Platypus And Turtle Homes Destroyed By “Good Corporate Citizen” (Aus – criminal)

An unnamed Queensland quarrying company pleaded guilty to 9 charges, relating to its failures, since 2008, to comply with environmental law, including one charge of causing serious environmental damage, and another of providing misleading and deceptive information to the Queensland Department of Environment and Heritage Protection (“EHP“).

For at least three years, the company’s criminal discharge of aggregate into Browns Creek has “filled the living spaces of aquatic life (platypus, fish, turtles and plants) so that the creek no longer serves the ecological or environmental functions of a stream”.  The effects on wildlife will continue for years, and landowners along the creek have been unable to use their lands for grazing and horse training, or to draw water from it.

So, what’s the consequence for turning a healthy, thriving stream and your neighbours’ properties into your private waste bin, providing false information to EHP along the way?   Well, the Brisbane Magistrates’ Court fined the company, without conviction.  The $250,000 fine was fixed without reference to the financial benefit reaped by the company as a result of its criminal behaviour.  The Court considered the company “a good corporate citizen”, though it noted, somewhat incongruously, that “it was a significant concern that a company of the defendant’s size could so profoundly fail to meets its obligations.”  It makes one wonder what size the company was?  Who can say? Its name hasn’t been published, nor any conviction recorded.

The Slow Grind Of Environmental Crime (Aus – criminal)

Another EHP prosecution – for an unnamed Gold Coast company this time.  The offender “held an environmental authority to carry out crushing, milling, grinding or screening activities, as well as water transfer station activities”.  The complaints started in 2004 – and never stopped.  After four official warnings, five infringement notices and an Environmental Protection Order (which wasn’t complied with), the EPO finally charged the company in 2015.  Southport Magistrates’ Court issued a $40,000 fine.  It’s unclear whether a conviction was recorded, or whether the financial benefit to the company was taken into account when fixing the fine.

Aiding and Abetting Corporation to Offend (Aus – criminal)

ASIC has commenced proceedings against the executive chairman of Waratah Resources Limited.  The matter is included here as an example of the various ways white collar offenders may be prosecuted for involvement in their company’s offending; the charges in this case include “knowingly authorising” the company’s offending, and “aiding and abetting” the company’s offending – both of which constitute offences by the individual.

Another example of charging a white collar offender with aiding and abetting a company is provided by ACCC’s prosecution of Mr Davies, in connection with Natural Food Vending Pty Ltd‘s offending.  This latter matter is also an example of the Federal Court exercising its criminal jurisdiction.

The Problems With The Illegal Phoenix (Aus – regulatory)

ASIC Commissioner John Price noted some of the problems created by Illegal Phoenixes – and ASIC’s methods for dealing with individuals associated with them, in an address to the Senate.

Good Culture (Aus – regulatory)

ASIC Commissioner John Price also spoke to Deloitte this fortnight, commenting on the “strong connection between poor [corporate] culture and poor [corporate] conduct”.  He offered some insight into the features ASIC looks for when assessing culture, and made the rather confusing comment that “[i]f your staff accept and really believe in doing the right thing by your customers, the need for a lot of internally driven rules falls away.”  I wonder if Price had a particular context in mind, and what he meant by “internally driven rules”, because most courts and regulators are familiar with the well-meaning corporation that unwittingly commits crime by following inadequate internal processes – WorkSafe Queensland’s Q Fever prosecution this fortnight provides a ready example.

“Q Fever” Prosecution of Meat Processor (Aus – criminal)

WorkCover Queensland summarily prosecuted a Meat Processing company for a failure to provide a safe work environment for employees; that failure resulted in an employee contracting Q Fever, requiring hospitalisation for 10 days.  WorkCover declined to publish the offender’s name, and described the matter as follows: “In this instance, the magistrate found that the defendant was a good corporate citizen which tried to do the right thing but fell down on supervision. The company had even put in place what it thought was best practice and sought outside assistance to implement controls for Q fever. However, special care is needed with Q fever because it can cause severe harm. The worker in this case was hospitalised for 10 days. The company has since made changes, including stopping workers who have not been vaccinated from working in high risk areas.”

Unconscionable Expressions (Aus – civil)

The ACCC has commenced civil pecuniary penalty proceedings in the Federal Court against Lifestyle Photographers, T/A Expression Sessions.  It provided child photography services, and the ACCC alleges that it conducted itself unconscionably, when entering contracts with vulnerable consumers.

ASIC’s Licensing Report (Aus – regulatory)

Licensing regimes are an important feature of corporate regulation in Australia, serving to cordon off parts of the marketplace considered particularly problematic, restricting entry to those operators who have successfully completed the licensing process.  Licensing legislation frequently establishes offences particular to misconduct within the licensed industry.  This fortnight, ASIC published its latest licensing activity report, giving an insight into the licensing regimes it administers. A recent example of ASIC’s licensing work is its cancelation of Sanford Pty Ltd’s credit licence.

Financial Crime Inquiry (Aus)

The Parliamentary Joint Committee on Law Enforcement published its Inquiry into financial related crime; it’s not focussed on corporate crime, but does include some interesting material, like this comment from Commender Bryson at 7.50:

When we have a report of a financial related crime here in the Territory, time and time again we find that a lot of the entities, whether they be incorporated bodies or associations, have extremely poor governance and poor records.  That makes it very problematic to conduct a successful investigation and move the matter into the prosecution phase.

I haven’t seen much commentary on this particular problem, but it is a very significant one for corporate crime investigators and prosecutors – particularly where the suspect is a small company.

Misleading Market Conduct results in $300K fine (Aus – criminal)

ASIC advises “D J Carmichael Pty Limited … has paid a penalty of $300,000 to comply with an infringement notice given to it by the Markets Disciplinary Panel (“MDP”). The MDP found it had reason to believe that DJ Carmichael had contravened subsection 798H(1) of the Corporations Act 2001 …  by failing to comply with  an ASIC market integrity rule (ASX Market) regarding manipulative trading. The penalty imposed was for DJ Carmichael entering bids and dealing in a product for a client where DJ Carmichael intended to create a false or misleading appearance with respect to the price of that product.”

Cars That Switch Off While You’re Driving (And Kill You) (USA)

“From in or about the spring of 2012 through in or about February 2014, GM, the defendant, in a matter within the jurisdiction of the executive branch of the Government of the United States, wilfully and knowingly did falsify, conceal, and cover up by trick, scheme and device material facts, and made materially false, fictitious, and fraudulent statements and representation, to wit, GM engaged in a scheme to conceal from its federal U.S. regulator, NHTSA, a potentially deadly safety defect that GM was required to disclose within five business days of discovery thereof.”

So runs the first charge against GM, which will, like the other charges, be withdrawn if GM complies with its Deferred Prosecution Agreement, entered this month.

According to the agreed facts (Appendix C on page 27 at [5]-[9]) “[b]efore the Defective Switch went into production in 2002, certain GM engineers knew that it was prone to movement out of the Run position; testing of a prototype showed that the torque return between the Run and Accessory positions fell below GM’s own internal specifications.  But the engineer in charge of the Defective Switch approved its production anyway…From approximately the spring of 2012, certain GM personnel knew that the Defective Switch presented a safety defect because it could cause airbag non-deployment associated with death and serious injury.  Yet not until approximately 20 months later, in February 2014, did GM first notify NHTSA and the public…”

GM has “acknowledged a total of 15 deaths, as well as a number of serious injuries, caused by the Defective Switch“. However, there’s reason to believe the real number is at least 124 deaths.

Cars That Tell Lies? (USA and Worldwide)

Volkswagen installed “defeat devices” to cheat on emissions tests in as many as 11 million cars sold worldwide.  While corporations cannot presently be charged with offences in Germany, they can in many of the jurisdictions in which those cars were sold; the New York Times provides an overview of possible US legal action, while the Wall Street Journal expresses doubt as to whether it will be possible to charge the company with US environmental offences.

Deadly Peanut Butter (USA)

Meanwhile, executives of the Peanut Corporation of America were sentenced for their fraud and food safety offences which resulted in a salmonella outbreak that killed 9 people; CEO Stewart Parnell received a 28-year jail term.  Presumably, prosecutors declined to charge the company because it filed for bankruptcy in 2009. Joe Nocera for The New York Times noted the very significant disparity between treatment of Parnell and treatment of GM executives following the death of at least 124 people who died in cars that GM sold despite knowing they were seriously defective.  Should US prosecutors have to rely on fraud charges when companies knowingly, or recklessly, sell deadly products?

US EPA Praises Another Alleged Polluter (USA)

This fortnight it was Guardian Industries Corp, a flat-glass manufacturer alleged to have violated the Clean Air Act by making unauthorised major modifications to its furnaces that significantly increased harmful air emissions.  “[G]lass manufacturing is currently a significant source of the air pollutants that cause serious lung and heart problems”, EPA’s press-release noted.  Guardian resolved the matter with the EPA out-of-court, and, despite the fact that the consent decree records that Guardian “has denied and continues to deny the violations alleged in the complaint” (p10), Guardian has been showered with praise by the EPA and other State representatives, for entry into the agreement.

Meanwhile, the EPA has settled with Buckeye Pipe Line Co and Greenlight WVO LLC over their (allegedly) inadequate oil-spill prevention plans and equipment.

When Environmental, OHS and Consumer Law Collide (USA)

The US EPA it has updated its “1992 Agricultural Worker Protection Standard [to] afford farmworkers similar health protections that are already afforded to workers in other industries”.

It has also charged FMC Corporation with 12,379 violations of the Federal Insecticide, Fungicide, and Rodenticide Act, including unlawful advertising, and use of a misleading brand name.

And it settled criminal litigation with Bayer CropScience, who, it is alleged, violated US federal chemical accident prevention laws, resulting in the loss of two lives.