You are on page 1of 8


• The main corporate and business fraud offences and regulatory provisions are found in the Corporations Act 2001 (Cth) and
federal Criminal Code, as well as in specific federal statutes and the criminal laws of the states and territories.
• Federal, state and territory criminal legislation contain various offences which can be used to prosecute corporate or business
fraud. These include:
• Standard fraud offences, which include obtaining property, financial advantage or causing financial disadvantage by deception or
• The falsification of company books or accounting records.
• Specific offences in particular contexts, such as fraud against the Commonwealth.
• These are not strict liability offences but the elements, including any necessary mental element, depend on the particular offence.
Some offences apply to either natural or legal persons, while others apply only to specific persons such as company directors or
officers. For example, the falsification of books offence applies to current or former company officers, employees or members
whose conduct has recklessly falsified company books.
• Depending on the offence, corporations may be liable for the conduct of employees, agents or officers acting within their actual or
apparent authority or scope of employment, and where the conduct was authorised or permitted (including a result of corporate
culture) by the body corporate.
• Attempts to commit these offences may also attract the same liability.

• Depending on its nature and/or territorial scope, corporate or business fraud may
be investigated by a number of governmental agencies including:The Australian
Securities and Investments Commission (ASIC).The Australian Federal Police (AFP)
or its state/territory counterparts.Australian regulators work closely with other
international enforcement agencies. In some cases, the regulators have signed
formal co-operative documents, including memoranda of understanding (MOUs)
in relation to international regulation, information sharing and enforcement (for
example, there is a specific unit within ASIC responsible for liaising with
international regulators). The authorities have the following powers;

Civil/administrative proceedings or penalties
• Depending on the nature of the conduct, a regulator can consider
civil/administrative enforcement remedies available to it, which includes seeking
pecuniary civil penalties, the disqualification of individuals from managing
companies or bans on the provision of financial services or engaging in credit
activities. However, cases of deliberate fraud are more likely to be dealt with by
way of criminal rather than civil proceedings. In some cases, civil provisions may
operate automatically against criminal convictions (for example, a person is
automatically disqualified from managing corporations for five years if convicted
of an offence that involves dishonesty and is punishable by imprisonment for at
least three months).
• In cases of deliberate misconduct, fraud or involving a high level of recklessness,
ASIC will not accept enforceable undertakings (being administrative settlements
that may be accepted as alternatives to certain civil enforcement actions).
• Right to bail. The right to bail varies in each Australian jurisdiction. Factors which
weigh against bail include the risk that the accused will abscond, pose a danger to
the community or interfere with witnesses. However, many factors may be taken
into account including previous criminal history, the strength of the prosecution
case and the circumstances of the accused. Bail can be granted with or without
conditions at any stage in the proceedings.
• Penalties. Penalties vary depending on the offence and circumstances. For
example, the falsification of books offence under the Corporations Act attracts a
maximum penalty of 100 penalty units (A$21,000) and/or two years
imprisonment, while the fraud offence in New South Wales attracts a maximum
penalty of ten years imprisonment and/or 1000 NSW penalty units (A$110,000)
for individuals (substituted with a maximum fine of A$220,000 for corporations).
False accounting offences under the Commonwealth Criminal Code also attract
significant maximum penalties
• Depending on the nature of the alleged fraud, it may be possible for
affected third parties to bring an action for compensatory damages under
various statutory and common law actions (such as misleading and
deceptive conduct, breach of fiduciary duty or conversion). Punitive
damages (known as exemplary damages) are not available generally and
are rarely awarded even in the few areas of law which they may be sought.
• However, Australia has a thriving class action regime which, along with the
presence of litigation funders, means that third parties who suffer damages
(such as consumers, investors and/or shareholders) can launch litigation as
a representative class. In the last ten years, Australia has seen a very
marked rise in shareholder and consumer class actions arising from
misleading and deceptive conduct on the part of corporations.