 Appendix 25 |
 Contents |
 Appendix 27 |
This appendix provides an outline of offences or contraventions against the laws of the Commonwealth and States that may potentially be relevant to the facts as found. Some of the issues that may arise in any criminal or civil proceedings based on those offences or contraventions are also addressed. Findings and recommendations in relation to these offences are made in Volume 4.
The Inquiry has had regard to a large range of offences and contraventions against Commonwealth law and the laws of the various States and Territories. This appendix discusses only those offences that, on close analysis, might be applicable to the facts and the subject of recommendations. The offences addressed in this appendix include:
It is worth noting that the various United Nations Security Council Resolutions that imposed the sanctions and established the Oil-for-Food Programme had no direct effect on Australian domestic law because they were not, in terms, incorporated in Australian domestic law.[263] It follows that there is no offence known to the law in any Australian jurisdiction constituted by the breach of United Nations sanctions or Security Council Resolutions. Domestic effect was given to the Resolutions by various Commonwealth Regulations. The offences created by those Regulations are addressed in this appendix.
The Inquiry's Terms of Reference require the consideration of whether offences might have been committed by various corporate entities; relevantly AWB, Rhine Ruhr, Alkaloids of Australia, BHP and Tigris. For this reason, before addressing specific offences, it is necessary to give some consideration to the principles applicable to corporate criminal liability.
A corporation can only act by the actions of its officers, employees and agents. Likewise, a corporation can only possess knowledge or intention as a result of knowledge or an intention possessed by its officers, employees and agents. In considering the potential criminal liability of AWB, Rhine Ruhr and Alkaloids, it is necessary to consider whether the relevant acts and knowledge of certain of the officers, employees or agents of each company can be attributed to the company.
In the case of State offences and Commonwealth offences (other than offences in the Criminal Code) that were committed prior to 14 December 2001, corporate criminal responsibility is governed by the common law. In the case of offences under the Criminal Code (which commenced operation on 24 May 2001) and other Commonwealth offences committed after 14 December 2001, Part 2.5 of the Criminal Code contains specific provisions dealing with the circumstances in which a company may be found guilty of any offence.
The leading decision on the test of whether the acts and knowledge of a natural person may be attributed to corporation for the purposes of the criminal law is the decision of the House of Lords in Tesco Supermarkets Ltd v Nattrass [1972] AC 153.[264] Lord Reid explained the nature and rationale of corporate criminal liability in the following terms:
Lord Reid then referred to the judgment of Denning LJ in H.L Bolton (Engineering) Co. Limited v T. J. Graham & Sons Limited[266], where Denning LJ stated:
In relation to this dicta, Lord Reid stated in Tesco (at 171):
Lord Morris of Borth-y-Gest (at 180) cited with approval the following test by Viscount Haldane in Lennards Carrying Co Limited v Asiatic Petroleum Co Limited:[269]
Viscount Dilhorne also referred to the tests formulated by Viscount Haldane in Lennard's Carrying v Asiatic Petroleum and Denning LJ in Bolton v Graham and stated (at 187G):
In Lord Diplock's opinion, the starting place to look to discover by what natural persons a corporation's powers are exercisable is in its constitution; its memorandum and articles of association. Lord Diplock then formulated the following test, which is perhaps the most frequently cited test for corporate criminal liability:
The decision in Tesco and the principles enunciated therein have been accepted and applied in Australia. The test expounded by Lord Diplock was applied by the High Court in Nissho Iwai Australia Limited v Malaysian International Shipping Corporation Berhad.[273] That was a civil case and concerned, in general terms, the question whether the lack of reasonable diligence by reason of an act or omission of an employee of a corporation was to be attributed to the company itself. Nevertheless, it demonstrates an acceptance of Tesco and what the commentators have termed the 'identification doctrine.'[274]
In Hamilton v Whitehead[275], the High Court cited with apparent approval the passage of Lord Reid in Tesco and referred to the statement by Denning LJ in Bolton v Graham. The liability imposed by the offence the subject of that case was direct, not vicarious, liability and the High Court held that there could be little doubt that the act of the managing director of the corporation in question was the act of the corporation because 'he was its managing director and his mind was the mind of the company.'[276]
The identification doctrine has been accepted and the tests proposed in Tesco, particularly those of Lord Reid and Lord Diplock, have been cited with approval in a number of other Australian courts, including the Full Federal Court in Universal Telecasters (Qld) Limited v Gutherie.[277]
The various tests enunciated by the Law Lords in Tesco are not identical. The test expounded by Lord Diplock may be a more stringent test to the extent that his Lordship suggests that the only individuals who may be identified with the company are those who are entrusted with the power of the company in either the Memorandum and Articles of Association or as a result of a formal delegation by the board. The other Law Lords, in particular Lord Reid, refer to delegation by the board, but do not insist on formal delegation. The question arises whether Lord Diplock's strict test (if it be such) is the appropriate test or whether it is necessary only to establish that the relevant individual in fact (and irrespective of any formal delegation) had been delegated certain responsibilities and had full discretion to act independently of the board. Further, the question arises whether it is necessary to prove that the relevant individual had delegated to him or her all of the powers of the company, or whether it insufficient to prove that the individual had been delegated responsibility in the particular area in which they committed the alleged criminal act.
In Meridian Global Funds Management Asia Limited v Securities Commission[278], Lord Hoffman, delivering the judgment of the Privy Council, expressed the opinion that the particular rule of attribution to be applied in any given case was a matter of interpretation or construction of the relevant law or 'substantive rule'. His Lordship stated (at 507):
In Meridian, the particular offence provision was a provision which required notice of substantial investments to be given to the company and the stock exchange. Two senior investment managers breached this provision and the question was whether the knowledge of these investment managers could be attributed to the company. It was held that the offence was not one in respect of which vicarious liability was applicable. The special rule of attribution which the Privy Council 'fashioned' for this particular offence focussed on whether the investment managers had authority to acquire the relevant interests which should have been notified. The knowledge of the investment managers had to be attributed to the company otherwise the policy of the statute would be defeated.
Lord Hoffman, however, emphasised that this particular rule of attribution will not apply in all cases:
An additional point which comes out of Meridian, is that in the inquiry whether the relevant individual is properly to be regarded as the directing mind and will of the company, attention should be focussed on the particular area of responsibility delegated to that individual. It is not necessary to prove that the individual was the directing mind and will for all of the company's activities, only the directing mind and will in the area in which the alleged criminal conduct or knowledge occurred. This is particularly apparent from the New Zealand Court of Appeal decision in Meridian.[281] Hardie Boys J (delivering the judgment of the Court) stated (at 302):
In the Privy Council decision in Meridian, Lord Hoffman cited Admiralty v the Owners of the Steamship Divina (the Truculent)[283] and The Lady Gwendolen.[284] In The Lady Gwendolen, the issue was whether the failure to warn the captain of a ship of certain dangers was an act performed by the owner-corporation. Winn LJ stated (at 355):
Further, Willmer LJ stated (at 343-4):
This point was also made by Estey J, delivering the judgment of the Supreme Court of Canada in Canadian Dredge & Dock Co Limited v The Queen.[287] That case was concerned with allegations of collusive tendering and with the issue whether the acts of various managers of companies could be attributed to the various companies. Estey J conducted a detailed review of the authorities in the United Kingdom, Canada, Australia and the United States of America in relation to corporate criminal responsibility. At 330-331 Estey J stated:
In this passage, Estey J refers to Lord Reid's use of the phrase 'within the scope of delegation'. Lord Reid also stated (at 174-5):
Canadian Dredge and Dock has been cited in a number of Australian cases; including Edward Karwacki Smith & Co Pty Limited v Jacka Nominees Pty Limited (in liq)[290] and Beach Petroleum NL v Johnson.[291] In Beach Petroleum, a civil case in which allegations of fraud were made, von Doussa J cited a portion of the judgment in Canadian Dredge and Dock which dealt with the situation where the directing mind and will acts in fraud of the company (but which included reference to the sphere of operation), and stated that 'this statement of the law in Canada provides compelling guidance to the law which should be applied in this case.'
The other important point to emerge from Canadian Dredge and Dock concerns the issue whether the relevant delegation of power to the individual is required to be express and formal or whether it is sufficient that as a matter of fact the particular individual exercises full responsibility within the relevant sphere assigned to him or her. In Canadian Dredge and Dock, Estey J expressed the identification principle in the following terms (at 323):
Estey J's statement that the individual must represent the corporation's de facto mind may be contrasted with Lord Diplock's formulation in Tesco which on one reading may require de jure control by the individual. The central fact in Canadian Dredge and Dock was: 'Each of the appellants had a manager who conducted the business of the company relating to the submission of bids for tender dredging work.'[293]
Estey J also stated as follows (at 331):
Meridian has been frequently cited with approval in cases in various different contexts.[295] In relation to criminal cases, in Director of Public Prosecutions (Victoria) Reference No. 1 of 1996 (Victorian Court of Appeal, unreported 26/9/97) the Victorian Court of Appeal accepted that 'Lord Hoffman's approach to the problem of corporate liability was correct.' It was also accepted as the applicable law by Bell J in the Victorian Supreme Court in ABC Developmental Learning Centres Pty Limited v Wallace[296], a case concerning a prosecution of a company for an offence under the Children's Services Act 1996 (Vic).
Thus the rule of attribution to be applied in any particular case is to be determined as a matter of interpretation or construction. An offence involving fraud or dishonesty-as opposed to a mere regulatory offence-is likely to be construed such that it will only apply to a company (to use Lord Hoffman's words) 'on the basis of its primary rules of attribution' as expounded in Tesco. It is unlikely to be held to be sufficient for the prosecution to prove merely that the relevant servant or agent had authority to do the relevant act on the company's behalf. Rather, it is necessary to prove that the individual had delegated to him or her full discretion to act independently of the board or any superiors with respect to the subject matter that included the relevant act.
A potentially relevant issue in the context of the knowledge or intention of a company is whether knowledge or intention possessed by a company at one point in time, as a result of the possession of that knowledge or intention by a particular officer or officers, may later be 'forgotten' by the company when that officer or those officers leave the company and are replaced by other officers who do not possess the knowledge. Most of the authorities relating to this point are civil cases.[297]
In the case of a criminal offence, for a corporation to be criminally responsible it must possess the relevant knowledge at the time of the alleged unlawful act. Whether the company possessed information at that particular point in time is ultimately a question of fact. As with the case of knowledge possessed by a natural person defendant, any suggestion by a corporate defendant that it once possessed the knowledge but had forgotten it by the time of the relevant transaction will be closely scrutinised.[298] Much will depend on the 'nature and importance of the information said to be once known and later forgotten,'[299] whether the new officer was under a duty to ascertain the information or knowledge when they took up the office[300], whether the information was recorded in the company's books and records and the nature of the relevant transaction. Ultimately, however, it must be a matter for the prosecution to prove that at the time that the relevant act occurred, a current officer or officers of the company whose knowledge may be imputed to the company possessed the knowledge or information.
There is also authority for the proposition that the knowledge of, or information possessed by, various officers of a company may be aggregated and imputed to the company.[301]
Part 2.5 of the Criminal Code applies to offences under the Criminal Code and other Commonwealth offences committed after 14 December 2001. Sections 12.1 of the code makes it clear that the Code applies to bodies corporate in the same way as it applies to individuals and that a body corporate may be found guilty of any offence, including one punishable by imprisonment.
Part 2.5 contains provisions that deal with the physical elements and the fault elements of an offence insofar as they apply to a corporation. Section 12.2 deals with the physical elements of the offence and provides as follows:
It follows that insofar as the physical act of an offence is concerned, it is necessary only to prove that the employee, agent or officer of the defendant company that carried out the relevant act was acting within his or her actual or apparent authority. If, for example, the relevant act is the submission of the UN Notification form and contract documents to DFAT, it is necessary to prove only that the officer responsible for this communication was acting within his actual or apparent authority. As discussed below it is relevant to note in this regard that the officer of the company who performed the relevant act on behalf of the company need not be the same person who possessed the necessary mental state or fault element.
The rule of attribution in the case of the fault element of an offence is dealt with in section 12.3. Subsections 12.3 (1) to (2) provide as follows:
(1) If intention, knowledge or recklessness is a fault element in relation to a physical element of an offence, that fault element must be attributed to a body corporate that expressly, tacitly or impliedly authorised or permitted the commission of the offence.
(2) the means by which such an authorisation or permission may be established include:
(a) proving that the body corporate's board of directors intentionally, knowingly or recklessly carried out the relevant conduct, or expressly, tacitly or impliedly authorised or permitted the commission of the offence; or
(b) proving that a high managerial agent of the body corporate intentionally, knowingly or recklessly carried out the relevant conduct, or expressly, tacitly or impliedly authorised or permitted the commission of the offence; or
(c) proving that a corporate culture existed within the body corporate that directed, encouraged, tolerated or led to non-compliance with the relevant provision; or
(d) proving that the body corporate failed to create and maintain a corporate culture that required compliance with the relevant provision.
(3) Paragraph (2)(b) does not apply if the body corporate proves that it exercised due diligence to prevent the conduct, or the authorisation or permission.
For the purposes of paragraph 12.3(2)(b), 'high managerial agent' is defined in subsection (6) as meaning 'an employee, agent or officer of the body corporate with duties of such responsibility that his or her conduct may fairly be assumed to represent the body corporate's policy.'
Paragraphs (c) and (d) significantly expand the scope of the attribution rule from the position at common law. They provide, in substance, the fault element of the offence may be proved on the basis of a 'corporate culture' that led to the commission of the offence, as opposed to the requirement to prove actual knowledge or intention on the part of the directors or other senior management. 'Corporate culture' is defined in subsection 12.3(6) as meaning 'an attitude, policy, rule, course of conduct or practice existing within the body corporate generally or in the part of the body corporate in which the relevant activities takes place.' Subsection 12.3(4) specifies some factors relevant to ascertaining whether such a corporate culture exists:
(4) Factors relevant to the application of paragraph (2)(c) or (d) include:
(a) whether authority to commit an offence of the same or a similar character had been given by a high managerial agent of the body corporate; and
(b) whether the employee, agent or officer of the body corporate who committed the offence believed on reasonable grounds, or entertained a reasonable expectation, that a high managerial agent of the body corporate would have authorised or permitted the commission of the offence.
Section 12.3(4) does not purport to be an exhaustive statement of the factors that would make out a corporate culture. Paragraph (b), however, is of particular potential significance. The effect of it is that it may be possible to prove the existence of the relevant culture by proving that the relevant officer who did commit the offence, who might not himself or herself be a 'high managerial agent,' believed on reasonable grounds that a high managerial agent would have authorised the commission of the offence. It is not necessary to prove that the high managerial agent in fact possessed the relevant intention or knowledge. In the case of AWB, to make out the relevant fault element against AWB in respect of an offence relating to the misleading of DFAT, or the concealing of facts from DFAT, it would be sufficient to prove that the relevant officer or officers who may have been responsible for the dealings with DFAT believed on reasonable grounds that a director of manager, who was a high managerial agent, would have authorised or permitted the misleading of, or concealment of facts from, DFAT.
The Criminal Code provisions dealing with attribution are potentially narrower than the common law rules of attribution in at least one respect. That is that, by reason of subsection 12.3(3), where the relevant knowledge or intention is possessed by a high managerial agent (as opposed to the board of directors), the company has an available defence if it had itself exercised due diligence to prevent the conduct that constituted the offence. The establishment of some form of internal audit or corporate risk committee may, in some circumstances, amount to due diligence.
The various criminal statutes of the Commonwealth and each of the potentially relevant States contain a series of cognate offences that have as elements or ingredients the obtaining of benefits by deception, or the making false or misleading statements, or other conduct involving dishonesty or fraud. The Commonwealth provisions will apply where the benefit was obtained from, or the false statements or the dishonesty or fraud was practised upon, the Commonwealth. State provisions will apply where the benefit was obtained from, or the false statements or the dishonesty or fraud was practised upon, some other person or entity. In the case of state offences, it is also necessary to find some jurisdictional nexus with the State.
In relation to any conduct that occurred prior to 24 May 2001, the relevant offences are contained in the Crimes Act 1914. The relevant offence provisions in the Crimes Act were repealed[302] and replaced by offences in the Criminal Code from 24 May 2001.
As discussed in Chapter 12, the Australian companies who participated in the Oil-for-Food Programme interacted with DFAT at a number of levels. Most significantly, they:
(a) submitted documents-a United Nations form entitled 'Notification or Request to Ship Goods to Iraq,' together with copies of documents recording the contractual arrangements between the company and the relevant Iraqi person or entity-to DFAT on the basis that DFAT would, upon satisfying itself of certain matters, submit the documents to the United Nations;
(b) applied to DFAT for a permission to export the goods pursuant to the Customs (Prohibited Exports) Regulations 1958.
For its part, DFAT responded or acted upon the documentation submitted to it, or the application for permission to export, by, in summary:
(a) considering whether the Notification form was properly completed and that the transaction reported in the Notification form and the accompanying contractual documents did not appear to infringe the United Nations sanctions against Iraq. If so satisfied, DFAT would certify and submit the documents to the United Nations via Australia's permanent mission to the United Nations in New York;[303]
(b) in the case of permissions to export, if DFAT received notification from the United Nations that a particular contract had been approved for payment under the Oil-for-Food Programme, together with a request for permission to export by the company, DFAT would arrange for a permission to export to be signed by a delegate of the Minister for the purposes of the Customs (Prohibited Exports) Regulations.[304]
If the available evidence was capable of establishing the following matters, a number of provisions of the Crimes Act 1914 could potentially be relevant in the case of conduct occurring before 24 May 2001;
(a) the Notification form or any of the accompanying documentation submitted to DFAT contained a materially false or misleading statement; or materially false or misleading information; or
(b) the Notification form or any of the accompanying documentation submitted to DFAT omitted information that rendered the information in the documentation misleading in a material respect; and
(c) by reason of the false or misleading documentation submitted to it, DFAT conferred a benefit upon the company-either by submitting the documentation to the United Nations or by causing a permission to export to be granted; or
(d) the purpose, object or intention of the company in submitting the false or misleading documentation to DFAT was to obtain a benefit from DFAT, or was otherwise to deceive an officer of DFAT into doing something that the officer would not otherwise have done.
The potentially relevant offence provisions are sections 29A, 29B and 29D of the Crimes Act of these provisions. Section 29D is the most general and, for a number of reasons, may be the most apposite. It is accordingly dealt with first.
Prior to its repeal effective 24 May 2001, section 29D of the Crimes Act provided as follows:
The elements of this offence are undefined except by common law concepts of fraud. In general terms, to defraud means to use dishonest means to deprive a person of money or property, or to put the person's money or property at risk or to prejudicially affect that person in relation to some lawful right, interest, opportunity or advantage knowing that they have no right to deprive that person of that money or property or to prejudice that person's interests.[305] The two key elements, therefore, are first, the use of 'dishonest means' and second, an element of deprivation.
To prove dishonest means it is usually necessary to prove that the defendant made or took advantage of representations which they knew to be false, or promises that they knew would not be carried out, or concealed facts which they had a duty to disclose, or engaged in conduct which they had no right to engage in and which they knew they had no right to engage in.[306] The latter case will include conduct that involves a breach of duty, trust or confidence, or by which an unconscionable advantage is to be taken of another.[307]
The element of deprivation usually involves making use of, or prejudicing, another person's economic right or interest, or inducing another person to refrain from acting to his or her economic disadvantage. However, the element of deprivation may also be made out if dishonest means are employed to deceive public officers into committing a breach of duty, or if a person responsible for a public duty is intentionally deceived into doing something that he or she would not have done but for the deceit, or if the due performance of a public duty by an officer is otherwise interfered with.[308] It is not a necessary element of the offence that the defendant actually obtained a benefit or advantage corresponding in some way with deprivation or loss to the Commonwealth.[309]
The mental element of an offence involving fraud is intention: that is, the defendant intended to deprive or prejudice the interests of a third person by the use of means that are dishonest.
In the present context, the offence of defrauding the Commonwealth contrary to section 29D of the Crimes Act will be made out if the defendant (AWB, Rhine Ruhr or Alkaloids or the relevant officers involved in the conduct[310]), used dishonest means to deceive an officer of DFAT into doing something in the course of their duty that they would not have done but for the deceit. For practical purposes, the offence would be made out if the available evidence was capable of proving that:
(a) the Notification form or any of the accompanying documentation submitted to DFAT to the knowledge of the defendant either contained a materially false or misleading statement or statements or omitted from it a matter or thing that rendered the information in the documentation misleading in a material respect; or
(b) the defendant intentionally concealed facts that it had a duty to disclose or that it knew would be relevant to the actions of DFAT referred to in (c); or
(c) the conduct in either (a) or (b) deceived an officer of DFAT into either forwarding documents to the United Nations or causing a delegate of the Minister to sign a Permission to Export in circumstances where, but for the deceit, the officer would not have taken that action;
(d) the defendant intended to use the means in (a), (b) or (c) to deceive the officer of DFAT into taking the action or actions referred to in (d).
A factor to be noted in relation to 29D of the Crimes Act in the present context is that if the dishonest conduct and deception of DFAT was ongoing, sustained and systematic, a single count of defrauding the Commonwealth during the period of the conduct could be charged and would not be duplicitous.[311]
Prior to its repeal effective 24 May 2001, section 29A of the Crimes Act provided as follows:
(1) Any person who, with intent to defraud, by any false pretence obtains from the Commonwealth, or from any public authority under the Commonwealth any chattel, money, valuable security or benefit, shall be guilty of an offence.
(2) Any person who, with intent to defraud, by any false pretence, causes or procures any money to be paid, or any chattel, valuable security or benefit to be delivered or given, by the Commonwealth or by any public authority under the Commonwealth to any person, shall be guilty of an offence.
The elements of the offence created by subsection 29A(1), relevant to the matter at hand, are as follows:
(1) the defendant;
(2) with intent to defraud;
(3) by any false pretence;
(4) obtains a benefit from the Commonwealth.
The offence created by subsection 29A(2) covers the situation where the actions of the defendant result in the Commonwealth conferring a benefit on some other person. The first three elements are the same as the subsection 29A(1) offence. Element (4) is, relevantly:
(4) causes or procures a benefit to be delivered or given by the Commonwealth to any person.
There is considerable overlap between section 29D and section 29A to the extent that, in most cases where the elements of the offence under section 29A are made out, an offence under section 29D would also be made out. The reverse, however, is not always the case because the dishonest means that may constitute the fraud under section 29D may not involve a false pretence. Section 29D also does not have as an element the obtaining of a benefit. The other significant difference between section 29A and section 29D is that section 29A employs words of singularity, meaning that a separate offence must be pleaded in relation to each false pretence that results in a benefit being obtained.[312]
The element of intent to defraud has been considered above in the context of section 29D. Suffice it to say that an intention to defraud will be found where the defendant intends, by dishonest means, to deceive a public official into doing or not doing something that they would, or would not have done, but for the deceit.
A false pretence is essentially the same as an untrue representation. It may be a representation by words, writing or conduct or a combination of these[313], and may be implied from conduct.[314] In certain circumstances a false pretence or representation may be made by silence[315], however ordinarily silence will only amount to a representation if there is a duty to disclose.[316] The false representation must generally be in relation to a material existing fact, rather than a statement of opinion or intention about future conduct.[317]
The false representation need not be made directly to the Commonwealth. The offence may be made out if the defendant makes a false representation to an innocent agent who then communicates the information to the Commonwealth.[318] In those circumstances it would be necessary to prove that the defendant knew that the agent would convey the representation to the Commonwealth.
The use of the word 'by' in element (3) imports an element of causation. It must be proved that the officers of the Commonwealth responsible for conferring the benefit were influenced by the false pretence.[319] If they were influenced, it matters not that they may also have been influenced by other matters[320], or that they had the means of finding out whether the pretence was true or false, or that they ought reasonably to have known that the information was misleading.[321] The relevant false pretence must not, however, be too remote from the obtaining of the benefit.[322]
It is an element of the offence that the defendant actually obtained a benefit. The meaning of 'benefit' is not defined in the Crimes Act. The correct approach to construing the words in section 29A, having regard to their context in the Crimes Act, is to give them their ordinary meaning and not limit the ambit of the operation of the section by reference either to the common law offence of false pretences or to decisions on other statutes differently worded.[323] The language of the section was 'no doubt occasioned by the legislature's appreciation of the expansive range of financial and other benefits provided by the Commonwealth and its instrumentalities.'[324] The word 'benefit' should accordingly be given a wide meaning not limited to property or financial benefits.
There is at least one potential limitation on the construction of 'benefit.' That limitation flows from the use of the word 'obtain' in the section. In his dissenting judgment in Bacon v Salamane[325], which concerned the meaning of 'benefit' in the context of section 29B of the Crimes Act, Taylor J said:
The majority in Bacon v Salamane did not embrace Taylor J's construction of 'benefit' and held that obtaining employment with the Commonwealth was a benefit within the meaning of the section. The majority judgments turned, however, on whether earlier authority, which was concerned with different legislation and with the question whether a contract could be a benefit, ought to dictate the construction of section 29B. The issue is whether an intangible advantage that is not in a form that is capable of being 'obtained' can be a 'benefit' within the meaning of section 29A (and section 29B). In this context, it may be questionable that the benefit of having DFAT certify documents and submit them to the United Nations is a benefit that is capable of being obtained.
Ultimately the question whether a benefit has been conferred by the Commonwealth is question of fact. Putting aside the issue arising from the dissenting judgment of Taylor J in Bacon v Salamane, there would appear to be no reason in principle why it would not be a benefit to have DFAT certify convey to the United Nations a company's Notification form and contractual documents. This is so particularly having regard to DFAT's role in the Oil-for-Food Programme and the fact that the United Nations only accepted documentation certified and submitted by Missions of member countries.[326] The obtaining of permission to export under the Customs (Prohibited Exports) Regulations is a clearer case of a benefit. There is no reason in principle why the obtaining of such a permission would not be regarded as a benefit in circumstances where the relevant company would not otherwise be permitted to lawfully export goods to Iraq.
The mental element of the offence under section 29A is intention to defraud, discussed above, and knowledge that the relevant representation was false.
In the present context, the offence of obtaining a benefit from the Commonwealth by false pretence contrary to section 29A of the Crimes Act may be made out if the evidence is capable of demonstrating the following:
(a) the defendant (either one of the relevant companies or their officers) intended by dishonest means to deceive an officer or officers of DFAT; and
(b) the Notification form and contractual documents submitted by the company to DFAT contained, to the knowledge of the defendant, a false representation, or had omitted from them information that rendered the documentation misleading in a material particular; or
(c) the conduct of the company in submitting the document to DFAT together with its failure to disclose to DFAT other material facts (for example other collateral arrangements with Iraq relating to the payment of inland transportation or after-sales-service fees and the incorporation of such fees in the contract price) amounted to a representation (namely a representation that the Notification form and contractual documentation disclosed all material terms upon which the goods were being exported to Iraq) which was false to the knowledge of the defendant; and
(d) DFAT was deceived by the false pretence in either (b) or (c) and was influenced thereby to confer a benefit on the defendant-the benefit comprising either or both the certification and submission of the documents to the United Nations and the giving of permission to export the relevant goods to Iraq.
Prior to its repeal effective 24 May 2001, section 29B of the Crimes Act provided as follows:
The elements of the offence created by subsection 29B(1), relevant to the matter at hand, are as follows:
(1) the defendant;
(2) imposes (or endeavours to impose) upon the Commonwealth;
(3) by any untrue representation;
(4) with a view to obtaining a benefit.
The mental element of the offence is that the defendant knew that the representation was untrue and that the representation was made with the object or purpose of obtaining the benefit.
In Bacon v Salamane[327], Owen J spelt out the elements of the offence in the following terms:
There is a considerable overlap between section 29B and section 29A of the Crimes Act. The principal differences are that in the case of section 29B it is not necessary to prove an intention to defraud[328] or that the defendant obtained anything, though the fact that the defendant achieved his aim may be relevant in establishing that the Commonwealth was imposed upon.[329]
To 'impose upon' means to cheat or wilfully deceive[330] or to 'deceive or get the better of.'[331] It follows that it is an element of the offence that the Commonwealth was misled or deceived by the untrue representation[332], though it is not necessary to prove that the Commonwealth acted in reliance on the representation.[333] A charge of endeavouring to impose may cover the case where the Commonwealth was not misled or deceived by the untrue representation.[334] The element of 'endeavour' is similar to an attempt.[335]
The element requiring proof of an untrue representation has been addressed above in the context of the false pretence element in section 29A. The meaning of 'benefit' has also been addressed above in the context of section 29A.
The circumstances in which a company may be criminally liable is addressed in detail below. In a case where a company is charged with an offence under section 29B, it is necessary to impute to the company knowledge, possessed by one of its officers, that the relevant representation was untrue. It is not necessary to prove, however, that the officer who in fact conveyed the representation to the Commonwealth possessed this knowledge. This is illustrated by the decision in Lamb v Toledo-Berkel Pty Ltd.[336] The facts of that case were that a company secretary, on behalf of the company, applied to the Decimal Currency Board for compensation for the conversion of certain weighing machines. The foreman of the company (Jackson) responsible for the conversions had wilfully failed to carry out the conversions claimed. The secretary and directors of the company were unaware that the conversions claimed had not been carried out. On appeal, the conviction of the company secretary for an offence under section 29B was quashed and it was held, in the circumstances, that the guilty knowledge of the foreman could not be imputed to the company. Starke J stated:
The circumstances in which knowledge can be imputed to a company are addressed below.
In the present context, the offence of imposing or endeavouring to impose upon the Commonwealth contrary to section 29B of the Crimes Act may be made out if the evidence is capable of demonstrating the following:
(a) the Notification form and contractual documents submitted by the company to DFAT contained, to the knowledge of the defendant, an untrue representation; or
(b) the conduct of the company in submitting the document to DFAT together with its failure to disclose to DFAT other material facts (for example other collateral arrangements with Iraq relating to the payment of inland transportation or after-sales-service fees and the incorporation of such fees in the contract price) amounted to a representation (namely a representation that the Notification form and contractual documentation disclosed all material terms upon which the goods were being exported to Iraq) which was untrue to the knowledge of the defendant; and
(c) the untrue representation constituted by either (a) or (b) was made by the defendant (either one of the relevant companies or their officers) with the object or for the purpose of obtaining a benefit from DFAT-the benefit comprising either or both the certification and submission of the documents to the United Nations and the giving of permission to export the relevant goods to Iraq.
If the defendant was charged with imposing on the Commonwealth, it would also be necessary to prove that the Commonwealth was deceived by the untrue representation in either (a) or (b). This would not be necessary if the defendant was charged only with endeavouring to impose on the Commonwealth.
Subsection 5(1) of the Crimes Act provides as follows:
Section 5(1) does not create a separate offence. Rather a defendant who aids, abets, counsels or procures or is knowingly concerned in the commission of an offence by another person is deemed to have committed the substantive offence.[338] The penalty applicable for the substantive offence accordingly is applicable.
The words 'aids, abets, counsels or procures' are descriptive of a single concept that involves the 'general idea, that the person charged as a principal in the second degree is in some way linked in purpose with the person actually committing the crime and is by his words or conduct doing something to bring about, or rendering more likely, such commission.'[339] The definition of 'knowingly concerned' raises the question 'whether on the facts it can reasonably be said that the act or omission shown to have been done or neglected to be done by the defendant does in truth implicate or involve him in the offence, whether it does show a practical connection between him and the offence.'[340] A person does not become criminally involved in an unlawful act by means of knowledge only; some act or conduct on his part is necessary. An accessory must be 'concerned in' and not merely 'concerned about' the offence.[341] The necessary knowledge that must be proved is knowledge of all of the essential elements of the principal offence.[342]
In order to establish that a person is an accessory to the commission of an offence by another person (the principal offender) it must be established that
Of potential relevance to the present circumstances is that, where a company is alleged to be the principal offender, an officer of the company can be convicted of aiding and abetting or being knowingly concerned in the commission of the company's offence even when it is the acts of the officer which are the basis of the criminal liability of the company.[343] It follows that if an officer of one of the relevant companies was responsible for misleading or deceiving the Commonwealth in any of the ways covered by sections 29A, 29B or 29D of the Crimes Act, so long as that officer's actions and knowledge can be imputed to the company (as to which see further below), the company can be charged as principal offender and the officer as an accessory.
At all relevant times up to the time of its repeal on 24 May 2001, subsection 86(1) of the Crimes Act provided as follows:
The elements of the offence of conspiracy to commit a Commonwealth offence, as set out in subsection 86(3), are that:
(1) the defendant entered into an agreement with one or more other persons; and
(2) the defendant and at least one other party to the agreement must have intended that an offence would be committed pursuant to the agreement; and
(3) the defendant and at least one other party to the agreement must have committed an overt act (an act in furtherance of the conspiracy) pursuant to the agreement.
Of potential importance to the present circumstances is that subsection 86(4) provides that a person may be found guilty of a conspiracy even if the only other party to the agreement is a body corporate. It follows that if an officer of one of the relevant companies that entered into an agreement with the company to, say, defraud the Commonwealth by misleading an officer of DFAT and cause them to do something they otherwise would not have done (for example, certify and submit the company's documents to the United Nations), both the officer and the company may be convicted of conspiracy to commit the offence of defrauding the Commonwealth contrary to section 29D of the Crimes Act.
Effective 24 May 2001, each of the foregoing offences of fraud or deceit was repealed and replaced by a number of cognate offences in Parts 7.3 and 7.4 of the Criminal Code. The offences in these Parts cover a broad range of conduct involving fraudulent conduct towards the Commonwealth, obtaining property or financial benefits from the Commonwealth by deception, the making of false or misleading statements in applications to the Commonwealth and the provision of false or misleading information or documents to the Commonwealth in certain circumstances.
Not all of the offences created by Parts 7.3 and 7.4 are applicable or apposite to the present facts. A number of the offence provisions contain elements that, on any view of the facts, are unlikely to be established.
The offence of obtaining property belonging to the Commonwealth by deception in section 134.1 is not apposite because the benefits or advantages obtained from the Commonwealth by the relevant companies (the certification and submission of their documents to the United Nations and the granting of permission to export under the Customs (Prohibited Exports) Regulations) could not readily be regarded as 'property' as defined in section 130.1 of the Criminal Code, despite the fact that the definition includes 'a thing in action or other intangible property.' The definition of 'property' in the criminal code is not sufficiently broad as to encompass the sort of 'benefits' that were previously covered by section 29B of the Crimes Act. The same problem arises in relation to the general dishonesty offence in section 135.1, which requires proof that the defendant intended dishonestly to obtain a 'gain' from the Commonwealth. That is because 'gain' is defined in section 130.1 as meaning a gain in property or a gain by way of the supply of services; the problem again being that the relevant benefits intended to be gained were not gains in relation to properly as defined.
Nor could the benefits obtained from DFAT readily be regarded as constituting a 'financial advantage' for the purpose of the offence of obtaining a financial benefit by deception created by section 134.2, or the offence of obtaining a financial advantage created by section 135.2 of the Criminal Code. The phrase 'financial advantage' is not defined in the Criminal Code. Whilst it has been held, in the context of cognate State offence provisions, that the words 'financial advantage' should be given their plain meaning and not be narrowly construed, it is difficult to see how the intangible benefits obtained by the companies from DFAT could be considered to constitute a financial advantage. Whilst ultimately the companies no doubt benefited financially from being able to export the goods, that financial advantage is quite remote from the immediate benefits obtained from DFAT. The difficulty again is that the phrase 'financial advantage' is not as broad as the word 'benefit' that was previously used in section 29B of the Crimes Act to cover non-financial benefits or advantages.
Consideration has also been given to the offences created by sections 137.1 and 137.2. The difficulty with the offence in section 137.1(1) is that, whilst by reason of subparagraph (c)(i) it covers the provision of information to a Commonwealth entity that is false or misleading or misleading by omission, the offence is not made out if, before the information was given by a person to the Commonwealth entity, the Commonwealth entity did not take reasonable steps to inform the person of the existence of the offence.[344] Subsection 137.1(6) provides that it is sufficient for the purpose of subsection 137.1(4) for the words 'giving of false information is a serious offence' to be used. As discussed in Chapter 12, DFAT did not require the relevant companies to fill out any form, let alone a form that included the words specified in subsection 137.1(6). Nor is there any evidence to suggest that DFAT took any other steps to advise the companies of the existence of the offence in section 137.1(1). The same difficulty applies in relation to the offence under section 137.1(1) that applies by reason of subparagraph (1)(c)(ii). The offence in section 137.1 that applies by reason of subparagraph (1)(c)(iii) does not apply because the information was not given in compliance or purported compliance with a law of the Commonwealth.[345] The same difficulty renders the offence in section 137.2 inapplicable.
The offences in Parts 7.3 and 7.4 of the Criminal Code that potentially apply to the fact situation and that are most apposite are the offences in subsection 135.1(7), 135.4(7) and subsections 136.1(1) and (4).
Subsections 135.1(7) and (8) of the Criminal Codes provides as follows:
This offence is similar to the species of fraud that involves deceiving a public official into doing something that the official would not otherwise have done (considered above in the context of section 29D of the Crimes Act). The elements of the offence are:
(1) the person does anything;
(2) with the intention of dishonestly influencing;
(3) a Commonwealth public official
(4) in the exercise of the official's duties as a Commonwealth public official.
The first element is extremely broad. It comprises the 'physical element' of the offence[346] and would appear to cover virtually any conduct-feasance or non-feasance.[347] Relevantly it would cover the failure to disclose information that was material, or potentially material to a Commonwealth public official's duties, or the provision of information that was materially misleading by reason of the omission to refer to other information.
In relation to the second element, 'dishonest' is defined in section 130.3 of the Criminal Code to mean dishonest according to the standards of ordinary people and known by the defendant to be dishonest according to the standards of ordinary honest people. The reference to 'intention' in this element means that, by reason of section 5.2 of the Criminal Code, this element constitutes the 'fault element' of the offence. Subsection 5.2(1) provides that a person has intention with respect to conduct if he or she means to engage in that conduct. Accordingly, it is necessary to prove that the defendant by his conduct meant dishonestly to influence. It is not an element of the offence that the Commonwealth officer was in fact influenced.
'Commonwealth public official' is defined in the Dictionary in the Criminal Code and includes, relevantly, an Australian Public Service employee or any other individual employed by the Commonwealth. 'Duty' is defined in section 130.1 as meaning, in relation to a person who is a Commonwealth public official, any authority, duty, function or power that is conferred on the person as a Commonwealth public official, or the person holds himself or herself out as having as a Commonwealth public official.
In the present context, the offence of influencing a Commonwealth public official contrary to subsection 135.1(7) of the Criminal Code will be made out if the defendant (AWB, Rhine Ruhr or Alkaloids or the relevant officers involved in the conduct[348]), did anything with the intention of dishonestly influencing an officer of DFAT in the course of that officers duties as a Commonwealth public official. For practical purposes, the offence would be made out if the available evidence was capable of proving that:
(a) the Notification form or any of the accompanying documentation submitted to DFAT contained, to the knowledge of the defendant, either a materially false or misleading statement or statements or omitted from it a matter or thing that rendered the information in the documentation misleading in a material respect; or
(b) the defendant failed to disclose or concealed from DFAT facts that were or may have been material to the duty being performed by the DFAT officer (for example, that the relevant arrangements with the Iraqi entity included a collateral arrangement to pay an inland transport fee or after-sales-service fee which fee was incorporated in the contract price); and
(c) in engaging in the conduct in either (a) or (b), the defendant intended to dishonestly influence the DFAT officer into either forwarding documents to the United Nations or causing a delegate of the Minister to sign a Permission to Export in circumstances where, but for the deceit, the officer would not have taken that action.
Subsection 135.4(7) of the Criminal Code in effect creates an offence of conspiring to commit the offence of influencing a Commonwealth public official that has just been discussed. Subsection 135.4(7) provides as follows:
It is unnecessary spell out the elements of this offence, which are effectively the same as the offence under subsection 135.4(7) except that the physical element of the offence is conspiring with another person rather than 'does anything'. The requirements of the conspiracy element are set out in subsections 135.4(9) to (13) in terms similar to section 86 of the Crimes Act and include:
(a) the defendant entered into an agreement with one or more other persons; and
(b) the defendant and at least one other party to the agreement must have intended to do 'the thing' pursuant to the agreement; and
(c) the defendant and at least one other party to the agreement must have committed an overt act (an act in furtherance of the conspiracy) pursuant to the agreement; and
(d) a person may be found guilty of a conspiracy even if the only other party to the agreement is a body corporate.
Section 136.1 of the Criminal Code creates two offences relating to the making of false statements to the Commonwealth in applications: an offence requiring proof of knowledge in subsection 136.1(1) and an offence requiring only proof of recklessness in subsection 136.1(4).
Subsection 136.1(1) provides as follows:
Subsection 136.1(1A)[349] provides that absolute liability applies to each of subparagraphs (1)(d)(i), (ii) and (iii), meaning that it is unnecessary to prove that the defendant knew any of the matters in those paragraphs. Subsections 136.1(2) and (3) provide, in effect (and in combination with section 13.3), that it is a defence if the defendant adduces (or is able to point to) evidence that suggests a reasonable possibility that the statement was not false or misleading in a material particular, or that the statement did not omit a matter or thing without which the statement was misleading, as the case may be.
The elements of the offence created by subsection 136.1, relevant to the matter at hand, are as follows:
In relation to element (1), it is clear from the words of the section that the statement may be made in any way. This encompasses not only written or oral statements, but also statements that are implied from conduct, including in some circumstances silence, or from a combination of writing and conduct.[350] In the present matter, the submission to DFAT of a Notification form and accompanying contractual documents is, in all the circumstances, capable of being construed as an implied statement that the documentation disclosed all relevant terms of the arrangements between the relevant company and the Iraqi entity and that there were no collateral or associated arrangements.
Element (2) is the fault element of the offence. Section 5.3 of the Criminal Code provides, in relation to a fault element that consists of knowledge, that a person has knowledge of a circumstance or result if he or she is aware that it exists or will exist in the ordinary course of events.
Element (3) requires proof that the statement was made in connection with, relevantly, a permit or authority. Proof that the relevant statement was made in connection with a permission to export under the Customs (Prohibited Exports) Regulations would satisfy this element. In the circumstances of this matter, an issue arises whether the submission of the Notification form and accompanying contractual documents to DFAT, for the purpose of having DFAT certify the Notification form and submit the documents to the United Nations was done 'in connection with' an application for permission to export. The words 'in connection with' mean a relation between one thing and another[351] and generally have a very wide operation.[352] Chapter 12 discusses DFAT's role in the Oil-for-Food Programme, the procedures that DFAT adopted and the connection between the submission by a company of a Notification form and contractual documents, United Nations approval of payment under the Programme and the signing of Permission to Export. Suffice it to say that the procedure was such that it is open to conclude that the submission of the Notification form and contractual documents to DFAT by a company was (and was known to be) in connection with the granting of permission to export.
As for element (4), 'Commonwealth entity' is defined in the Dictionary to the Criminal Code as comprising the Commonwealth or a Commonwealth authority, and 'Commonwealth authority is defined as meaning a body established under the law of the Commonwealth'[353], but not including some bodies that are not presently relevant. Element (4) of the offence would be made out on the basis that DFAT is a Commonwealth entity as defined.
In the present context, the offence of making a false or misleading statement in an application contrary to subsection 136.1(1) of the Criminal Code will be made out if the evidence is capable of demonstrating the following:
(a) the Notification form and contractual documents submitted by the company to DFAT contained, to the knowledge of the defendant (the company or its officers), a statement that was false or misleading, or had omitted from it a matter or thing that rendered the statement misleading; or
(b) the conduct of the company in submitting the document to DFAT together with its failure to disclose to DFAT other material facts (for example other collateral arrangements with Iraq relating to the payment of inland transportation or after-sales-service fees and the incorporation of such fees in the contract price) amounted to a statement (for example an implied statement that the Notification form and contractual documentation disclosed all material terms upon which the goods were being exported to Iraq) which was false or misleading to the knowledge of the defendant; and
(c) the statement in (a) or (b) (the submission of the documents to DFAT) was made in connection with a permission to export the goods the subject of the contract pursuant to the Customs (Prohibited Exports) Regulations;
Subsection 136.1(4) creates a similar offence, but with the lesser 'fault' element of recklessness. It provides as follows:
Subsections 136.1(4A), (5) and (6) are relevantly in the same terms as subsections 136.1(1A), (2) and (3) considered above.[354]
As stated, the only difference between this offence and the offence in subsection (1) is that, instead of proving that the defendant knew that the relevant statement was false or misleading, it is necessary to prove only that the defendant was reckless as to whether or not that was the case. Recklessness in relation to a circumstance-here that the relevant statement was false or misleading-is defined in section 5.4 of the Criminal Code in the following terms:
In the present case it would be necessary to prove that the defendant:
(a) knew there was a substantial risk either that the Notification form or contractual documents submitted to DFAT contained a false or misleading statement (or a statement that was misleading by omission) or that the implied statement made as a result of the submission of the documents (that the documents set out the entirety of the arrangements between the company and Iraq) was false or misleading; and
(b) having regard to the circumstances known to the defendant, it was unjustifiable to make the relevant statement.
Complicity or accessorial liability under the Criminal Code is dealt with in section 11.2. It is in similar terms to section 5 of the Crimes Act, however it does not include 'knowingly concerned' as a basis for accessorial liability. It provides as follows:
The requirements of proof of accessorial liability are set out in subsection 11.2(3) and (4), which provide that a person cannot be guilty unless the following matters are established:
(a) the person's conduct in fact aided, abetted, counselled or procured the commission of the offence by the other person; and
(b) the offence was committed by the other person; and
(c) the defendant intended that their conduct would aid, abet, counsel or procure the commission of any offence (including its fault elements) of the type the other person committed; or
(d) the defendant intended that their conduct would aid, abet, counsel or procure the commission of an offence and was reckless about the commission of the offence (including its fault elements) that the other person in fact committed.
There is also a general conspiracy provision in section 11.5 of the Criminal Code. Section 11.2 of the Criminal Code creates the offence of attempting to commit an offence.
If any of the actions of the relevant companies (AWB, Rhine Ruhr or Alkaloids) amounted to fraud, deceit or dishonestly towards a person or entity other than the Commonwealth, the relevant offence provisions are to be found in State legislation. The only relevant non-Commonwealth victim or object of any alleged fraudulent activity by any of the companies was the United Nations.
Various State offences would potentially be relevant if the available evidence was capable of establishing that:
(a) the documents that the relevant companies caused DFAT to submit to the United Nations deceived the United Nations because, for example, they did not disclose the existence of collateral arrangements between the company and Iraq to the effect that the company would pay Iraq inland transportation or after-sales-service fees that were incorporated in the contract price; and
(b) as a result of that deception, the United Nations approved the contract for payment and in due course authorised payment out of the United Nations controlled escrow account;
In relation to the recoupment of the Tigris debt Chapter 27, state offences may be relevant if the available be evidence was capable of establishing that:
(a) the Notification and contract documents that AWB caused DFAT to submit to the United Nations in relation to contracts 1670 and 1680 did not disclose that the contract price had been inflated to provide for the payment of a past debt by Iraq (since assigned to Tigris);
(b) as a result, the United Nations was deceived and approved the contract and authorised payment out of the United Nations controlled escrow account.
The various State Crimes Acts and Codes all contain offences which may be described shortly as obtaining property or financial advantages by deception.[355] An offence will only be committed under a particular State Act, however, where there can be shown to be a local feature or relevant link between the State and the commission of the offence. At common law the nature of the required link depended on whether the offence in question was a 'conduct' crime or a 'result' crime.[356] The offence of obtaining property or financial advantages by false pretences or deception is a result crime and the offence is committed and triable in the place where the obtaining occurred, rather than the place where the deception or false pretence was practised.[357] However, a number of State Acts provide for extra-territoriality in relation to offences of fraud or dishonesty.
Because AWB's offices were in Victoria, any benefit from any deceptive or fraudulent act is likely to have been received, directly or indirectly, in Victoria. If relevant, any act of fraud or deceit practised by its officers is also likely to have been communicated from Victoria. That is likely to provide a sufficient jurisdictional nexus for the application of the Crimes Act 1958 (Vic). The same applies to Rhine Ruhr, whereas the offices of the agent of Alkaloids who was primarily responsible for matters associated with the Iraqi contract were in Sydney. Because of the likely applicability of the Victorian provisions in most relevant cases, the relevant provisions of the Victorian Crimes Act will be considered. There are cognate provisions in the other States.[358]
Section 82(1) of the Victorian Crimes Act at the relevant time provided as follows:
The elements of this offence are:
'Deception' is defined in subsection 81(4) as including any deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including a deception as to the present intentions of the person using the deception or any other person. A deception almost invariably involves a false or misleading representation that, as discussed above in the context of section 29A of the Commonwealth Crimes Act, may be made in writing, by words or by conduct or by a combination of those matters, and may be implied. The definition of deception in subsection 81(4) expands the common law concept of false pretences in that it covers representations about the law and the intentions of the person using the deception.
In relation to element (2), the question whether a particular act of deception is dishonest depends on the knowledge, belief and intent of the defendant and is to be determined by the standards of ordinary decent people.[359]
The element of 'obtaining' and the resulting requirement that the relevant deception caused or led to the obtaining has been considered above in the context of section 29A of the Commonwealth Crimes Act. The expression 'financial advantage' is not defined in the Victorian Crimes Act, though it would plainly include money or a credit to a bank account.
Section 323 of the Victorian Crimes Act provides that a person who aids, abets, counsels or procures the commission of an indictable offence may be tried, indicted or presented and punished as a principal offender. This section operates in the same way as section 5 of the Commonwealth Crimes Act as discussed above, though there is no provision for a person to be an accessory by being 'knowingly concerned'.
Section 84 of the Victorian Crimes Act provides that where a body corporate has committed an offence under sections 81, 82 or 83, a 'director, manager, secretary or other similar officer' of the body corporate will also be liable if that person is proved to have consented or connived in the commission of the offence by the body corporate.
Section 80A of the Victorian Crimes Act provides for the extra territorial operation of a number of offence provisions, including section 82. It provides as follows:
In the case of AWB and Rhine Ruhr, the relevant question is whether a significant part of any deception practised by them occurred in Victoria. To answer that question, it would be necessary to consider each act that constituted each alleged deception and then consider whether a significant part of that conduct occurred in Victoria. In the case of a deception arising from the forwarding of a Notification form and contractual documentation to DFAT (and as a result of the fact that those documents omitted to inform DFAT that there were collateral arrangements relating to the payment of inland transportation and after-sales-service fees and that those fees had been incorporated in the contract price), if those documents were forwarded from AWB's or Rhine Ruhr's Victorian offices, it is open to conclude that a significant part of the relevant conduct occurred in Victoria.
A significant issue likely to arise in relation to any alleged offence that contains as an element a deception or false pretence practised on the United Nations is that the relevant companies did not communicate directly with the United Nations. All documentation and other material communications between the companies and the United Nations occurred through DFAT. An offence involving a deception or false representation can, however, be made out in circumstances where the false representation or deception is communicated to the victim through an innocent agent. In White v Ridley[360], Gibbs J said:
As discussed in Chapter 36, DFAT did not know that there was anything false or misleading about the documentation that it forwarded to the United Nations in respect of AWB's wheat contracts, or that the documentation had omitted from it material facts relating to the arrangements between AWB and the Iraqis. There is evidence that demonstrates that relevant officers of AWB knew that DFAT sent the documentation to the United Nations for the purpose of approval by the United Nations, that the documentation made no reference to the collateral arrangements between AWB and the IGB in relation to inland transportation fees and the incorporation of these fees in the contract price and that DFAT did not know about those arrangements. For all intents and purposes DFAT was an innocent agent.
Offences involving bribery or secret commissions
There are offence in both the Criminal Code and various the Crimes Acts and Codes of various States that involve the payment of bribes and secret commissions and other corrupt practises that are potentially applicable.
Division 70 of the Criminal Code was inserted into the Criminal Code with operation from 17 December 1999[361] to give domestic effect to Australia's ratification of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Subsection 70.2(1) of the Criminal Code provides as follows:
The elements of the offence created by subsection 70.2(1), relevant to the matter at hand, are as follows:
The defendant:
(1) promises to provide a benefit to be provided to another person (A); and
(2) the benefit is not legitimately due to A;
(3) with the intention of influencing a foreign public official (who may be the same person as A) in the exercise of the official's duties as a foreign public official;
(4) in order to obtain or retain business.
For the purpose of considering the potential availability of this offence, it will be assumed that the defendant is AWB, the other person (A) is an Iraqi Ministry or Government entity (for example the Iraqi State Company for Water Transport) and the foreign public official is the Director General of the Iraqi Grains Board. In the absence of any contrary intention in the section, the person to whom the benefit is paid (A) can be a body politic.[362]
In relation to element (1), 'benefit' is defined in section 70.1 as including any advantage and is not limited to property. Proof that AWB promised to pay money (indirectly via Alai) to the Iraqi State Company for Water Transport or any other Iraqi entity, in the form of inland transportation or after-sales-service fees, would satisfy element (1).
In relation to element (2), the Criminal Code does not define the circumstances in which a benefit is to be found to be not legitimately due. However, subsection 70.2(2) provides that in working out if a benefit is not legitimately due, the following matters should be disregarded:
(a) the fact that the benefit may be customary, or perceived to be customary, in the situation
(b) the value of the benefit
(c) any official tolerance of the benefit.
There are difficulties in determining whether the benefits received, or to be received, by the Iraqi State Company for Water Transport in the circumstances of this matter were not legitimately due. The difficulties arise because, as discussed in Chapters 13 and 21 the inland transportation fees and after-sales-service fees were demanded of, or levied from, AWB as a result of directives or orders from Ministers or Ministries of the Iraqi Government. The fees were akin to a tariff imposed by the Iraqi government on all goods imported under the Oil-for-Food Programme. It is open to conclude from this that the payments were lawful, or at least not unlawful, as a matter of Iraqi law. The lawfulness of the impost, as a matter of Iraqi law, amounts to more than 'custom' or 'official tolerance,' these being matters that must be disregarded in working out whether a benefit was not legitimately due.
In these circumstances, the only way in which it could be asserted that the benefits were not legitimately due to the Iraqis was that they were contrary to United Nations sanctions. It is however, questionable whether payments that are not unlawful in a country as a matter of domestic law could be held to be 'not legitimately due' solely by reason of actions taken by the United Nations.
In the end it is not necessary to decide this question because, as will be seen, the fact that the payments were not unlawful in Iraq constitutes a defence to the offence in any event.
In relation to elements (3) and (4), 'foreign public official' is defined broadly in section 70.1 and includes an employee or official of a foreign government body. In the circumstances of this matter, element (3) would be made out if the available evidence was sufficient to prove that AWB's intention in promising to pay the inland transport or after-sales-service fees was to influence an employee or official of the Iraqi Grains Board, in the course of that officer's duty as such an officer, to accept AWB's tender and agree to purchase its wheat. Proof that agreeing to pay the fees was a prerequisite to the Iraqi Grains Board entering into a contract and that AWB knew this would be sufficient proof.
Section 70.3 provides a number of defences to the offence created by subsection 70.2(1). The general thrust of the defences created in subsection 70.3(1) is that it is a defence if the defendant's conduct (relevantly, promising to provide the payment to the foreign public official) occurred in the country or place where the foreign public official was located, the defendant would not have been guilty of an offence against a law in place in that place or country. Subsection 70.2(1) contains a number of items that correspond to the paragraphs of the definition of foreign public official in section 70.1. In the circumstances currently under consideration, the foreign public official was an employee or official of a foreign government body as provided for in paragraph (a) of the section 70.1 definition. Item 1 of subsection 70.3(1) provides that if it were assumed that the person's (the defendant's) conduct had occurred wholly in the place where the central administration of the body is located (in this case Baghdad), the defendant is not guilty of an offence if the defendant would not have been guilt of an offence in that place (namely Baghdad).
By reason of sections 13.1, 13.2 and 13.3 of the Criminal Code, a defendant would bear an evidential burden in relation to the defence in subsection 70.3(1)-that is, the defendant must adduce or point to evidence that suggests a reasonable possibility that the matter (in this case the lawfulness of the conduct had it occurred in Baghdad) exists. Once that evidential burden is discharged, the prosecution bears the legal burden of disproving the existence of that matter beyond reasonable doubt.
There is evidence that points to the likelihood that if AWB's conduct in promising to make the payment to the Iraqis had occurred in Baghdad, AWB would not have been guilty of an offence against a law in force in that place. That is because the requirement to pay inland transport or after-sales-service fees to Iraqi entities was the result of directives or orders by Iraqi government Ministers or officials. The available inference is, therefore, that it was not unlawful in Iraq to make such payments. The fact that the payment may have been contrary to the United Nations sanctions would not have affected the lawfulness of the payments as a matter of Iraqi law.
It follows that, at least in relation to the payment of inland transport and after-sales-service fees, there is no reasonable basis for concluding that an offence may have been committed against subsection 70.2(1) of the Criminal Code.
A number of States prohibit the giving or offering of secret commissions to agents. Subsection 176(2) of the Crimes Act 1958 (Vic) provides, for example:
or
There is a similar provision in section 249B(2) of the Crimes Act 1900 (NSW).
It is unnecessary to give any detailed consideration to these provisions because they are unlikely to have any relevant application to the matter at hand. The general thrust of the offence is to criminalise the giving of money (or other valuable consideration) by a defendant to an agent as a reward for the agent granting, or causing to be granted, business from the agent's principal. A simple example of the type of conduct that would constitute an offence under this provision (and others like it) is the case where a defendant pays money to an agent, generally without the knowledge of the agent's principal, as a reward for the agent causing or procuring the principal to select the defendant as, for example, a preferred supplier of goods or services to the principal. In the present case, whilst on one view Alia was acting as an agent of the IGB when it received into its bank account payments representing inland transportation or after-sales-service fees, it received these funds pursuant to an arrangement with its principal (the IGB) whereby Alia was remunerated by the IGB (by being permitted to retain a percentage of the payment as commission) for its services as a conduit for the payments. It did not receive the funds from AWB as a reward for caused the IGB to award a contract or contracts for the supply of wheat to the IGB. The decision to award the contract to the AWB was made by the IGB well prior to the payment of the fees by AWB.
Offences involving the possession, concealment or disposal of the proceeds of crime may have some potential relevance if it is found that AWB committed offences arising from the recoupment of the Tigris debt via the inflation of the price in contracts 1670 and 1680. The money obtained and dealt with by AWB in these circumstances could be regarded to be the proceeds of crime. The most likely substantive offence relating to the Tigris debt is section 82 of the Victorian Crimes Act (considered above). Accordingly, the Victorian money laundering provisions are most likely the relevant provisions.
In Victoria, it is an offence to deal with property that is the proceeds of crime or is suspected of being the proceeds of crime. In the period 1 July 1998 to 1 January 2004, the relevant offence provisions were sections 122 and 123 of the Confiscation Act 1997 (Vic). Section 122 of the Confiscation Act provided as follows:
'Proceeds of crime' was defined in section 121 of the Confiscation Act in the following terms
'Forfeiture offence' was defined in section 3(1) as including, amongst other things, an offence referred to in Schedule 1. An offence referred to in schedule 1 was 'an indictable offence against the law of Victoria.' 'Unlawful activity' was defined in section 3(1) as meaning an act or omission that constitutes an offence against a law in force in the Commonwealth, Victoria or another State, a Territory or a foreign country punishable by imprisonment.
'Proceeds' was defined in section 3(1) in the following terms:
Thus, the elements of the offence against s 122(2)(b) of the Confiscation Act were:
(1) the defendant,
(2) received, possessed, concealed, disposed of or brought into Victoria,
(3) money, or other property, that was proceeds of crime (that is, relevantly, property that was derived or realised, directly or indirectly, by any person from the commission of an indictable offence against the law of Victoria), and
(4) the defendant:
(a) knew, or
(b) ought reasonably to have known,
that the money or other property is derived or realised, directly or indirectly, from some form of unlawful activity (that is, the activity was an act or omission that constitutes an offence against a law in force in the Commonwealth, Victoria or another State, a Territory or a foreign country publishable by imprisonment), and
(5) the defendant did not engage in money laundering to assist the enforcement of a law of the Commonwealth, a State or a Territory.
Another potentially relevant offence provision is section 123 of the Confiscation Act. Between 1 July 1998 and 1 January 2004, section 123 provided as follows:
Having regard to the definitions previously considered, the elements of this offence under section 123 were as follows:
(1) the defendant,
(2) received, possessed, concealed, disposed of or brought into Victoria,
(3) money, or other property,
(4) that may reasonably have been suspected of being proceeds of crime (that is, property that was derived or realised, directly or indirectly, by any person from the commission of an indictable offence against the law of Victoria).
With effect from 1 January 2004, sections 194 and 195 of the Crimes Act 1958 (Vic) replaced these sections of the Confiscation Act. Section 194 of the Crimes Act provides as follows:
The elements of the various offences created by section 194 of the Victorian Crimes Act are, relevantly:
(1) the defendant,
(2) dealt with (that is, received, possessed, concealed or disposed of)[365],
(3) proceeds of crime (that is, property that was derived or realised, directly or indirectly, by any person from the commission of an indictable offence against the law of Victoria)[366], and
(4) the defendant:
(a) knew that the property was the proceeds of crime;
and
(b) intended to conceal that it was the proceeds of crime;
or
(b) knew that the property was the proceeds of crime;
or
(c) was reckless as to whether the property was the proceeds of crime;
or
(d) was negligent as to whether the property was the proceeds of crime,
and
(5) the defendant did not deal with the property in order to assist the enforcement of a law of the Commonwealth, a State or a Territory.
The other potentially relevant offence is created by Section 195, which provides as follows:
The elements of the offence created by section 195 are:
(1) the defendant
(2) dealt with (that is, received, possessed, concealed or disposed of)[367],
(3) property,
(4) in circumstances where there were reasonable grounds to suspect that the property was the proceeds of crime (that is, property that was derived or realised, directly or indirectly, by any person from the commission of an indictable offence against the law of Victoria).[368]
The potential significance of these money laundering offences is that officers of AWB who were not knowingly involved in the conduct that recouped the Tigris debt (the inflation of the contract price in contracts 1670 and 1680 and the concealment of this fact from DFAT and the United Nations) may nonetheless be culpable if they came to later learn of this unlawful activity and were then involved in some way in dealing with the proceeds. Of importance also is that the offences created by subsections 194(3) and (4) require only proof of recklessness or negligence in relation to whether the money was the proceeds of crime.
Part 5.3 of the Criminal Code contains a number of offences relating to terrorism. Some of these offences have potential application insofar as they relate to the provision of funds to a terrorist organisation, or to the reckless provision of funds that may be used to facilitate of engage in terrorist acts. The provisions with potential application-in particular sections 102.6, 102.7 and 103.1 of the Criminal Code-relevantly commenced operation on 6 July 2002.[369] Sections 102.6 and 102.7 were repealed and replaced with substituted provisions on 29 May 2003.[370] The following analysis accordingly deals with the provisions as they stood between 6 July 2002 and 29 May 2003.
During the relevant period, section 103.1 provided as follows:
The elements of the offence created by section 103.1 that are potentially relevant to the matter at hand are:
(1) the defendant intentionally provided funds;
(2) the defendant was reckless as to whether the funds would be used to facilitate or engage in a terrorist act.
The first element of this offence is extremely broad. The words 'funds' and 'provides' are not defined in the Criminal Code and accordingly bear their ordinary meanings. The word 'funds' is relevantly defined in the Macquarie Dictionary as meaning 'money in hand, pecuniary resources.' The word 'provides' is relevantly defined as meaning 'furnish.' It is unnecessary to prove that the funds were provided in any particular form, or in any particular way, or to any particular person or body, or type of person or body. The element would be satisfied upon proof that funds were provided indirectly (via Alia or otherwise) to Iraq, or an Iraqi Ministry or government entity.
Because the physical element of providing funds consists of conduct, the corresponding fault (or mental) element is intention.[371] This requires proof that the defendant meant to engage in that conduct.[372] It is thus necessary to prove only that the defendant intended to provide funds to someone. In the present case, it would be sufficient to prove that the defendant intended to provide funds (directly or indirectly) to Iraq, or to an Iraqi Ministry or government entity. It is not necessary to prove that the defendant intended to provide the funds to Iraq for any particular purpose or reason.
Element (2) requires proof that the defendant was reckless as to a result; that is, whether the funds would be used to facilitate or engage in a terrorist act. Section 5.4(2) of the Criminal Code provides as follows:
At the relevant time, section 101.1 defined 'terrorist act' in the following broad terms:
The second element of the offence under section 103.1 will be made out if it can be proved that the defendant knew that there was a substantial risk that the funds being provided by it would be used for any of the actions, or threats of action, listed in the definition of 'terrorist act' (that do not fall within subsection 101.1(2A)) and that having regard to the circumstances known to the defendant it was unjustifiable to take the risk and go ahead and provide the funds.
Whether a defendant knew that there was such a substantial risk is ultimately a question of fact for the tribunal of fact. It would, however, be open to the prosecution to prove, by inference, that the defendant knew or must have known that the person or body to whom it was providing funds had in the past committed terrorist acts as defined and had not disavowed further terrorist acts or had threatened future acts. This, in turn, would provide the basis for an inference that the defendant therefore knew, or must have known, that there was a risk that it would carry out such actions with any funds provided to it in the future. Relevantly, in the case of the provision of funds to Iraq, the element could possibly be made out if it could be proved that such was the public notoriety of Saddam Hussein's regime and the violent acts perpetrated by it, or threatened to be perpetrated by it, against sections of the Iraqi public that it could be inferred that the defendant must have known that there was at least a risk that any funds provided to the regime would be used to perpetrate similar acts in the future.
Subsections 102.6(1) and (2) of the Criminal Code are similar to section 103.1, though instead of being directed to the provision of funds for a terrorist act, they are directed to the funding of a terrorist organisation. At the relevant time subsections 102.6(1) and (2) were in the following terms:
The only difference between the two subsections is the fault element in paragraph (c)-knowledge in the case of subsection (1) and recklessness in the case of subsection (2). The elements of the offences are, relevantly, as follows:
(1) the person intentionally makes funds available to an organisation;
(2) the organisation is a terrorist organisation;
(3) Either:
(a) the person knows the organisation is a terrorist organisation [in the case of s 102.6(1)]; or
(b) the person is reckless as to whether the organisation is a terrorist organisation [in the case of s 102.6(2)].
The first element is not dissimilar to the first element of the offence created by section 103.1. The only difference of significance is that the funds must be made available to an organisation. 'Organisation is defined in section 101.1 in the following terms:
It is doubtful that the making of funds available to the Iraqi Government would satisfy this element because it is a body politic rather than a body corporate or unincorporated body and therefore not within the statutory definition of an organisation. A Department or Ministry of the Iraqi Government would also not fall within the definition of 'organisation' for the same reason. However, a body corporate or unincorporated body that is owned by or controlled by the Iraqi Government-for example the Iraqi State Company for Water Transport-may, depending on how it was constituted, fall within the definition of an organisation.
The critical element in both the subsection 102.6(1) and (2) offences is the second element that requires proof that the organisation to which the funds were made available was a terrorist organisation. At the relevant time 'terrorist organisation' was defined in section 102.1 in the following terms:
No relevant Iraqi body corporate or unincorporated body was, during the relevant period, specified in the Criminal Code Regulations as being a terrorist organisation.[373] To make out this element, therefore, it would be necessary to prove that the body to which the defendant made funds available was at the time directly or indirectly engaged in, or preparing, planning in or fostering the doing of a terrorist act. The definition of 'terrorist act' in section 101.1 has been addressed above.
If the relevant organisation to which funds were made available was a body corporate or unincorporated body owned or controlled by the Iraqi Government-such as the Iraqi State Company for Water Transport-it would be necessary to prove that that body itself was directly or indirectly engaged in, or preparing, planning or fostering the doing of a terrorist act. It would not be sufficient to prove that the State Company merely passed the funds onto the Iraqi Government or some other body that may have engaged in terrorist acts, unless the act of passing the funds on to another body could of itself amount to indirectly engaging in or fostering a terrorist act. There are likely to be significant, if not insurmountable, difficulties in proving this in the present case.
The third element of the offence is the fault element. In the case of the subsection (1) offence, the fault element is knowledge that the organisation to which the money was made available was a terrorist organisation. This requires proof that the defendant was aware that this circumstance existed, or that it would exist in the ordinary course of events.[374] If the organisation to which the funds were made available was the Iraqi State Company for Water Transport, it would be necessary to prove that the defendant was aware that that organisation (as opposed to the Iraqi Government generally) was a terrorist organisation as defined.
In the case of the subsection (2) offence, the fault element is recklessness as to that circumstance. As considered above, that requires proof that the defendant was aware of a substantial risk that the organisation (relevantly the Iraq: State Company for Water Transport) was a terrorist organisation, and proof that having regard to the circumstances known to the defendant it was unjustifiable to take the risk and make the finance available to that organisation. Similar difficulties to those discussed above in relation to the subsection (1) offence are likely to be encountered in relation to this element.
The elements of the offences created by subsections 102.7(1) and (2) of the Criminal Code are relevantly identical to the offences created by subsections 102.6(1) and (2) save that the first element of each of the offences is that the defendant intentionally provided support or resources to an organisation that would help the organisation engage in an activity described in paragraph (a) of the definition of terrorist organisation (as opposed to making funds available to the organisation, which is the first element in the subsection 102.6(1) and (2) offences). This element, at least in the circumstances of this case, is likely to be more difficult to prove than the first element in the subsection 102.6(1) and (2) offences.
The difficulties in proving the second and third elements (proof that the organisation was a terrorist organisation and proof that the defendant either knew or was reckless about this circumstance) are addressed above in the context of section 102.6.
Offences under the Banking (Foreign Exchange) Regulations and the Customs Act
The Security Council Resolutions restricting dealings with Iraq were implemented domestically by various directions or exemptions issued by the Reserve Bank pursuant to the Banking (Foreign Exchange) Regulations and by certain amendments to, relevantly, the Customs (Prohibited Exports) Regulations. A number of offences under the Banking (Foreign Exchange) Regulations and the Customs Act have potential application.
The Banking (Foreign Exchange) Regulations at various relevant times imposed restrictions on, amongst other things, transfers of Australian currency and foreign currency transactions that related to payments to Iraq, its agencies or nationals. As discussed in Chapters 18 and 26, AWB paid inland transportation fees and after-sales-service fees in US dollars, Deutschmark and euro.[375] To this end, AWB engaged in foreign currency transactions in relation to its payment of inland transportation fees. There were no relevant payments or transactions in Australian currency. It follows that those provisions of the Banking (Foreign Exchange) Regulations that relate to foreign currency transactions have potential application to AWB.
The relevant regulations have already been identified in Chapter 2, as have the terms in which those regulations appear.[376]
AWB paid inland transportation fees in respect of its contracts with IGB from November 1999 until March 2003. Within that period there was a change in the terms of the Banking (Foreign Exchange) Regulations, in particular r. 5, as described in Chapter 2. This occurred in March 2002. Accordingly, for the purposes of determining whether AWB might have contravened any of these regulations, it is necessary to consider both the position prior to 10 March 2002 and the position after that date.
At all relevant times prior to 10 March 2002, regulation 5 of the Banking (Foreign Exchange) Regulations relevantly provided as follows:
In June 1984, the Reserve Bank of Australia granted a number of authorities in relation to engaging in foreign currency transactions for the purposes of r. 5. The terms of these authorities, which are identified in Chapter 2, were amended in late 1984 and again in 1990.
In June 1990, the Reserve Bank pursuant to r. 39 of the Banking (Foreign Exchange) Regulations revoked the general authority granted in 1984 and pursuant to r. 38A granted in its stead a general authority to persons in Australia to buy and sell foreign currency through an authorised dealer and to residents of Australia to buy and sell foreign currency outside Australia.[377] The terms of that authority are set out in Chapter 2.
On 9 August 1990[378] and 5 April 1991, the Reserve Bank varied this general authority in relation to transactions concerning Iraq. The 5 April 1991 variation was relevantly in the following terms:
The effect of the 5 April 1991 variation to the general authority granted by the Reserve Bank was that the purchase or sale of foreign currency through an authorised dealer in Australia or by an Australian resident overseas relating to payments to the Government of Iraq, its agencies or its nationals was no longer authorised by the Bank for the purposes of r. 5(1) and as such would amount to a contravention of that regulation.
Regulation 42 of the Banking (Foreign Exchange) Regulations provides that:
The combined operation of r. 5 and r. 42 and the variation of 5 April 1991 to the Reserve Bank's general authority of July 1990 relevantly created two offences depending on whether the transaction in question occurred in Australia or outside Australia.
In the case of transactions occurring in Australia, the elements of the offence are:
(1) the defendant (either on his own behalf or on behalf of another person) bought or sold foreign currency in Australia;
(2) without the authority of the Reserve Bank, relevantly because:
(a) the purchase or sale of foreign currency related to payments to the Government of Iraq, its agencies or its nationals and thereby fell outside the general authority of the Reserve Bank granted in July 1990; and
(b) the defendant did not have the specific approval of the Reserve Bank.
In the case of transactions occurring outside Australia, the elements of the offence are:
(1) the defendant was a resident (or was acting on behalf of a resident) of Australia;
(2) who bought or sold foreign currency outside Australia;
(3) without the authority of the Reserve Bank, relevantly because:
(a) the purchase of sale of foreign currency related to payments to the Government of Iraq, its agencies or its nationals and thereby fell outside the general authority of the Reserve Bank granted in July 1990 and
(b) the defendant did not have the specific approval of the Reserve Bank.
In the case of both of these offences, it is necessary also to consider the mental or fault element of the offences. In the case of Commonwealth offences, this will depend on whether the relevant act or physical element of the offence occurred before or after 14 December 2001 when Chapter 2 of the Criminal Code commenced operation. In the case of Commonwealth offences that are alleged to have been committed prior to 14 December 2001, the issue is to be determined by the application of the common law. At common law, in general terms, it is a question of construction whether an offence provision that does not specify a mental element nonetheless requires proof of mens rea; that is, knowledge or intention depending on the nature of the offence. The presumption or inference is that most offences other than minor regulatory offences require proof of either knowledge or intention on the part of the defendant.[379] Minor regulatory (or strict liability) offences do not require proof of knowledge or intention, though a defendant may raise, as a defence, that they made an honest and reasonable mistake of fact.[380] Whilst the offence created by the combined operation of regulations 5 and 42 might conceivably be construed as a strict liability offence, having regard to the potential penalty[381] the better view is that the offence requires proof of an intention (relevant here) to buy or sell foreign currency (either inside or outside Australia) and knowledge that that purchase or sale was not authorised by the Reserve Bank.
In the case of Commonwealth offences alleged to have been committed after 14 December 2001, the issue is dealt with by section 5.6 of the Criminal Code, which provides that where an offence provision does not specify a fault element for a physical element, intention is the fault element for a physical element that consists of conduct and recklessness is the fault element in respect of physical elements that consist of a circumstance or a result. Applying section 5.6 to the offence created by the combined operation of r. 5 and r. 42 of the Banking (Foreign Exchange) Regulations, it would be necessary to prove that the defendant intended to buy or sell foreign currency (either in or outside Australia) and was reckless about whether it had the authority of the Reserve Bank.
In the present context, the offence created by the combined operation of r. 5 and r. 42 would be made out if the evidence is capable of proving that:
(a) the defendant (AWB or its relevant officers) either:
(i) bought or sold foreign currency in Australia; or
(ii) as an Australian resident (or acting on behalf of a resident), bought or sold foreign currency outside of Australia
(b) in order to pay, or facilitate the payment of the inland transportation fees or after-sales-service fees; and
(c) the defendant intended to buy or sell the foreign currency referred to in (a);
(d) the foreign currency transaction related to a payment to Iraq, its agencies or nationals-and therefore was excluded from the operation of the Reserve Bank's general authority by reason of the 5 April 1991 variation;
the defendant knew (or, after 14 December 2001, was reckless as to whether) that foreign currency transaction had not been authorised by the Reserve Bank.
In relation to (c), this would be made out if the evidence demonstrated that the foreign currency obtained as a result of the dealing was paid to Alia and that Alia was either acting as an agent of Iraq, or that it was paid to Alia on the understanding or belief that Alia would pay the money to Iraq (less any relevant commission).
In relation to (d), it would not be necessary to prove that the defendant knew that such dealings were prohibited by regulation 5 (or was reckless about this matter) and was therefore unlawful. Mistake or ignorance of the law is no defence.[382] It may, however, be necessary to prove that the defendant knew the circumstances which resulted in the dealing being outside the operation of the general authorisation-that is, that the dealing related to a payment to Iraq, its agencies or nationals.
In June 1984, in addition to the authorities that it issued, the Reserve Bank also exempted certain transactions from the application of r.5. This exemption was granted pursuant to r.38 of the Banking (Foreign Exchange) Regulations. This exemption[383] was in the following terms:
This exemption extended, relevantly for present purposes, to include any person 'who otherwise deals (except by way of buying and selling) with foreign currency in Australia' and any resident of Australia (or person acting on their behalf) 'who otherwise deals (except by buying or selling) with foreign currency outside Australia'.
As noted in Chapter 2, this exemption was not affected by the variations made on 9 August 1990 and 5 April 1991 to the Reserve Bank's general authority to r. 5. There was also no similar amendment to the terms of the exemption, in particular so as to remove from the ambit of the exemption, dealings in foreign currency of the type described which relate to payments to the Government of Iraq, its agencies or its nationals.
Accordingly, a transaction in which a person deals with foreign currency in Australia-other than buying or selling it-is exempted from the application of r. 5(1) by reason of the June 1984 exemption. Moreover, this is so even if the transaction is made after April 1991 and relates to a payment to the Government of Iraq, its agencies or its nationals. Regulation 5(1) has no application to that transaction by reason of the exemption. A person entering into such a transaction after April 1991 does not thereby contravene r. 5(1), even if the transaction was for the purposes of or related to a payment to the Government of Iraq, its agencies or its nationals.
Further, a transaction in which an Australian resident deals with foreign currency outside of Australia-other than by buying or selling it-is similarly exempted from the application of r. 5(1) by reason of the June 1984 exemption, even if that overseas transaction is made after April 1991 and relates to a payment to the Government of Iraq, its agencies or its nationals. Regulation 5(1) has no application to any such transaction by reason of the exemption and a person entering into such a transaction after April 1991, does not thereby contravene r. 5(1) even if for the purposes of or related to a payment to the Government of Iraq, its agencies or its nationals.
There is a further observation that should be made in relation to the application of r. 5 to companies. This arises from sub-regulation 5(7).
Sub-regulation 5(7)(b) provides in effect that where an Australian resident company has a place of business overseas, the company is deemed not to be a 'resident' for the purposes of r. 5 in relation to the affairs of the company conducted through that place of business, including any business carried on, transactions entered into and acts and things done by the company at or through that place of business.
AWB had an office in the United States. It also had a US incorporated subsidiary. For the purposes of any business conducted through either, AWB was not a 'resident' for the purposes of r. 5. Foreign currency transactions by that office or place of business and in relation to the affairs of that office or place of business may not fall within the prohibition in r. 5(1).
However, this provision is not likely to have any application to the transactions of AWB with which this Inquiry is concerned and which might have constituted a contravention of the Banking (Foreign Exchange) Regulations, namely the payment of inland transportation fees to Alia. This is because:
Regulation 5 was amended by the Banking (Foreign Exchange) Regulations 2002, effective from 11 March 2002. Sub-regulations 5(1), (2), (3) and (4) were substituted and a new sub-regulation 5(4A) was added.
Relevantly, r. 5 as amended provided:
The effect of this amendment was to remove from the Banking (Foreign Exchange) Regulations any general prohibition in relation to dealings in foreign exchange and replace it with a power on the part of the Reserve Bank to issue directions to a person that they not engage in, or be a party to, certain dealings relating to foreign currency.
On 5 April 2002, the Reserve Bank issued a direction pursuant to r. 5 in the following terms:
On the same day, the Reserve Bank also revoked its earlier exemption to r. 5 dated 21 June 1984.
It is to be recalled that r. 42 provides that a person shall not contravene or attempt to contravene or fail to comply with 'any of the provisions of these regulations'.
Whilst the intention of the drafters of the new r. 5 may have been that a direction issued by the Reserve Bank pursuant to that regulation would have the same effect as a prohibition in the Banking (Foreign Exchange) Regulations themselves, so that a failure to comply with the direction would amount to a contravention of the Regulations and therefore an offence against r. 42, arguably there is a lacuna in the Regulations that prevents the regulatory scheme from having that effect. Although r. 5 confers a power on the Reserve Bank to issue directions, only the direction itself prohibits transactions that fall within the terms of the direction. Nothing in the Regulations provides that a person is obliged to comply with such a direction, or that such a direction has the status of a regulation, or that a contravention of such a direction amounts to a contravention of the Regulations. If the direction itself does not have the status of a regulation, it would follow that a failure to comply with a direction may not amount to a contravention of r. 5, or any other provision in the Regulations, and that therefore does not constitute an offence against r. 42.
If, however, as a matter of construction, a failure to comply with a direction under r. 5 does amount to a contravention of r. 5 itself, the combination of rr. 5 and 42 and the direction issued by the Reserve Bank on 5 April 2002 creates offences with elements similar to the offences that existed prior to the amendment of r. 5 on 10 March 2002.
The elements of the offences are, in the case of transactions occurring in Australia:
(1) the defendant, either on his own behalf or on behalf of another person, bought, borrowed, sold, lent, exchanged in Australia or otherwise dealt in Australia with foreign currency;
(2) in relation to a payment to the Government of Iraq, its agencies or its nationals;
(3) without the specific prior approval of the Reserve Bank of Australia
in contravention of the direction issued by the Reserve Bank on 5 April 2002 and thereby r. 5.
In the case of transactions occurring outside Australia, the offence has the following elements:
(1) the defendant was a resident (or was acting on behalf of a resident) of Australia;
(2) who bought, borrowed, sold, lent, exchanged outside Australia or otherwise dealt outside Australia with foreign currency;
(3) in relation to a payment to the Government of Iraq, its agencies or its nationals;
(4) without the specific prior approval of the Reserve Bank of Australia
in contravention of the direction issued by the Reserve Bank on 5 April 2002 and thereby r. 5.
Proof of these elements would not be dissimilar to the proof of the elements of the offences based on r. 5 in the form in which it appeared prior to 11 March 2002, as has already been considered.
Reference again needs to be made to r. 5(7) in this context-in particular reference needs to made to the application of r. 5(2) and who may be a 'resident' for that purpose. This is again not likely to have any relevant application to the particular foreign currency transactions of AWB with which this Inquiry is concerned in the application of r. 5 after 11 March 2002. This is because:
At all relevant times regulation 6 of the Banking (Foreign Exchange) Regulations provided as follows:
Regulation 6 proscribes the taking or sending of currency out of Australia. It is concerned with two situations. The first concerns Australian currency; the second concerns foreign currency.
Regulation 6 prohibits the taking or sending of Australian currency out of Australia, except with the authority of the Reserve Bank of Australia. On 29 June 1990 the Reserve Bank issued an exemption from the application of r. 6(1).[385] This came into operation on 1 July 1990. The effect of the exemption was to exempt 'from the application of subregulation 6(1) of the Regulations the taking or sending out of Australia by a person of any Australian currency'.
On 9 August 1990 this exemption was varied so that it would not apply to dealings relating to the Governments of Kuwait or Iraq, their agencies or nationals.[386] The variation came into operation on the same date. On 5 April 1991 the variation was revoked and replaced by another variation, which applied exclusively to dealings with Iraq rather than Iraq and Kuwait.[387] This variation came into operation on 5 April 1991.[388] The effect of these variations was that taking or sending out of Australia of Australian currency associated with dealings relating to Iraq, its agencies or nationals was no longer exempted from r. 6; it was no longer possible to send or take Australian currency out of Australia in relation to such dealings without the specific approval of the Reserve Bank. These variations were not revoked until 29 May 2003.[389]
This aspect of r. 6 is unlikely to have any application to AWB. The evidence before the Inquiry does not disclose that it took or sent any Australian currency out of Australia for the purposes of the payment of any inland transportation fees. All AWB's payments of inland transportation fees were paid in currencies other than Australian dollars.
Although, if it were to be found that AWB had taken or sent Australian currency overseas, for example from its Australian dollar bank accounts in Australia to its US dollar accounts held overseas, and converted it into foreign currency overseas in order to pay the inland transportation fees, then the remittance of the Australian currency between April 1991 and May 2002 may amount to a contravention of r.6. That is provided that the remittance of the Australian currency was sufficiently closely connected to the transaction with Iraq. If, however, AWB sent Australian dollars from Australia to (for example) the United States where they were converted to US dollars and paid into its US dollar account for the purposes of that account generally, or to top up that account, then those remittances may not amount to a contravention of r. 6 even if some of those funds were later used for making payments to Iraq. In that latter situation, the more general nature for the transfer may be sufficient to sever any causal connection between the remittance and the payment. Ultimately, this would be a question of fact to be determined by reference to the particular circumstances of the particular transaction.
There are two aspects to the possible application of r.6 to foreign currencies in the context of the transactions considered by this Inquiry.
The first is that r. 6 only prohibits taking or sending foreign currency out of Australia. It has no application to the remittance of foreign currency by an Australian or Australian resident from a place outside of Australia to another place outside Australia. It therefore has no application to payments made from foreign currency that is not held in Australia and is not paid from Australia, even if the payment is made by an Australian. To the extent that inland transportation fees were paid by AWB in US dollars from US dollar accounts that it held outside of Australia, those payments were not subject to r. 6.[390]
However, as has already been observed in Chapter 26, from May 2001 AWB also paid inland transportation fees in foreign currencies (Deutschmarks and euros) from Australia via the banking system.[391] It is therefore necessary to consider whether r. 6 may have some potential application to those transactions.
The second relates to some possible problems in the construction and application of r. 6 to the sending or taking out of foreign currency. These problems stem from the language of r. 6 which excludes 'foreign currency obtained under the last preceding regulation' from the general prohibition otherwise provided for by that regulation (in respect of foreign currencies). The reference to the 'last preceding regulation' is a reference to r. 5. To consider the implications of this question to the application of r. 6, it is again necessary to look at the situation both prior to and after the amendment of r. 5 on 11 March 2002.
Prior to 11 March 2002, r. 5 prohibited certain specified dealings of foreign currency (including the purchase of foreign currency) except with the authorisation of the Reserve Bank. Whilst r. 5 in this form did not directly provide a mechanism for 'obtaining' foreign currency for the purposes of r. 6, it is possible to construe r. 5 as permitting the obtaining of foreign currency with the authority of the Reserve Bank. That being so, foreign currency obtained without the authority of the Reserve Bank would not have been 'obtained under' r. 5.
The general authority and the variation to the general authority under r. 5 have already been considered. In short, after April 1991, any foreign currency purchased in Australia or by an Australian resident overseas in relation to any payment to the Government of Iraq, its agencies or its nationals, was not authorised by the Reserve Bank and (on the construction suggested above) not obtained under r. 5. It follows that r. 6 prohibited the sending out of Australia of any foreign currency obtained in these circumstances. Any contravention of this prohibition would be an offence under r. 42.
Because, in these circumstances, any contravention of r. 6 requires, in effect, proof of a prior contravention of r. 5 (that is, purchasing the foreign currency without the authority of the Reserve Bank), r. 6 is of limited utility, for present purposes. On each occasion that inland transportation fees were paid from Australia in foreign currency acquired in Australia prior to 11 March 2002, this would involve both a contravention of r. 5 (in relation to the purchase of the foreign currency) and a contravention of r. 6 (in relation to the transfer of the foreign currency out of Australia), both of which would amount to offences under r. 42.
Equally, if the foreign currency that was taken or sent from Australia was acquired through a means falling within the exemption to r. 5 dated 21 June 1984[392], then it is also likely that this would not amount to a contravention of r. 6. That is on the basis that foreign currency acquired consistent with the exemption to r. 5 is foreign currency that has been obtained under that regulation, for the purposes of r. 6. That foreign currency has also been obtained in effect with the 'approval' of the Reserve Bank by reason of the operation of the Reserve Bank's exemption to the regulation. To conclude otherwise would require a very narrow construction of the words 'obtained under' when used in r. 6. It would be necessary to argue that, strictly speaking, the foreign currency so acquired was not obtained under r. 5, but obtained under an exemption to its application. But it was nevertheless obtained in a manner not prohibited by r. 5 and thereby acquired analogously to the foreign currency acquired pursuant to the Reserve Bank's general approval.
After March 2002, r. 5 provided that the Reserve Bank could direct persons not to engage or be a party to certain transactions concerning foreign currency. It is difficult to see how any foreign currency could be 'obtained under' r. 5 for the purposes of r. 6. The only construction of r. 5 that gives some meaning to the words 'other than foreign currency obtained under the last preceding regulation' in r. 6 is that r. 5 (after 11 March 2002) amounts to a general authorisation to purchase foreign currency so long as the transaction is not subject to a direction issued by the Reserve Bank. If this construction is accepted, any purchase of foreign currency that was contrary to such a direction was not 'obtained under' r. 5 and was therefore subject to the prohibition against transfer from Australia in r. 6.
The 5 April 2002 direction not to deal with foreign currency where the dealing relates to a payment to Iraq has been considered above in the context of r. 5. The purchase of foreign currency in relation to a payment to the Government of Iraq, its agencies or its nationals would be contrary to that direction and therefore, on the basis of the construction of r. 5 identified earlier, not 'obtained under' that regulation. Foreign currency obtained in these circumstances would therefore be subject to the prohibition in r. 6. Sending such foreign currency overseas would contravene r. 6 and be an offence under r. 42. That would be so even if, for the reasons given above, the purchase of foreign currency contrary to the 5 April 2002 direction may not amount to a contravention of regulation 5 and therefore an offence under r. 42 on that basis.
This analysis depends, however, on an acceptance of what on one view is a fairly strained construction of rr. 5 and 6. The potential difficulties surrounding the construction of these regulations after 11 March 2002 may present difficulties in any prosecution proceedings based on a contravention of these regulations or the underlying directions or authorities issued by the Reserve Bank.
Regulation 8(1)(a) of the Banking (Foreign Exchange) Regulations 1959 provides that:
On 29 June 1990 the Reserve Bank issued an exemption from the application of this regulation[393] which came into operation on 1 July 1990 and which provided that the Reserve Bank:
On 9 August 1990 this exemption was varied so that it did not apply to transactions in connection with the governments of Kuwait or Iraq, their agencies or nationals.[394] This variation came into operation on the same date.[395] On 5 April 1991 this variation was revoked and replaced with another variation, which applied exclusively to dealings with Iraq rather than Iraq and Kuwait.[396] This variation came into operation on 5 April 1991.[397] The Reserve Bank revoked its variation of this exemption on 28 May 2003.[398]
Regulation 8 is concerned with the making of a proscribed payment 'in Australia'. There is no evidence before this Inquiry that AWB made any payment of the type contemplated by that regulation. Accordingly, there does not appear to be any basis on which it may be said that AWB might have contravened that regulation.
The other means by which the relevant Security Council Resolutions were implemented domestically was to prohibit exports to Iraq via the Customs Act and the Customs (Prohibited Exports) Regulations. Section 112 of the Customs Act provides that the Governor-General may, by regulation, prohibit the exportation of goods from Australia. Goods the exportation of which is so prohibited are 'prohibited exports.' From 17 June 1999 to 30 June 2002, regulation 13CA of the Customs (Prohibited Exports) Regulations provided as follows:
Minor amendments to subregulations 13CA(2) and (4) were effected by the Customs (Prohibited Exports) Amendment Regulations 2002 (No. 2). The amendments commenced on 1 July 2002.[399] The essential effect of these amendments was to substitute 'the Foreign Minister' for references to 'The Minister of State for Foreign Affairs and Trade' and 'the Minister'.[400]
It follows that goods the immediate or final destination of which was Iraq were prohibited exports unless the Minister had granted a permission to export in relation to the goods under subregulation 13CA(2) and that permission had not been revoked under subregulation 13CA(4). The exportation of prohibited exports is an offence under section 233(1)(c) of the Customs Act.
All of the goods exported by the three relevant companies were the subject of permissions granted under subregulation 13CA(2). None of the permissions were revoked under subregulation 13CA(4). The goods were accordingly not prohibited exports and no offence was committed under section 233(1)(c) of the Customs Act.
The only possible basis for any suggestion that an offence under section 233(1)(c) of the Customs Act may have been committed is that, if the permissions were obtained as a result of fraud or misrepresentation on the part of any of the relevant companies, as a matter of public law the permissions could be declared invalid and void ab initio. Until declared void, however, the permissions remain in force. There have been no proceedings to declare any of the permissions invalid.
It must also be regarded as doubtful that a declaration, made after the date of the export to which the permission related, that the permission was void ab initio could support a prosecution based on the allegation that there was no permission at the time of export. It is unnecessary to decide this issue because if the central allegation is that the permission was obtained as a result of fraud or misrepresentation, it plainly would be preferable to prosecute for offences directly relating to that fraud or misrepresentation (considered above), rather than the offence under s 233(1)(c) of the Customs Act.
Offences under the Corporations Law and Corporations Act
In the case of AWB, there are some potentially relevant offences (or civil penalty provisions) in the Corporations Act, including offences previously in the Corporations Law that are, in effect, taken to be included in the Corporations Act 2001 by reason of the transitional provisions in sections 1400 and 1401 of the Corporations Act.[401]
There are three broad areas where Corporations Act offences are potentially applicable. First, offences under the Act may have been committed if it is found that any officers of AWB provided false or misleading information to the directors in relation to the various contracts and arrangements with Iraq, including the recouping of the Tigris debt. Second, offences might have been committed if it is found that officers of AWB falsified books in relation to any of the relevant transactions. Third, offences or civil contraventions of the Corporations Act may have been committed if it were found that, in causing or permitting AWB to enter into the relevant arrangements with Iraq, officers of AWB failed to act in accordance with the statutory duties to act in good faith in the best interests of the company, to act for proper purposes and to exercise care and diligence.
The context in which the potential availability of the offence created by section 1309 of the Corporations Act is to be considered is the provision of information by senior management to the AWB board of directors, in particular during 2003 and 2004, concerning the nature of the relevant dealings with Iraq and Alia, including the recovery of the Tigris debt, and the various investigations conducted by management, and persons retained by it, in relation to those matters. The key factual issue is whether this information was in any respect false or misleading.
At all material times section 1309 of the Corporations Act relevantly provided as follows:
The elements of the offence created by subsection 1309(1), relevant to the matter at hand, are as follows:
(1) the defendant was an officer of a corporation; and
(2) the defendant made available (or furnished, or authorised the making available or furnishing, or permitted the making available or furnishing) of information;
(3) to [relevantly] a director;
(4) being information that;
(a) related to the affairs of the corporation; and
(b) to the knowledge of the officer was either:
(i) false or misleading in a material particular; or
(ii) had omitted from it a matter or thing the omission of which rendered the information misleading in a material respect.
Subsection 1309(2) creates a similar offence with a lesser mental element. Unlike the subsection 1309(1) offence, to make out the offence under subsection 1309(2) it is unnecessary to prove that the officer knew the information to be false or misleading. It is necessary only to prove that the officer failed to take reasonable steps to ensure that the information was not false or misleading. Subsection 1309(2) provides as follows:
The elements of the offence created by subsection 1309(2), relevant to the matter at hand, are as follows:
(1) the defendant was an officer of a corporation; and
(2) the defendant made available (or furnished, or authorised the making available or furnishing, or permitted the making available or furnishing) of information;
(3) to [relevantly] a director;
(4) being information that;
(a) related to the affairs of the corporation; and
(b) to the knowledge of the officer was either:
(i) false or misleading in a material particular; or
(ii) had omitted from it a matter or thing the omission of which rendered the information misleading in a material respect; and
(5) the defendant failed to take reasonable steps to ensure that the information:
(a) was not false or misleading in a material particular; or
(b) did not have omitted from it a matter or thing the omission of which renders the information misleading in a material respect.
In relation to the first element of these offences, 'officer' in relation to a body corporate is defined in section 82A of the Corporations Act to include a director, secretary, executive officer or employee of the body or entity. At all material times, an executive officer in relation to a body was defined in section 9 as meaning a person who was concerned in, or took part in the management of the body (regardless of the person's designation and whether or not the person was a director of the body). In CAC v Bracht[402] Ormiston J said that the definition of executive officer pointed to activities which involved policy and decision making related to the business affairs of the corporation, and that affected the corporation as a whole, or a substantial part of that corporation, to the extent that the consequences of the formation of those policies or the making of those decisions may have some significant bearing on the financial standing of the corporation or the conduct of its affairs. Section 9 of the Act also includes a definition of 'officer' that covers persons who would fall within Ormiston J's construction of the definition of 'executive officer.'
The second and third elements of the s1309 offence, which are the main physical elements of the offence, are expressed in broad terms and will cover most acts that result in the provision of information, in virtually any form, to a director or the directors of the company of which the defendant is an officer.
The information potentially relevant in this case is information concerning AWB's dealings with Iraq and Alia, including the payment of fees to Iraq (via Alia) and the recovery of the Tigris debt, and the results of the various investigations conducted by management and external advisers in relation to these matters. In particular there is evidence to suggest that whilst the directors were told, in general terms, that the Iraq contracts included inland transportation costs or fees, they were not told how these fees were calculated or paid. In particular, they were not told that the fees were paid indirectly to Iraq through Alia. In relation to Tigris, there is evidence to suggest that the directors were told that the Tigris debt had been recouped, but were not told the manner in which the debt was recouped-in particular that contract prices had been inflated to incorporate it.
The fourth element of the offence requires proof that the information provided, to (relevantly) the directors had two qualities. First, the information must have related to the affairs of the corporation; and second, the information was false or misleading in a material particular, or had omitted from it a matter that rendered the information false or misleading in a material particular.
The first quality is unlikely to be an issue in this case. The information concerning AWB's dealings and the investigations relating thereto plainly related to the affairs of AWB. In relation to the second quality, the question whether particular information is false or misleading is a question of fact to be decided by considering what was said and done against the background of all surrounding circumstances.[403] However, to the extent that the context is equivocal, attention is properly focussed squarely on the words or text of the relevant statement.[404] Information is misleading if 'its natural and probable result' is to induce persons to act on the information.[405]
The fourth element of the subsection 1309(1) offence requires proof that the defendant knew that the information provided was false or misleading in a material respect or that there was a material omission. The knowledge required is actual knowledge. In the case of the information discussed, in general terms, above, it would be necessary to prove that the defendant knew that the information provided to the directors in relation to transportation and after-sales-service fees was misleading by reason of the omission to inform the directors that the level of the fees was fixed by the IGB and the fees were paid indirectly to Iraq via Alia. In the case of the Tigris debt, it would be necessary to prove that the defendant knew that the information provided in relation to the recoupment of this debt was misleading by reason of the omission to inform the directors that the price of two relevant Iraq contracts had been inflated to incorporate the payment of the debt.
Proof of knowledge is not required in the case of the subsection 1309(2) offence. Rather element five of the offence requires proof that the defendant failed to take reasonable steps to ensure that the information that was provided was not false or misleading, or false or misleading by omission. This imposes an objective standard. The relevant question may be framed as being what steps a reasonable person in the defendant's position and with their knowledge would have taken to ensure the accuracy of the information. What steps would have been reasonable will depend on the particular facts and circumstances of the case. In the case of the information discussed, in general terms, above, it would be necessary to prove that the defendant failed to take any, or any reasonable steps, to ascertain how the fees were calculated and paid; or failed to take any, or any reasonable, steps to ascertain the manner in which the Tigris debt was recouped.
At all material times, section 1307 of the Corporations Act provided as follows:
The elements of the offence created by subsection 1309(1), relevant to the matter at hand, are as follows:
(1) An officer or employee;
(2) Engages in conduct that results in the falsification of;
(3) Any books affecting or relating to the affairs of the company.
A 'book' is defined in section 9 as including 'any other record of information' and 'a document'.
Subsection 1307(3) provides that it is defence to subsection 1307(1) if the defendant proves that he, she, or it acted honestly and that in all the circumstances the act or omission constituting the offence should be excused.
At all relevant times sections 180 to 182 of the Corporations Act[406] imposed obligations on officers and directors of corporations to act with care and diligence (section 180), to act in good faith in the best interests of the corporation and for proper purposes (section 181), and not to improperly use their positions to gain an advantage for themselves or cause detriment to the corporation (section 182). These provisions are civil penalty provisions[407], meaning that the result of any contravention of them is the imposition of a civil penalty. They are not criminal offences. Section 184 of the Act, however, made it a criminal offence for directors or officers to dishonestly, intentionally or recklessly engage in the sort of conduct that would amount to breaches of the statutory duties
It should be noted that by reason of s. 1317K of the Corporations Act, proceedings for a declaration of contravention of a civil penalty provision must be started no more than 6 years after the contravention.
Section 180 of the Corporations Act provides as follows:
There is considerable authority concerning the nature of this obligation and the standard of care expected of a director. Much of this authority is in the context of the general law fiduciary duty to exercise reasonable care and skill and the antecedent provision in the Corporations Law.[408] It is beyond the scope of this report to address these authorities in any detail. In general terms, the extent of a director's (or officer's) duty and the standard of care required will depend on a number of factors, including: the nature of the company's business[409], the manner in which the work of the company is distributed between the directors and management[410], the terms on which the director undertook to act as a director[411], the particular functions that the director was performing[412] and the circumstances of the specific case.[413] At the very least a director is obliged to take reasonable steps to place themselves in a position to guide and monitor the company's business[414], which will include keeping informed about the business and activities of the company. The following passage from the judgement of Pollock J in Francis v United Jersey Bank[415] is apposite:
A director is, however, entitled to rely, without verification, on the judgment, information and advice of management and other officers appropriately so entrusted, so long as the directors did not know, or, by the exercise of ordinary care should have known, any facts that would deny such reliance.[416] The reasonableness of the reliance on management may depend on a number of factors, including the extent to which the director is put on inquiry, or should have been put on inquiry, whether the director honestly holds the belief that the particular officer upon whom reliance is placed was honest, trustworthy and competent and the nature of the transaction or the risk involved in it.[417]
The extent of the obligation in subsection (1) must also be considered in light of the business judgment rule in subsections (2) and (3). A director will only be protected by this rule, however, if they meet each of the four criteria spelt out in subsection (2).
There are two separate aspects of the conduct of the directors or officers of AWB that may that might have been in breach of subsection 180(1). The first involves the conduct of those officers who caused or permitted AWB to enter the relevant contracts with Iraq, including the collateral arrangements in relation to the payment of inland transportation and after-sales-service fees. The second aspect relates to the conduct of the directors of AWB when they became aware, firstly, of the fact that AWB had been paying the inland transportation fees and, secondly, when they became aware of aspects of the recoupment of the Tigris debt.
In relation to the first of these matters, the officers of AWB who negotiated and committed AWB to the Iraq contracts were not directors. The first question in relation to the potential application of subsection 180(1), then, is whether any of these officers were 'officers' for the purposes of subsection 180(1). The definition of 'officer' for the purpose of subsection 180(1) is given in section 9[418] and includes, relevantly, the following:[419]
It would be open to conclude that a number of the senior officers of AWB who participated in the decisions relating to the relevant arrangements with Iraq fall within this definition of 'officer.' Plainly such decisions had the capacity to affect a substantial part of the business of AWB or to affect significantly AWB's financial standing.
An officer who caused or permitted AWB to enter into the arrangements with Iraq in circumstances where they knew that the arrangements involved the payment of fees to Iraq which were not revealed to the United Nations or DFAT, could hardly be regarded to have discharged their duty of care and diligence. Indeed, it is likely that an officer would be found to be in breach of this obligation if they knew enough information about the arrangements with Iraq that it could be said that they ought reasonably to have known about the payment of the inland transportation fees, or that they ought reasonably to have taken steps to ensure that the arrangements were in fact approved by the United Nations and therefore not in breach of the sanctions.
The second area of potential breach involves the actions of the directors. Put shortly, the relevant question is whether the directors, or any of them, to use the words of Pollock J, 'shut their eyes to corporate misconduct' on the part of management. This applies both in relation to knowledge of the payment of the inland transportation fees, and knowledge of the recoupment of the Tigris debt. The critical factual issues in any case against the directors for failure to discharge their statutory obligation to exercise care and diligence would be what information was conveyed to the directors by management in relation to the transportation and after-sales-service fees and the recoupment of the Tigris debt, was it reasonable for the directors to rely on this information, were there any matters that should have put the directors on inquiry, what steps the directors took in relation to this information and whether a reasonable director in their position and with their knowledge would have taken some additional action.
An additional statutory obligation imposed on directors and officers is the duty to act in good faith and for proper purposes. Subsection 181 of the Corporations Act at all relevant times provided as follows:
Like the obligation of care and diligence, this statutory obligation has its origins in the general law fiduciary duties that directors owe to their company. It is again beyond the scope of this report to address the authorities concerning a director's duty to act in good faith and for proper purposes in any detail. Suffice it to say that the duty requires a director to at all times exercise their powers honestly, in the interests of the company and not in the interests of themselves or others, and for the purposes for which those powers were conferred on them, not for collateral purposes.
A director will be in breach of this duty if they failed to give proper consideration to the interests of the company, or if they acted for purposes collateral to the purposes for which the specific power they exercised was conferred on them, even if they were acting in what they considered to be an honest manner and for proper purposes.[420]Further, whilst most cases concerned with the breach of this duty involve directors exercising their powers for their own personal benefit, or the benefit of associates, a director may exercise their powers for what the court considers to be an improper purpose even though their actions gave them no personal benefit.[421]
Those officers (falling within the section 9 definition of 'officers') of AWB who caused or permitted AWB to enter the Iraq contracts that included the collateral arrangements to pay inland transport and after-sales-service fees to Iraq could potentially have breached section 181 of the Corporations Act. Whilst it may be inferred that the officers who committed or permitted AWB to enter into these arrangements did so for subjectively honest reasons-that it, their purpose was to maintain and secure AWB's wheat sales to Iraq-it is difficult to see how any reasonable officer could ever consider that it was in AWB's best interests to enter into arrangements that were, or potentially were, in contravention of United Nations sanctions and that involved deception or concealment of key parts of the arrangements (the payments made indirectly to Iraq via Alia) from the United Nations and DFAT. Likewise, it is difficult to see how the power conferred on officers of AWB to commit AWB to contractual arrangements could possibly extend to encompass such arrangements.
Subsection 182(1) of the Corporations Act imposes an additional civil obligation on directors and officers that, in most cases, will overlap with the obligation in subsection 181(1). Subsection 182(1) provides as follows:
Significantly this obligation is imposed not only on directors and officers, but also on employees of a corporation.
The test of impropriety in section 182 is objective, though the defendant's state of mind may be relevant. In R v Byrnes[422] the High Court stated:
To prove a contravention of section 182(1), it is necessary to prove that the improper use of position was 'to gain' an advantage for the defendant or someone else. The words 'to gain' refer to the purpose of the improper use of position as opposed to the result.[423] That is, it is necessary to prove that the director, officer or employee had the purpose or intention of advantaging themselves or another person. It is not necessary to prove that their conduct had that result.
The circumstances that give rise to a potential breach of section 182 are similar to those considered above in the context of section 181. It may be open to conclude that an officer or employee of AWB, by committing AWB to contracts that were, or were potentially, in breach of United Nations sanctions and involved deception or concealment, made improper use of their position. That would be so even if the officer or employee believed that they were acting honestly. The potential difficulty in making out a contravention of section 182 is that it must also be proved that the officer or employee misused their position for the purpose of gaining an advantage for themselves or someone else. There is no real question of any officer or employee of AWB who was involved in these arrangements acting with the purpose of advantaging themselves. Further, whilst the effect of the arrangements was, ultimately, to advantage Iraq, it would be difficult to conclude that this was the purpose or intent of the relevant officers or employees.
Section 184 of the Corporations Act creates criminal offences that largely coincide with the civil obligations in sections 181 and 182, but with the added element of dishonesty or recklessness. At all relevant times section 184 provided as follows:
The elements of the offence created by subsection 184(1) are as follows:
(1) The defendant was a director or officer (as defined in section 9) of the corporation;
(2) The defendant either:
(a) recklessly; or
(b) intentionally dishonestly
(3) failed to exercise their powers and discharge their duties either:
(a) in good faith; or
(b) for a proper purpose.
The elements of the offence created by subsection 184(2) that are potentially relevant to the facts of this matter are as follows:
(1) The defendant was a director or officer (as defined in section 9) or employee of the corporation;
(2) The defendant dishonestly;
(3) used their position as a director, officer or employee of the corporation;
(4) either:
(a) with the intention of directly or indirectly gaining an advantage for themselves; or
(b) reckless as to whether the use [of their position] may have resulted in someone else directly or indirectly gaining an advantage.
In relation to the subsection 184(1) offence, the first and third elements have already been considered in the context of section 181(1). The only difference of significance is that whereas section 181(1) requires proof that the defendant's exercise of powers was both not bona fide in the best interests of the corporation and not for a proper purpose, subsection 184(1) only requires proof that the exercise of power was either not in the best interests of the corporation or not for a proper purpose.
The second element is the mental or fault element of the offence. It requires, in effect, that it be proved that the defendant either:
(a) knew that the exercise of power was either not in the best interests of the corporation or was for an improper purpose, and that the defendant either deliberately acted in disregard of that knowledge; or
(b) was reckless as to whether their conduct was not in the best interests of the corporation or was for an improper purpose (that is, the defendant knew that there was a substantial risk that this was the case and persisted with their conduct notwithstanding that risk).
In the relevant circumstances relating to AWB, this would require proof that the officer of AWB who was involved in the arrangements with Iraq and, in particular, the payments to Alia, either knew that committing AWB to these arrangements was not in the best interests of AWB, or that using their position or powers to commit AWB to the arrangements was not a proper use of their position, or knew that there was a substantial risk that this was the case.
In relation to the subsection 184(2) offence, whilst this offence has similarities to the civil penalty provision in subsection 182(1), there are significant differences. First, the element of 'improper' use of position is replaced by an element involving dishonesty. This would require, at minimum, proof that the defendant knew that their conduct as an officer or employee was improper, in the sense that it fell below the standards expected of a person in their position and with their knowledge. It may also require proof that the defendant was conscious that his conduct was not in the best interests of the corporation.
Second, whereas subsection 182(1) requires proof that the officer's purpose was, relevantly, to obtain an advantage for another person[424], subsection 184(2) includes, as an alternative to proof of intention, proof that the defendant was reckless that their conduct would result in someone else obtaining an advantage. That would require proof that the defendant knew that there was a substantial risk that another person would obtain a benefit and that, having regard to the defendant's knowledge, it was unreasonable for them to act.
There are two separate aspects of the conduct of officers or employees of AWB that might amount to an offence against subsection 184(1). The first relates to the conduct of those employees who were relevantly involved in AWB's arrangements with Iraq and in particular the indirect payments to Iraq via Alia. As discussed above, it may be open to conclude that those employees who knew that the arrangements, and in particular the payments to Alia, were actually or potentially in breach of the United Nations sanctions, and for this reason were not fully disclosed to the United Nations and DFAT, acted dishonestly in the sense required in subsection 184(2). It is difficult to accept that any reasonable officer or employee could believe that it would be in the best interests of AWB to commit it to such arrangements. It is also difficult to accept that any employee that lent their hand to such transactions, involving as they did the structuring of the payments in a way designed to avoid disclosure to DFAT and the United Nations, was not conscious of the dishonesty involved. It may also be concluded that these employees were, at the very least, reckless that the use of their positions to commit AWB to these arrangements would result in Iraq obtaining, directly or indirectly, an advantage, namely access to foreign currency which it would not otherwise have been able to obtain.
The second aspect relates to the recoupment of the Tigris debt. It might reasonably be concluded that those officers or employees that were involved in the arrangements and transactions involved in the recoupment of the Tigris debt acted dishonestly in the required sense. It is difficult to accept that any employee involved in these arrangements would not have been aware that it could not have been in AWB's best interests to be involved in such transactions, involving as they did the deception, or potential deception of the United Nations and DFAT in relation to the genuine price of the wheat in the two relevant wheat contracts. It may also be open to conclude that officers or employees involved in these transactions were at the very least reckless that their conduct in putting these transactions in place would result in Tigris obtaining an advantage: namely repayment of a debt that it otherwise would not be able to recoup, at least at that time. The fact that AWB would also be advantaged-in the form of a payment or commission for its assistance in recouping the debt-would not necessarily take away the fact that Tigris would also be advantaged.
Offences relating to the obstruction or hindering of Commonwealth public officials might have been committed by certain persons. This may apply in particular to the actions of certain officers of AWB and AWBI towards the Wheat Export Authority.
At all material times after 24 May 2001, section 149.1 of the Criminal Code provided as follows:
Subsections 149.2(2) and (3) provide in relation to the fault element of the offence that that it is not necessary to prove that the defendant knew that the official was a Commonwealth public official, or that the functions were the functions as a Commonwealth public official and that it is immaterial whether the defendant was aware that the public official was performing the official's functions. Subsection 149.1(6) defines 'function' as meaning any authority, duty, function or power that is conferred on the person as a public official, or Commonwealth public official.
The wilful provision of false, misleading or materially incomplete information to a public official in response to a request for information can amount to hindering or obstructing that official.[425]
In the context of a possible offence of the hindering or obstruction of officials of the Wheat Export Authority, an offence might be committed if it is proved that the defendant:
(a) Knew that an officer or employee of WEA was a public official;
(b) that officer or employee requested information from the defendant which request was known by the defendant to have been made in the performance of a function of the Wheat Export Authority, such as monitoring the performance AWBI; and
(c) the information provided by the defendant was known by the defendant to be false or misleading or materially incomplete.
[263] See Ex 3, EXH.0001.0015.
[264] Tesco Supermarkets Ltd v Nattrass [1972] AC 153.
[265] Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 170 (Lord Reid).
[266] H.L. Bolton (Engineering) Co. Ltd v T.J. Graham & Sons Ltd [1957] 1 QB 159.
[267] Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 171 (Lord Reid).
[268] Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 171 (Lord Reid).
[269] Lennards Carrying Co Limited v Asiatic Petroleum Co Limited [1915] AC 705.
[270] Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 180 (Lord Morris).
[271] Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 187 (Viscount Dilhorne).
[272] Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 199-200 (Lord Diplock).
[273] Nissho Iwai Australia Limited v Malaysian International Shipping Corporation Berhad (1989) 167 CLR 219.
[274] Glanville Williams, Criminal Law: the general part, Stevens London 1963, 857; Glanville Williams, Textbook of Criminal Law, Stevens London 1978, 946; and B Fisse, 'The Distinction between Primary and Vicarious Liability' (1967) 41 Australian Law Journal, 203.
[275] Hamilton v Whitehead (1988) 166 CLR 121.
[276] Hamilton v Whitehead (1988) 166 CLR 121, 127 (Mason CJ, Wilson and Toohey JJ).
[277] Universal Telecasters (Qld) Limited v Gutherie (1978) 18 ALR 531, 535 (Bowen CJ), 540-1 (Nimmo J), 551 (Franki J). See also S & Y Investments (No 2) Pty Limited (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) 85 FLR 285.
[278] Meridan Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500.
[279] Meridan Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500, 507 (Lord Hoffmann).
[280] Meridan Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500, 511 (Lord Hoffmann).
[281] Meridian Global Funds Management Asia Ltd v Securities Commission [1994] 2 NZLR 291.
[282] Meridian Global Funds Management Asia Ltd v Securities Commission [1994] 2 NZLR 291, 302 (Hardie Boys J).
[283] Admiralty v the Owners of the Steamship Divina (the Truculent) [1952] P. 1.
[284] The Lady Gwendolen [1965] P. 294.
[285] The Lady Gwendolen [1965] P. 294, 355 (Winn LJ).
[286] The Lady Gwendolen [1965] P. 294, 343-4 (Wilmer LJ).
[287] Canadian Dredge & Dock Co Limited v The Queen (1985) 19 DLR (4th) 314.
[288] Canadian Dredge & Dock Co Limited v The Queen (1985) 19 DLR (4th) 314, 330-1 (Estey J).
[289] Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 174-5 (Lord Reid).
[290] Edward Karwacki Smith & Co Pty Limited v Jacka Nominees Pty Limited (1994) 15 ACSR 502.
[291] Beach Petroleum NL v Johnson (1993) 43 FCR 1.
[292] Canadian Dredge & Dock Co Limited v The Queen (1985) 19 DLR (4th) 314, 323 (Estey J).
[293] Canadian Dredge & Dock Co Limited v The Queen (1985) 19 DLR (4th) 314, 320 (Estey J).
[294] Canadian Dredge & Dock Co Limited v The Queen (1985) 19 DLR (4th) 314, 331 (Estey J).
[295] See, for example, ACCC v J McPhee & Sons (1997) ATPR 41-570 where Heerey J stated that in his 'respectful opinion Meridian is a very important case'. Refer also to ABC Developmental Learning Centres Pty Ltd v Wallace [2006] VSC 171, [6] (Bell J) and the authorities referred to therein at endnote 3 .
[296] ABC Developmental Learning Centres Pty Ltd v Wallace [2006] VSC 171.
[297] Beach Petroleum NL v Johnson (1993) 43 FCR 1, 32 [22.36] (von Doussa J); K & S Corp Ltd v Sportingbet Australia [2003] SASC 96, [108] (Besanko J); Brambles Holdings Ltd v Carey (1976) 15 SASR 270, 275-6 (Bray CJ); Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473.
[298] Brennan v Pitt Son and Badgery Ltd (1899) 20 LR (NSW) Eq 179, 184 (Simpons CJ); Williamson v Bors (1900) 21 LR (NSW) Eq 302; Re Montagu's Settlement Trusts [1987] 2 WLR 1192.
[299] Beach Petroleum NL v Johnson (1993) 43 FCR 1, 32 [22.36] (von Doussa J).
[300] K & S Corp Ltd v Sportingbet Australia [2003] SASC 96, [108] (Besanko J); Brambles Holdings Ltd v Carey (1976) 15 SASR 270, 275-6, (Bray CJ).
[301] Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 583 (Brennan, Deane, Gaudron and McHugh JJ). See also J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532; Brambles Holdings Ltd v Carey (1976) 15 SASR 270, 275-6 (Bray CJ); K & S Corp Ltd v Sportingbet Australia [2003] SASC 96, [108] (Besanko J).
[302] Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 Schedule 2 item 1 and s2(3).
[303] Refer to Chapter 6-The role of the Department of Foreign Affairs and Trade. It should be noted that the various DFAT officers who gave evidence all stated, to varying degrees, that they regarded there role to be akin to a 'post box' between AWB (or other companies wanting to participate in the Oil-for-Food Programme) and the United Nations. However, their evidence was that they did give some consideration to the contract and Notification form and did give some consideration to whether the transaction was one that was obviously outside the Programme.
[304] Refer to Chapter 6-The role of the Department of Foreign Affairs and Trade.
[305] Peters v The Queen (1998) 192 CLR 493, 508 [30] (Toohey and Gaudron JJ) and 525 [74], 529 [84] (McHugh J). Spies v The Queen (2000) 201 CLR 603, 630 [79] - 631 [80] (Gaudron, McHugh, Gummow and Hayne JJ).
[306] Peters v The Queen (1998) 192 CLR 493, 529 [84] (McHugh J).
[307] Peters v The Queen (1998) 192 CLR 493, 529 [84] (McHugh J).
[308] Peters v The Queen (1998) 192 CLR 493 at 525 [74] (McHugh J). See also Wills v Petroulias (2003) 58 NSWLR 598, 611 [54] (Spigelman CJ); R v Bassey (1931) 22 Cr App R 160, 162 (Swift, Hawke and McNaghten JJ); Board of Trade v Owen [1957] AC 602, 622 (Lord Tucker); R v Withers [1975] AC 842, 877 (Lord Kilbrandon); Wai Yu-tsang [1992] 1 AC 269, 277 (Lord Goff); R v Terry [1984] 1 AC 374, 379 (Lord Fraser).
[309] Taylor v R (1997) 93 A Crim R 1, 4-6 (Underwood J), 26-27 (Zeeman J).
[310] Refer to [26.5] - [26.41] above.
[311] R v Moussad (1999) 152 FLR 373, 384 [65] - [66] (Smart AJ with whom Wood CJ at CL and Bell J agreed); cf. Taylor v R (1997) 93 A Crim R 1.
[312] R v Moussad (1999) 152 FLR 373, 383 [62] (Smart AJ with whom Wood CJ at CL and Bell J agreed); cf. Walsh v Tattersall (1996) 188 CLR 77, 91 (Gaudron and Gummow JJ). 101 (Kirby J).
[313] R v Devine (1987) 25 A Crim R 7, 15 (Vasta J within whom Conolly J agreed); R v Barnard (1837) 7 Carrington & Payne 784 ('A man may look a lie, nod a lie, smile a lie'.).
[314] For example, a person who enters a restaurant and orders food or drink impliedly represents by his conduct that he will pay for the food and drink when he leaves and that he has the ability to pay: DPP v Ray [1974] AC 370.
[315] Given v Pryor (1979) 24 ALR 442; Green v Taylor (1990) 102 FLR 33; Finucane v NSW Egg Corp (1988) 80 ALR 486, 513 (Lockhart J); R v Evans (1997) 142 FLR 319, 320-321 (Gleeson CJ with whom Dunford and Barr JJ agreed).
[316] Greenwood v Martins Bank [1933] AC 51, 57 (Lord Tomlin); Adams v R [1995] 1 WLR 52, 65 (Lord Jauncey); R v Gomez [1992] 3 WLR 1067.
[317] Greene v R (1949) 79 CLR 353, 358 (Latham CJ).
[318] Devine v R (1987) 25 A Crim R 7, 8 (Kneipp J).
[319] It may not be necessary to call as a witness the individual officer who acted upon the false pretence and caused the Commonwealth to part with its money provided that causation is properly proved. Causation may be proved by inference: Shik Aun Low v R (1978) 23 ALR 616, 618 (Burt CJ), 625 - 626 (Brinsden J).
[320] R v Lambassi [1927] VLR 349, 353-354 (McArthur J).
[321] Refer to Chapter 27-Knowledge of Commonwealth. R v Jessop (1858) Dearsley & Bell 442; R v Woolley (1850) 1 Denison 559, 563-564 (Alderson B); R v Wickham (1839) 10 Adophus & Ellis 34, 36-37 (Lord Denam CJ).
[322] R v Gardiner (1856) Dearsley & Bell 40, 46 (Jervis CJ).
[323] Yates v Wilson (1989) 22 FCR 397, 399 (Woodard and Morling JJ); Bacon v Salamane (1965) 112 CLR 85, 96 (Owen J).
[324] Yates v Wilson (1989) 22 FCR 397, 400 (Woodward and Morling JJ).
[325] Bacon v Salamane(1965) 112 CLR 85, 88 (Taylor J).
[326] Refer to Chapter 6-The role of the Department of Foreign Affairs and Trade.
[327] Bacon v Salamane(1965) 112 CLR 85, 92 (Owen J).
[328] Bacon v Salamane(1965) 112 CLR 85, 92 (Owen J). See also R v Wescombe (1987) 79 ALR 357, 361 (Murray J), 361 (McGarvie J).
[329] Bacon v Salamane(1965) 112 CLR 85, 92-93 (Owen J). See also R v Wescombe (1987) 79 ALR 357, 361 (Murray J).
[330] Lamb v Toledo-Berkel Pty Ltd [1969] VR 343, 345-346 (Starke J).
[331] Hansen v Archdall (1930) 44 CLR 265, 274 (Rich J). See also Jacobsen v Piepers [1980] 2 Qd R 448, 455 (WB Campbell J) and Joyce v Grimshaw (2000) 105 FCR 232, 244 [63], [65] (Miles, Matthews and Weinberg JJ).
[332] Joyce v Grimshaw (2001) 105 FCR 232, 246 [75] (Miles, Matthew and Weinberg JJ).
[333] Will v Borcherdt [No 2] [1991] 2 Qd R 230, 238 (Dowsett J); cf R v Baxter [1988] 1 Qd R 537, 540 (Connolly J with whom de Jersey J agreed). See also Guillot v Hender (1999) 86 FCR 294, 302 [24] (Wilcox, Finn and Kenny JJ).
[334] Guillot v Hender (1999) 86 FCR 294, 302 [24] (Wilcox, Finn and Kenny JJ).
[335] Will v Borcherdt [No 2] [1991] 2 Qd R 230, 237-238 (Doswett J).
[336] Lamb v Toledo-Berkel Pty Ltd [1969] VR 343.
[337] Lamb v Toledo-Berkel Pty Ltd [1969] VR 343, 348 (Starke J).
[338] Walsh v Sainsbury (1925) 36 CLR 464, 477 (Isaacs J); R v Lewis (1985) 18 A Crim R 243, 252 (McGregor J).
[339] Giorgianni v R (1985) 156 CLR 473, 493 (Mason J); R v Russell [1933] VLR 59, 67 (Cussen ACJ).
[340] R v Tannous (1987) 10 NSWLR 303, 308 (Lee J with whom Street CJ and Finlay J agreed); Ashbury v Reid [1961] WAR 49, 51 (Virtue J).
[341] R v Tannous (1987) 10 NSWLR 303, 308 (Lee J with whom Street CJ and Finlay J agreed).
[342] Yorke v Lucas (1985) 158 CLR 661, 670 (Mason ACJ and Wilson, Deane and Dawson JJ). Giorgianni v R (1985) 156 CLR 473, 481-482, 488 (Gibbs CJ), 494-495 (Mason J), 500 (Wilson, Deane and Dawson JJ).
[343] Hamilton v Whitehead (1988) 166 CLR 121, 128 (Mason CJ and Wilson and Toohey JJ).
[344] Criminal Code s137.1(4).
[345] The information was provided to DFAT for transmission to the United Nations for the purpose of seeking UN approval of payment under the OFFP. Whilst UN approval was necessary to obtain permission to export under the Customs (Prohibited Exports) Regulations, it does not follow that the information was provided in compliance with the Regulations.
[346] Criminal Code s 4.1.
[347] See subs 4.1(2) of the Criminal Code where 'conduct' or 'engage in conduct' is defined as including both doing an act, or omitting to perform an act.
[348] Refer to [26.5]-[26.41] above.
[349] Subsection 136.1(1A) was inserted by the Crimes Legislation Amendment (People Smuggling, Firearms Trafficking and Other Measures) Act 2002 Schedule 3 item 8. It commenced on 16 January 2003, being the 28th day after the Act received the Royal Assent (Crimes Legislation Amendment (People Smuggling, Firearms Trafficking and Other Measures) Act 2002 s 2(1) and Commonwealth, Commonwealth of Australia Gazette, GN 1 (8/01/03) p. 9).
[350] Refer to [26.60] above.
[351] Koppen v Commissioner for Community Relations (1986) 11 FCR 360, 364 (Spender J). See also Re Nanaimo Community Hotel Ltd [1945] 3 DLR 225, Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465, 480 (Wilcox J), Claremont Petroleum NL v Cummings (1992) 110 ALR 239, 280 (Wilcox J), Health Insurance Commission v Freeman (1998) 158 ALR 267, 273 (Merkel J with whom von Doussa and Carr JJ agreed) and Regina v Orcher [1999] NSWCCA 356, [32] (Spigelman CJ with whom Grove and Sully JJ agreed).
[352] Brown v Rezitis (1970) 127 CLR 157, 165 (Barwick CJ). See also Tana v Baxter (1986) 160 CLR 572, 579 (Gibbs CJ, Mason, Deane and Dawson JJ), Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465, 479 (Wilcox J), Burswood Management Ltd v Attorney-General (1990) 23 FCR 144, 146 (Lockhart, Wilcox and Hill JJ), Claremont Petroleum NL v Cummings (1992) 110 ALR 239, 280 (Wilcox J) and Regina v Orcher [1999] NSWCCA 356 [28] (Spigelman CJ with whom Grove and Sully JJ agreed) ('The phrase 'in connection with' is capable of considerable breadth'.).
[353] Criminal Code Dictionary.
[354] Subsection 136.1(4A) was inserted by the Crimes Legislation Amendment (People Smuggling, Firearms Trafficking and Other Measures) Act 2002 Schedule 3 item 8. It commenced on 16 January 2003, being the 28th day after the Act received the Royal Assent (Crimes Legislation Amendment (People Smuggling, Firearms Trafficking and Other Measures) Act 2002 s 2(1) and Commonwealth, Commonwealth of Australia Gazette, GN 1 (8/01/03) p. 9).
[355] Refer to the following provisions (as amended from time to time): Crimes Act 1958 (Vic) ss 81-82, Criminal Code 1899 (Qld) s 408C, Criminal Law Consolidation Act 1935 (SA) s 139, Crimes Act 1900 (NSW) s 178BA and Criminal Code Act 1924 (Tas) ss 250, 252A.
[356] Secretary of State for Trade v Markus [1976] AC 35.
[357] See for example R v Byron (1902) ASLR (C.N.) 21; R v Ellis [1899] 1 QB 230, 240 (Hawkins J).
[358] Refer to the following provisions (as amended from time to time): Crimes Act 1958 (Vic) ss 81-82, Criminal Code 1899 (Qld) s 408C, Criminal Law Consolidation Act 1935 (SA) s 139, Crimes Act 1900 (NSW) s 178BA and Criminal Code Act 1924 (Tas) ss 250, 252A.
[359] Peters v R (1998) 192 CLR 493, 551 (Kirby J). See also R v Ghosh [1982] QB 1053, 1064 (Lord Layne) and R v Feely [1973] QB 530, 538 (Lawton LB).
[360] White v Ridley (1978) 140 CLR 342, 346-7 (Gibbs J).
[361] Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999.
[362] See s 22(1)(a) of the Acts Interpretation Act 1901 which provides that unless the contrary intention appears, expressions used to denote persons generally include a body politic or corporate as well as an individual.
[363] Confiscation Act 1997 (Vic) s 3(1).
[364] Section 52 of the Crimes (Controlled Operations) Act 2004 (Vic) repeals s 194(5). However, that Act is expressed to come into operation on a day or days to be proclaimed (Crimes (Controlled Operations) Act 2004 (Vic) s 2). Section 52 has not yet been proclaimed.
[365] Crimes Act 1958 (Vic) s 193(1) which provides that 'deal with includes receive, possess, conceal or dispose of'.
[366] Crimes Act 1958 (Vic) s 193(1) which provides that 'proceeds of crime means property that is derived or realised, directly or indirectly, by any person from the commission of-(a) an offence referred to in Schedule 1 to the Confiscation Act 1997…' The Confiscation Act 1997 Schedule 1 item 1 refers to 'An indictable offence against the law of Victoria'.
[367] Crimes Act 1958 (Vic) s 193(1) which provides that 'deal with includes receive, possess, conceal or dispose of'.
[368] Crimes Act 1958 (Vic) s 193(1) which provides that 'proceeds of crime means property that is derived or realised, directly or indirectly, by any person from the commission of-(a) an offence referred to in Schedule 1 to the Confiscation Act 1997…' The Confiscation Act 1997 schedule 1 item 1 refers to 'An indictable offence against the law of Victoria'.
[369] Sections 102.1, 102.6 and 102.7 were inserted into the Criminal Code by the Security Legislation Amendment (Terrorism) Act 2002, which relevantly commenced on 6 July 2002, the day after the Act received Royal Assent (Security Legislation Amendment (Terrorism) Act 2002 s 2). Sections 100.1, 100.2 and 103.1 were inserted into the Criminal Code by the Suppression of the Financing of Terrorism Act 2002 which relevantly commenced on 6 July 2002, the day after the Act received Royal Assent (Suppression of the Financing of Terrorism Act 2002 s 2).
[370] Criminal Code Amendment (Terrorism) Act 2003 s 2(1) and Schedule 1 item 1.
[371] See section 5.6(1) of the Criminal Code.
[372] Subsection 5.2(1) of the Criminal Code.
[373] During the period 6 July 2002 to 29 May 2003, a number of organisations were specified as terrorist organisations. Refer to the Criminal Code Amendment Regulations 2002 (No. 2); Criminal Code Amendment Regulations 2002 (No. 3); Criminal Code Amendment Regulations 2002 (No. 4); Criminal Code Amendment Regulations 2002 (No. 5); Criminal Code Amendment Regulations 2002 (No. 6); Criminal Code Amendment Regulations 2002 (No. 7); Criminal Code Amendment Regulations 2003 (No. 2); Criminal Code Amendment Regulations 2003 (No. 3); Criminal Code Amendment Regulations 2003 (No. 4); Criminal Code Amendment Regulations 2003 (No. 5); Criminal Code Amendment Regulations 2003 (No. 6); Criminal Code Amendment Regulations 2003 (No. 7); and Criminal Code Amendment Regulations 2003 (No. 8). The government of Iraq, or any agency thereof, was not one such specified organisation.
[374] Section 5.3 of the Criminal Code.
[375] For the purposes of this chapter, a reference to AWB's payment of inland transportation fees includes payment of after-sales-service fees from the time they were first imposed in November 2000 with contract A0430.
[376] Refer to Chapter 2.
[377] Commonwealth, Commonwealth of Australia Gazette, GN 27 (11/07/1990) p. 1820.
[378] Commonwealth, Commonwealth of Australia Gazette, S 224 (10/08/1990) p. 2.
[379] He Kaw Teh v The Queen (1985) 157 CLR 523.
[380] Proudman v Dayman (1941) 67 CLR 536.
[381] If prosecuted summarily the penalty is a fine not exceeding $1,000 or imprisonment for a period not exceeding six months or if prosecuted on indictment the penalty is a fine not exceeding $100,000 or imprisonment for a period not exceeding five years.
[382] R v Turnball (1943) 44 SR (NSW) 108, 109 (Jordan CJ) cited with approval in He Kaw Teh v The Queen (1985) 157 CLR 523, 572 (Brennan). See also Ostrowski v Palmer (2004) 218 CLR 493, 503 [10] (Gleeson CJ and Kirby J), 511 [41] (McHugh J). See also s 9.3 of the Criminal Code.
[383] This is discussed in more detail in [2.28] of Chapter 2.
[384] Commonwealth, Commonwealth of Australia Gazette, S 235 (28/06/1984) p. 4.
[385] Commonwealth, Commonwealth of Australia Gazette, GN 27 (11/071990) p. 1820.
[386] Commonwealth, Commonwealth of Australia Gazette, S 230 (10/08/1990) p. 1.
[387] Commonwealth, Commonwealth of Australia Gazette, GN 14 (17/04/1991) p. 1342.
[388] Commonwealth, Commonwealth of Australia Gazette, GN 14 (17/04/1991) p. 1342.
[389] Commonwealth, Commonwealth of Australia Gazette, S 177 (29/05/2003) p. 2. See also Chapter 2.
[390] Although, as has already been observed, if it were to be found that AWB had taken or sent Australian currency overseas, for example from its Australian dollar bank accounts in Australia to its US dollar accounts held overseas, and converted it into foreign currency overseas in order to pay the inland transportation fees, then the remittance of the Australian currency between April 1991 and May 2002 may amount to a contravention of r 6.
[391] That is, they were paid by inter-bank transfers from AWB's bank to Alia's bank.
[392] For example, acquired otherwise than through the purchase of the foreign currency.
[393] Commonwealth, Commonwealth of Australia Gazette, GN 27 (11/071990) p. 1820.
[394] Commonwealth, Commonwealth of Australia Gazette, S 230 (10/08/1990) p. 3.
[395] Commonwealth, Commonwealth of Australia Gazette, S 230 (10/08/1990) p. 3.
[396] Commonwealth, Commonwealth of Australia Gazette, GN 14 (17/04/1991) p. 1341.
[397] Commonwealth, Commonwealth of Australia Gazette, GN 14 (17/04/1991) p. 1341.
[398] Commonwealth, Commonwealth of Australia Gazette, S 177 (29/05/2003) p. 1. The revocation came into operation on 29 May 2003.
[399] Customs (Prohibited Exports) Amendment Regulations 2002 (No. 2) r 2(a).
[400] Customs (Prohibited Exports) Amendment Regulations 2002 (No. 2) Schedule 1 cll 23-25.
[401] See R v Frawley [2005] NSWCCA 66.
[402] CAC v Bracht [1989] VR 821.
[403] Camponar v Nike International (1999) 202 CLR 45, 84 (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ).
[404] ASC v McLeod (2000) 34 ACSR 135, 144 (Owen J).
[405] ASC v McLeod (2000) 34 ACSR 135, 146 (Owen J).
[406] This includes the antecedent sections 180 to 183 of the Corporations Law as taken to be included in the Corporations Act by reason of sections 1400 and 1401.
[407] Section 1317E of the Corporations Act.
[408] Section 232(4) of the Corporations Law.
[409] Australian Securities Commission v Gallagher (1993) 11 WAR 105, 115 (Pidgeon J). See also AWA Ltd v Daniels t/as Deloitte Haskins & Sells (1992) 7 ACSR 759, 866 (Rogers J) and Circle Petroleum (Qld) Pty Ltd v Greenslade (1998) 16 ACLC 1577, 1591 (Muir J).
[410] Australian Securities Commission v Gallagher (1993) 11 WAR 105, 115 (Pidgeon J). See also AWA Ltd v Daniels t/as Deloitte Haskins & Sells (1992) 7 ACSR 759, 866 (Rogers J) and Circle Petroleum (Qld) Pty Ltd v Greenslade (1998) 16 ACLC 1577, 1591 (Muir J).
[411] Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490, 531 (Isaacs and Rich JJ). See also Vrisakis v ASC (1993) 11 ACSR 162, 169 (Malcolm CJ), 214 (Ipp J).
[412] Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490, 531 (Isaacs and Rich JJ). See also Vrisakis v ASC (1993) 11 ACSR 162, 169 (Malcolm CJ), 214 (Ipp J).
[413] Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490, 531 (Isaacs and Rich JJ). See also Vrisakis v ASC (1993) 11 ACSR 162, 169 (Malcolm CJ), 214 (Ipp JAC).
[414] Australian Securities Commission v Gallagher (1993) 11 WAR 105, 116 (Pidgeon J). See also Francis v United Jersey Bank (1981) 432 A 2d 814, 821 (Pollock J) cited in Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438, 503 (Clarke and Sheller JJA), Australian Securities Commission v Donovan (1998) 28 ACSR 583, 598 (Cooper J) and Sheahan (as liquidator of SA Service Stations) (in liq) v Verco (2001) 79 SASR 109, 129 (Mullighan J) (An appeal to the Full Court of the Supreme Court of South Australia was dismissed: Sheahan v Verco and Hodge [2002] SASC 68.). See also Australian Securities and Investments Commission v Vines (2003) 48 ACSR 322, 330 [32] (Austin J), AWA Ltd v Daniels t/as Deloitte Haskins & Sells (1992) 7 ACSR 759, 864 (Rogers J), Vrisakis v ASC (1993) 11 ACSR 162, 214 (Ipp J), Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438, 501 (Clarke and Sheller JJA), Sheahan (as liquidator of SA Service Stations) (in liq) v Verco (2001) 79 SASR 109, 127 (Mullighan J) (An appeal to the Full Court of the Supreme Court of South Australia was dismissed: Sheahan v Verco and Hodge [2002] SASC 68.), Re HIH Insurance Ltd (in prov liq); ASIC v Adler (2002) 41 ACSR 72, 167 [372] (Santow J) (This decision was the subject of an appeal: Adler v ASIC (2003) 46 ACSR 504. However, this proposition was not challenged: Adler v ASIC (2003) 46 ACSR 504, 616 [529] (Giles JA).), Australian Securities and Investments Commission v Vines (2003) 48 ACSR 322, 329 (Austin J) and ASIC v Rich (2003) 44 ACSR 341, 360 [77] (Austin J).
[415] Francis v United Jersey Bank (1981) 432 A 2d 814, 821 (Pollock J).
[416] Re HIH Insurance Ltd (in prov liq); ASIC v Adler (2002) 41 ACSR 72, 167 [372] (Santow J) (This decision was the subject of an appeal: Adler v ASIC (2003) 46 ACSR 504. However, this proposition was not challenged: Adler v ASIC (2003) 46 ACSR 504, 616 [529] (Giles JA).)
[417] Re HIH Insurance Ltd (in prov liq); ASIC v Adler (2002) 41 ACSR 72, 167-168 (Santow J).
[418] See subsection 179(2). Note, however, that 'officer' is also defined in section 82A.
[419] None of paragraphs (c) to (g) inclusive of the definition are potentially relevant.
[420] Section 181 of the Corporations Act replaced the former section 232(2) of the Corporations Law. There was a controversy in relation to the construction of section 232(2) that concerned whether, to make out a breach of the subsection, it was necessary to prove not only that a power was exercised for an improper purpose, but that the director was conscious that what he was doing was not in the interests of the company and acted in disregard of that knowledge: Marchesi v Barnes [1970] VR 434; cf Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 13 ACLR 261; CAC v Papoulias (1990) 20 NSWLR 503; Forge v ASIC (2004) 213 ALR 574; ASIC v Vines (2005) 55 ACSR 617. This controversy was settled by replacing s 232(2) with the criminal offence in section 184(1), that requires proof of dishonesty, and the civil penalty provision in s 181.
[421] The proper purpose of a power conferred on a director or officer is a matter of law-that is, it is for the court to ascertain as a matter of law the purpose or purposes for which the power may and may not be exercised: Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821.
[422] R v Byrnes (1995) 183 CLR 501, 514-515 (Brennan, Deane, Toohey and Gaudron JJ). See also R v Towey (1996) 21 ACSR 46; R v Cook (1996) 107 ALR 171.
[423] Chew v R (1992) 173 CLR 626. This case concerned the construction of section 232(6) of the Corporations Law, the antecedent of section 182(1).
[424] As the antecedent provision in the Corporations Law was construed by the High Court in Chew v The Queen (1992) 173 CLR 626.
[425] Tankey v Smith [1981] 36 ACT 219.
