Criminal Fraud and the Law - Week 4

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 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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