Australia has been labelled a potential "paradise" for corporate criminals by the country's own corporate regulator, adding to growing concerns about the country's lax penalties for financial wrongdoing.
The regulator, the Australian Securities and Investments Commission, says fines and penalties in Australia have not kept up with other international jurisdictions. The regulator is pushing for tougher penalties to help curb crimes such as insider trading.
In unusually pointed comments, the regulator's head, Mr Greg Medcraft, warned last week that Australia was at risk of becoming "a paradise for white collar criminals".
"In Australia, it is worth breaking the law to do the trade, it is a big problem," he told a business luncheon.
"In many cases, all we do is give a slap on the wrist and it is not discouraging bad behaviour."
The regulator has been pressing for legal changes and in March released a report which compared Australia's penalties with those in Canada, Britain, Hong Kong and the United States.
It noted that unlike in some other nations, Australian regulators lack the power to confiscate profits from corporate wrongdoing. The highest civil penalty for a crime like insider trading is A$200,000 (S$225,540), compared with unlimited fines in Britain and Hong Kong and fines of up to three times the benefit gained in the United States.
However, the push for tougher sanctions has been resisted by the government, which has so far rejected calls to change the laws and says it does not see a need for tougher penalties.
Earlier this year, the government slashed the regulator's funding by A$120 million over the next five years.
Mr Medcraft said Australia, in most cases, had not indexed penalties to inflation for 20 years and needed greater resources and funding to catch criminals.
"The penalties, particularly civil penalties, in Australia for white-collar offences are basically not strong enough, not tough enough," he said.
An expert on corporate crime in Australia, Mr David Bartlett, from Griffith University, said the government should consider imposing tougher penalties as well as bolstering the resources of the corporate regulator. However, he said, there should also be improved efforts to catch criminals.
"While having strong maximum penalties sends a clear deterrent message, would-be offenders are also going to weigh factors such as their likelihood of detection and prosecution," he told The Straits Times.
Asked how prevalent corporate crime is in Australia, he responded: "Nobody really knows. Reported offences are usually just the tip of the iceberg."
Some MPs - including members of the ruling coalition - have called for a national inquiry into corporate crime.
A coalition MP, Mr John Williams, told Parliament: "I have said for 5½ years that we should have a royal commission into white-collar crime because I believe Australia is, today, a paradise for white-collar crime."
But the government is holding its position.
Mr Medcraft's comments angered Finance Minister Mathias Cormann, who telephoned the bureaucrat and asked him to water down the description of Australia as a paradise for corporate criminals.
In an embarrassing back-down, Mr Medcraft publicly issued a correction.
This article was first published on Oct 30, 2014.
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