the
capacity to implement and enforce UN sanctions regimes in Australia by
significantly improving the relevant legal frameworks.
3.26
The committee notes advice from the Department and DFAT that it will
consult with industry in the development of regulations related to the proposed
amendments to the Charter of the United Nations Act. The committee encourages
comprehensive consultation in that regard.
Recommendation 1
3.27
The committee recommends that the Bill be passed.
Senator Guy Barnett
Chair
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