The Age reported from Australia last week that the government may change existing laws to create a “safe harbor” to shield company directors from prosecution.
The Australian Institute of Company Directors (AICD) — “a group representing Australia’s most powerful boardrooms” — made a proposal “to water down the Corporations Act and ASIC Act,” the Age said.
The AICD has been lobbying the finance minister and attorney general for a new ”honest and reasonable director defense” to be inserted into existing laws designed to protect shareholders and consumers from boardroom negligence, the report said.
The new defense would shield directors from prosecution unless there’s proof they told a lie or failed to act with ”integrity and commitment.”
Recent prosecutions of boards for failing their duties, including asbestos maker James Hardie and collapsed shopping center owner Centro, probably couldn’t have happened under the proposed changes, the Age said.
AICD general manager Steve Burrell said, ”The law as it currently stands is having a chilling effect on people making reasonable business decisions. In our system, some risk has to be taken. At the moment it’s tilted too far the other way.”
The Age said some even some AICD members oppose the changes.
Tim Lyons, Assistant Secretary of the Australian Council of Trade Unions said: ”As a company director and member of the AICD, I can see no basis for watering down current duties.”
”I challenge anybody who wants them watered down to identify a single case where a director has been unreasonably treated by the courts or authorities as a result of the current laws,” Lyons said.
But the AICD’s Burrell said the changes wouldn’t act as a ”blanket amnesty,” the Age reported.
The paper said the AICD’s proposal “has found ”general support'” with government ministers.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.