Criminal Fraud and the Law - Week 4
AYB115 WEEK 4 - Criminal Fraud and the Law
“Boards of Directors and CEOs should not be accountable for
their employee’s actions according to the law”. Discuss this in light of the
findings of the Royal Commission into Misconduct in the Banking, Superannuation
and Financial Services Industry”
The argument of the Board of Directors and CEOs being not accountable
for their employee’s actions is very complicated and there are many different
factors to consider when making up a conclusion. In most cases I would agree
that the Board of Directors and CEOs should not be accountable for their employee’s
actions, however, exceptions could be made to that opinion, especially after
the find of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Within the Royal Commission it was found that some of the
key issues such as companies charging fees for no services, misconduct in
credit and banking, which stems from the overall investigation that these
financial institutions were not acting in the customer’s best interests. In terms of these
finding, the argument can most certainly be made that the accountability of
Board of Directors and CEOs can come into focus. Even though these higher
titles have little involvement with general operations, they are still responsible
for the implementation of policies, procedures and frameworks that help prevent
these sorts of fraudulent activities within their companies.
Strict Liability would keep the accountability on the Board
of Directors and CEOs when it comes to these sorts of fraudulent activities
thanks to the Corporations Act 2001 s.769B, which states “A company director
may be held liable for the conduct of company employees. Directors are expected
to take an active role in ensuring their company and its employees comply with
the law and will be held personally liable unless they can establish that they
exercised due diligence.”
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