4 Corporate Crime and Government Response in Australia Peter Grabosky and John Braithwaite The Magnitude of the Problem Crimes committed by companies, by individuals acting in furtherance of company objectives, or by individuals in corporate clothing have attracted increasing attention in recent years. The list of scandals seem to grow relentlessly: Meat substitution. In 1981, an American inspector discovered horsemeat in a consignment of boneless beef exported from Australia. Further disclosures of fraudulent misrepresentation in other export shipments and domestic product in Victorian abattoirs and boning rooms jeopardised the entire Australian meat industry. 1 Medifraud. The extension of universal health care in Australia has created a temptation for medical practitioners to charge the govern- ment for services never rendered, or for unnecessary treatment. In 1983, the Australian Medical Association itself estimated the cost of fraud and overservicing at $100 million per year. 2 'Bottom of the harbour' tax evasion schemes. In the course of a Royal Com- mission on alleged illegal activities of a Victorian trade union, schemes 1 A Woodward, Report of the Royal Commission into the Australian Meat Industnj, 1982, AGPS, Canberra. 2 Medical Practice,' AMA Accepts Government Estimate of $100 million', 1983 Medical Practice: 7, pp 12-13. 84 Corporate Crime and Government Response in Australia discovered involving the purchase, sale and winding up of com- pames for the purpose of tax evasion. These sham transactions resulted in massive loss of revenue to the federal government, and a conse- quent increase in burdens borne by the average taxpayer. Bishopsgate. In 1983: control_of an company was acquired by a_group of compames assoCiated with a Sydney entrepr eneur. Within of the acquisition, the company was in liquidation, $19 of Its assets could not be accounted for, and the principal, havmg left Australia, was nowhere to be found. But the domain of corporate crime is not confined to household names such as above. _Each year, from behind the corporate shield, many small busmessmen mcur debts which they have neither the hope nor the expectation of paying. Corporate crime is by no means limited to fraud and its variants. Each ye_ar, of die, and thousands more are seriously InJUred,_ m workplace An undetermined, but significant proportion of these acodents result from violations of occupational h_ealth and safety laws. 3 Industries discharge toxic substances into the au waterways; are induced to purchase dangerous or defective products; mdividuals suffer the indignities and the financial burdens of race or sex discrimination (defined as unlawful, if not crimi- nal)-all at the hands of companies. the social consequences of corporate crime are extremely grave. Cnmmal conduct by Australian companies can lead to an erosion of trust in business. The ultimate implications are not merely syn:bohc, but real. The_ costs of corporate crimes are stag- genng. The meat substitution scandal threatened a $1000 million per ye?;I" export as managers of American fast-food chains grimaced at pbes about therr roo-burgers '. The cost of tax evasion has been esti- at $3 billion per year, wi th an even greater amount of revenue l?st through tax avoidance. 4 The economic impact of death and InJury _m the has been estimated at $6 billion annually.s While an of corporate crime suggests that the magnitude and cost of by companies is awesome, statistics on the subject are gr?ssly madequate. A number of Australian business regulatory agencies do not p_roduce an annual report. To be sure, a great ?eal of corporate cnme IS undetected and unreported: thus contribut- mg to a substantial dark figure. But official statistics tell us too little even about th?se which do come to light. It is a revealing irony a?out Australian society that our governments can determine with con- accuracy the average number of working days lost due to strikes, but comparable statistics on death in the Australian workplace are simply not available. 3 N C unningham, Safeguarding the Worker: Th e Role of Law, 1984, Law Book Company Sydney. ' 4 Draft White Paper, Refonn of the Australian Tax Syste m, 1985, Australian Government Pubhshmg Service, Canberra, p 36. 5 luterim Natio nal Occupational Health and Safety Commission Report , 1984, APGS, Canberra. 85