All the directors and officers of a company have a duty to direct their operations towards the profit of the organization and also towards its best interest. The Corporation Act 2001 (Cth) (The Act) governs the operations of the directors that are related to an Organization along with other common law provisions. Several provisions exist that have been laid down in the legislation towards governing the actions of the directors. Statutory duties of the directors set out by the CA are mentioned under the section 180-184 of the Act. According to the provisions that are laid down by section 180(1) of the said Act, the directors are bound to discharge their responsibilities and duties towards the organization with due skills and attentiveness. The activities of the directors related to the provisions of section 180(1) of the Act are evaluated based on objective rather than subjective. Thus, an imaginary person having an aptitude of a director is positioned o the director. Moreover, the actions of the director are analyzed based on the actions that the imaginary director would have taken in same position. It had been ruled by the court in the case of AISC v Cassimatis that any director under any reasonable circumstances in any situation will not violate a legal provision and therefore such an act cannot be sanctioned by the shareholders.
It has been produced in an article that Crown Resorts Ltd has sent agents to China for the purpose to recruit gamblers. Gambling is banned in China and hence it is treated as a penal offence. Previously, these agents used to go to mainland china and hired gamblers to come and play in the resorts of Australia. The Chinese officials arrested the employees of the Crown resort. In addition to this, the share value of the organization has witnessed a steer drop of 14%. The investors and shareholders of the company planned to take rigid action against the directors. From these factors it can be assumed that the directors of Crown have not complied with the provisions o section 180(1) of the Act. Therefore, it can be said that due to a reasonable director it would not undertake illegal actions in relation to the company and these activities are not with the observation of due ability and diligence.
Australian Security and Investment Commission (AISC) are a corporate supervisor and governor of organizations that operates within Australia and are registered with the Australian Securities Exchange (ASX). The ASIC monitors financial services, integrated corporate actions and consumer and market credits within the Australian territory. The indicator focuses to make scope for the market in order to enhance economic growth and fund the economy. The monitor determinates to ensure financial well being within the Australian community. The regulator along with the efficient functioning of market promotes the trust and confidence of the investors and consumers. The commission strives for orders like suspension from management and financial penalties from the management towards the ones who are found guilty of non-compliance with corporate legal framework. The article provides that the Chinese officials due to the illegal activities committed by them in China have arrested a few employees of Crown. Hence, it is the duty and role of the indicator to conduct an investigation related to the situation. Later it was classified that Crown was registered with ASK and hence ASIC had to conduct an investigation in relation to the accusations. The ASIC had to take actions in order to secure and protect the shareholders and investors of the Crown. They also had to make an investigation as the organization had subjected the employees who were arrested to significant risks.
The ASIC has the power to take various actions against the organization and its directors where it has been studied and established based on the investigation that they have not complied with the provisions of the Act. It was subjected to the investors, stakeholders and creditors of the organizations to significant rises. The duties of the directors are mentioned under Section 180-183 of the CA and it has been violated in a civil penalty provision. On the contrary, the provisions entailed in Section 184 of the Act have been breached which resulted in criminal liability under the provisions of Section 6.1 of the criminal code. Therefore, the directors were held criminally liable for their activities that they have hastily violated the duties imposed on them in relation to the organization. Section 1317E of the Act required the civil penalty provisions. According to this section, the directors can be subjected to financial penalties and they might also be barred from managing a company for a certain period of time. The maximum amount of penalty that can be imposed on the directors of an organization as an individual is $200,000. The major period for which the directors can be blocked from managing a corporation is five years as mentioned under the provisions of Section 206c of the Act. Therefore, the directors can rely on section 180(2) or 1317G as a defense related to the allegation. According to Section 1317G, the court has the power to forgive the directors for the breach of duty made by them. However, the ASIC obtained a monetary penalty of $100,000 as well as barring the period of two years in relation to the Australian Securities and Investments Commission [ASIC] v Lindberg.
Multiple cases have been launched against the Commonwealth Bank by the AUSTRAC regarding the violation of anti money laundering and he laws of counter terrorism. It was alleged by AUSTRAC that the bank was involved in the transfer of illegal money thereby benefiting several terrorist groups and criminal gangs. Allegation was brought against the Commonwealth Bank by AUSTRAC regarding the fact that the bank was involved in the violation of the provisions of the legal statutes that has been mentioned above on more than 53,000 instances. Proceedings were brought against the bank according to the provisions of civil penalty by AUSTRAC as established by the Corporation Act 2001, in the federal court of justice in Australia in regard to “serious and systemic non-compliance.”
The Australian community as a result of the actions of the Commonwealth bank has been subjected to major and ongoing financial crime however such allegation was brought down by the AUSTRAC during filing the case. In this case the bank failed to take reasonable steps and did not take any action in relation to the amount of A$77 million worth of suspicious transactions however this was the specific issue as brought down by the ASTRAC before the court. The Court is at the authority to impose a penalty of A$18 million maximum regarding the 53000 breaches made by the Commonwealth bank. In this context, several allegations were brought by the AUSTRAC against the bank in the present scenario where it is apparent that the use of Intelligent Deposit Machines were used for the purpose of money laundering activities however necessary steps in order to address the consequences of such activities has not been taken by the bank. The use of Intelligent Deposit Machines as provided by the bank were utilized by four money laundering syndicates and out of them three were associated with the distribution of drug and import network. However it was observed that in order to keep suspicion at bay the syndicates from the very beginning was involved in small amount of transactions and deposited about $21 Million across 11 accounts of commonwealth banks. However after further allegation by AUSTRAC the bank did not pay heed to the matter in scenario even after being warned by the Federal Police in Australia. In this regard, it is noteworthy to mention that the AUSTRAC has other roles to perform other than the roles played by the ASIC.
The ASIC or the Australian Investment and Security Commission is an independent body of the government of Australia whose purpose is to regulate companies and securities. The Australian Investment and Security Commission are at the duty to keep records of the company matters. The ASIC can be termed as the regulator of various organizations within Australia and is registered with the Australian Securities Exchange (ASX), the AUSTRAC on the other hand regulates different financial organizations in Australia. The regulation of financial services and consumer credit in Australia is controlled by the ASIC. In order to enhance economic growth in the market, the ASIC aims to fund economy in order to make scope for market operations. In order to ensure financial security within Australia, the role of ASIC as a regulator has proved to be beneficial. The ASIC since time immemorial is involved with the promotion of investor’s and customer’s trust and confidence. The commission from the very beginning made efforts in order to provide orders on financial penalties and suspension from the corporate management towards those who has not complied with the legal framework of the corporate. In the given scenario, the role of ASIC is to analyze the operation of the organization as well as the duties of the directors discharged during operations.
The chairman of ASIC, Greg Medcraft stated that investigation will be done regarding the matter that whether the bank authorities acted according to the legal provisions and not notifying the investors regarding the suspicious behavior. In the present case, ASIC has to analyze the compliances of Commonwealth bank with the obligations of licensing which is to act diligently, honestly and efficiently and requires to report with potential liabilities. As noted by the Chairman, that it is not mandatory on the part of organizations like Commonwealth bank to inform the ASIC regarding the breach of anti-money laundering laws and counter terrorism laws. The directors of the organization are at the duty to bring professional attitude while discharging their functions for ensuring effecting working of the management system.
Thus in the given case study it is the primary role of ASIC to investigate into the matter in depth by analyzing the actions of the directors regarding the matter of Commonwealth bank. If it comes to the knowledge of the ASIC that after proper investigation the corporate directors have not complied with their statutory duties in making disclosure about the risks involved in such matter to the investors, then in such cases the directors would be liable for the breach of the provisions of Section 180(1) of the Corporation Act, 2001. In this regard, the directors failed to comply with the disclosure of legal duties and failed to take reasonable care by not acting with diligence in context of their operations which any reasonable director would have done in the present case study. In case of breach of corporate laws, the ASIC has the authority to bring distinct proceedings against the bank. The ASIC in such cases would be successful in establishing breach of Section 180 (1) of the Corporation Act, 2001 done by the directors of the bank and would be able to acquire a separate order regarding the provisions of civil penalty
References:
‘ASIC To Investigate CBA Over Money-Laundering Scandal’ (ABC News, 2018) <https://www.abc.net.au/news/2017-08-11/asic-to-investigate-cba/8796542> accessed 6 January 2018.
CBA faces ‘very large’ shareholder action on money laundering. (2018). ABC News. Retrieved 3 January 2018, from https://www.abc.net.au/news/2017-08-23/commonwealth-bank-faces-shareholder-class-action/8833860.
CBA will take months to answer money laundering allegations. (2018). ABC News. Retrieved 3 January 2018, from https://www.abc.net.au/news/2017-09-04/commonwealth-bank-will-take-months-to-respond-to-austrac/8869706.
Knaus, C. (2018). Commonwealth Bank accused of money laundering and terrorism-financing breaches. the Guardian. Retrieved 3 January 2018, from https://www.theguardian.com/australia-news/2017/aug/03/commonwealth-bank-accused-of-money-laundering-and-terrorism-financing-breaches.
Planning News – Planning In The News (Business Collection) – Informit’ (Search.informit.com.au,2018)<https://search.informit.com.au/fullText;dn=658413116605352;res=IELBUS> accessed 4 January 2018.
‘Taking Other People’s Money: Development And The Political Economy Of Asian Casinos’ (Taylor&Francis,2018)<https://www.tandfonline.com/doi/abs/10.1080/09512748.2014.995127> accessed 4 January 2018.
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