Do company directors fall into a different category than normal offenders?

31 August 2009

The James Hardie directors should have faced jail terms and trading bans should be imposed on companies for directors' breaches, according to Professor Mark Findlay, Director of the Institute of Criminology at the University of Sydney.

In an article published in Lawyers Weekly, Professor Findlay said there was no reason directors shouldn't suffer similar punishments to other individuals, including jail terms, under the Corporations Act 2001.

"For example, if you fine [directors] what happens then to the company? Is it something that actually hurts the shareholders rather than the people who are responsible? And if you can't send people to jail, the question is 'How can you show the severity of how we see things meriting punishment or the severity of the harm if we simply see it in money terms?'," he said.

Findlay said he believed the courts were reluctant to impose jail terms because "they believe that directors - as representatives of the company - fall into a different category than normal offenders".

He also believes courts need to be more creative when considering effective punishments for corporate crimes.

"Relatively small fines and bans from sitting on company boards for people who have lots of money doesn't really have an enormous impact. So I think we need to start thinking ... [about] punishments on companies that really hurt," he said.

"Punishments like restricting their capacity to trade - which is not a feature of our courts in Australia to deal with corporate crime. In fact, courts in Australia seem to deal with corporate crime in an unusually lenient fashion, relative to what courts do in other countries and certainly relative to the way in which we punish an individual for doing what the directors or the company have done in this case."

Contact: Greg Sherington

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