Australian Institute of Criminology

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Complex commercial fraud

Proceedings of a conference held 20-23 August 1991

Peter N Grabosky (ed)
ISBN 0 642 16992 6 ISSN 1034-5086
Canberra: Australian Institute of Criminology, January 1992

Abstract

One of the objectives of this conference was to describe the new countermeasures which have been mobilised to combat complex commercial fraud in Australia. Representatives of agencies such as the Australian Securities Commission, the National Crime Authority and the Commonwealth Director of Public Prosecutions discussed the directions they are taking to tackle the problem of fraud. Other papers address such timely topics as penalties appropriate to fraud offenders, and the responsibility of professional advisers for the prevention, detection and rectification of client fraud.

Preface

The present volume represents the most recent contribution of the Australian Institute of Criminology to the understanding and control of white-collar crime in Australia. Institute involvement in the study of complex commercial fraud, and of white-collar crime in general, date to its founding nearly two decades ago. Dr Andrew Hopkins, an early Institute staff member currently on the faculty of the Australian National University, wrote landmark studies on what was then the new Trade Practices Act 1974 (Cwlth) (Hopkins 1978a; 1978b).

Dr Hopkins was followed by Dr John Braithwaite, now also of the Australian National University, who has been instrumental in establishing Australia as one of the world centres for the study of white-collar and corporate crime. Among his contributions while on the staff of the Institute which have received international critical acclaim are Corporate Crime in the Pharmaceutical Industry (Braithwaite 1984), The Impact of Publicity on Corporate Offenders (Fisse and Braithwaite 1983) and a seminal article on enforced self-regulation published in the Michigan Law Review (Braithwaite 1982).

After leaving the Institute, Dr Braithwaite continued to collaborate with our researchers in the study of white-collar crime. Indeed, one of these projects sets the stage for the present volume.

In 1984, Dr Braithwaite and I collaborated in a study of enforcement strategies of Australian business regulatory agencies. Together, we visited every Australian capital city and met with executives of ninety-six different regulatory agencies from the Reserve Bank of Australia to the Chief Inspector of Explosives in Queensland. Our book, Of Manners Gentle (Grabosky and Braithwaite 1986) was published jointly by the Institute and Oxford University Press in 1986. My commitment to principles of truth in advertising compel me to disclose that much of the book is now dated. For reasons which will soon become apparent, this is just as well.

Included in our project were those agencies then participating in the cooperative scheme for companies and securities regulation - the state and territory corporate affairs commissions and the National Companies and Securities Commission. Corporate affairs regulation is discussed in Chapter Two of our book.

The picture which we painted of corporate affairs regulation at the time of our fieldwork in 1984 was not one to inspire confidence. Agencies were hopelessly under-resourced. The backlog of cases awaiting investigation for possible fraud was apparently endless. Responsible ministers resisted requests for additional investigative resources. Political interference was pervasive; ministers were able to quash prosecutions quite readily, and did so. Corporate affairs regulators were told, 'Don't rock the boat'. In the most unusual event that an offender was brought to justice, penalties imposed were tepid, if not derisory. It is no wonder that the sorry state of Australian enterprise which marked the latter years of the 'Decade of Greed' were able to develop.

Fortunately, governments, in their wisdom (if perhaps belatedly) saw fit to replace the inadequate regime of companies and securities regulation which enabled fraud to flourish.

The essays in this volume were originally presented at a conference convened by the Institute in August 1991. One of the objectives of this conference was to describe the new countermeasures which have been mobilised to combat complex commercial fraud in Australia. Representatives of agencies which have been created since Braithwaite and I undertook our research (The Australian Securities Commission, the National Crime Authority, the Commonwealth Director of Public Prosecutions) discuss the directions which they are taking to combat complex commercial fraud. Other papers address such timely topics as penalties appropriate to fraud offenders, and the responsibility of professional advisers for the prevention, detection and rectification of client fraud.

A prominent theme in this collection is the very significant risk that the proliferation of investigative and enforcement agencies across the Australian federal system today might contribute to inefficient and ineffective fraud control.

As the decade of the 1990s began, the image of Australian business in the eyes of international financial institutions and markets was tainted. Australia had become the butt of jokes in international financial circles. The challenge of Australia's economic recovery depends to a significant extent on the ability to dispel that image. I hope that the Australian Institute of Criminology, by publishing this collection of essays, can make a small contribution to this effort.

P N Grabosky
Canberra
December 1991

References

  • Braithwaite, John 1982, 'Enforced Self-Regulation: A New Strategy for Corporate Crime Control', Michigan Law Review, vol. 80, pp. 1466-507.
  • ----------- 1984, Corporate Crime in the Pharmaceutical Industry, Routledge and Kegan Paul, London.
  • Fisse, Brent and Braithwaite, John 1983, The Impact of Publicity on Corporate Offenders, State University of New York Press, Albany.
  • Grabosky, Peter and Braithwaite, John 1986, Of Manners Gentle: Enforcement Strategies of Australian Business Regulatory Agencies, Oxford University Press, Melbourne.
  • Hopkins, Andrew 1978a, Crime, Law and Business: The Sociological Sources of Australian Monopoly Law, Australian Institute of Criminology, Canberra.
  • ----------- 1978b, The Impact of Prosecutions Under the Trade Practices Act, Australian Institute of Criminology, Canberra.