Australian Regulatory Compliance Review

Apology to Australia's Indigenous Peoples

Here is the text of today's apology by Parliament to the Stolen Generation.

Reconciliation Australia has background information.

UPDATE: ABC News video and audio of the Prime Minister's speech in support of the apology.

The text of the speeches made by the Prime Minister and Leader of the Opposition are now available from Parliament:

• Speech by Hon Kevin Rudd MP – Apology to Australia's Indigenous Peoples (pdf)
  

• Speech by Hon Dr Brendan Nelson MP – Apology to Australia's Indigenous Peoples (pdf)

Saying Sorry and the Bringing Them Home Report

The Parliamentary Library has published a Background Note ‘Sorry: the unfinished business of the Bringing Them Home report'.

The note provides a useful summary of the Bringing Them Home report recommendations relating to an apology and compensation as well as a chronology.

UPDATE: ABC News will broadcast Mr Rudd's statement of apology to the Stolen Generation live on television and radio next Wednesday 13 February at 8.55am AEDT.

Comonwealth election 2007

So the election has been called for 24 November 2007.

That means that Parliament is unlikely to sit before February 2008 when the unfinished business of this Parliament will be reviewed by the new Government (whichever party succeeds) and the expected many election promises will be implemented.

When is a director "fit and proper"?

VBN and Ors and Australian  Prudential Regulation Authority and Ors contains a detailed analysis of APRA's powers to decide that a director is not "fit and proper". In the decision the AAT reviewed decisions by the Australian Prudential Regulation Authority (APRA), to disqualify seven of nine former directors of a Trustee of a superannuation fund (Trustee) as a director of the Trustee.

APRA had made its decisions on the basis that the Trustee had contravened the Superannuation Industry (Supervision) Act 1993 (SIS Act) and that the nature or seriousness of the Trustee’s contraventions provided grounds for the disqualification of each of them.

In relation to two of them, APRA also decided that two of them were not fit and proper persons to be responsible officers of a body corporate that is a trustee and disqualified them under s 120A(3).

The AAT set aside the decisions after finding that the Trustee had not contravened the SIS Act and that it was not satisfied that two of them were not fit and proper persons to be responsible officers of a body corporate that is a trustee. The effect of the setting aside all of APRA’s decisions is that none of the applicants is a disqualified person within the meaning of the SIS Act.

In respect of the 2 directors deemed not fit and proper the AAT said there were 2 issues:

• what is meant by the expression “fit and proper”?
• did the 2 directors, or either of them, have a conflict of the duties they owed to the Employer and those they owed as Directors of the Trustee?

The decision analyses the investigatory powers of APRA and the construction of the section which deals with disqualification of a person who is not fit and proper:

Section 120A(3) of the SIS Act encompasses two steps. The first is to decide whether or not either VBN or VBW is a fit and proper person to be a trustee, investment manager or custodian or a responsible officer of a body corporate that performs one of those functions. If we decide that they are not, we must take the second step to decide whether or not they, or either of them, should be disqualified. We must take that second step because there is, inherent in the use of the word “may” in s 120A(3) a discretion. [para 519]

a person who was a responsible officer of a trustee at the time that it contravened the SIS Act, and the nature, seriousness or number of the contraventions provided grounds for disqualification of that person under s 120A(2), would not be a fit and proper person. A similar analysis would mean that a person who had contravened the SIS Act in circumstances justifying disqualification under s 120A(1) would not be a fit and proper person.[para 528]

That there is a potential for conflict between the interests of the directors and their role is an integral part of the scheme established by the SIS Act. ... The potential for conflict by virtue of their appointment alone does not mean that there is a conflict of the sort that means that an individual director is in breach of a fiduciary duty. There must be something more that shows that there is in fact a conflict of duty between the interests of the directors of a trustee of a fund. This must be determined by reference to the circumstances and not by reference to a formula or recitation of principle. Do the circumstances show that a director was in a position in which that director’s interests or those of another for whom he or she had responsibility or to whom he or she owed a duty conflicted with the interests of the trustee?...

Having regard to all of these matters, we are satisfied that VBW disclosed his interest and the nature of his interest as a result of his position with the Employer. Taken in the context of their appointments and their decisions to give him and others the task of dealing with the Employer, he did so in sufficient detail to reveal his position and to ensure that the Directors were fully informed of all the information that they needed to make a proper decision. We are satisfied that he was not in a position of conflict of interest...

the Trustee’s Board had all of the information that they needed in order to make a decision about what it should do about the Employer’s Offer. VBN was not in possession of any information that it did not have but that it should have known or that could have assisted it with its deliberations. There is no evidence that satisfies us that he influenced, or attempted to influence, the course of the Board’s deliberations.

USA anti-terrorist laws not renewed

During Australia's recent debate about its new Anti-terrorism Act there was discussion about a sunset clause (to ensure that the law would expire after a set period of time). Although there was argument for a 5 year sunset period, the provisions will sunset after 10 years  and will be reviewed by COAG after 5 years.

It is interesting to look at the US review process for its anti-terrorism laws introduced after the 11 September 2001 attacks.

The Wall Street Journal reports that the US senate has blocked renewal of certain Patriot Act provisions.

Whilst it is possible that an extension may be negotiated, the US public is concerned about alleged privacy and civil liberties breaches by the Bush Administration.

UPDATE: Washington Post: President acknowledges approving secret eavesdropping

Senate report on Anti-Terrorism Bill

The Senate Legal and Constitutional Legislation Committee Inquiry into the provisions of the Anti-Terrorism Bill (No. 2) 2005 has delivered its Report.

It has recommended that the Senate pass the Bill subject to 50 amendments listed in its Recommendations.

In particular the Committee recommended the deletion of Schedule 7 dealing with sedition. The recommendations also cover preventative detention and control orders.

Chapter 7 of the report deals with anti-money laundering and and terrorism financing. Whilst it noted concerns it only recommended a review in 5 years.

Recommendations 40-44 deal with the topic of "National Security Notices" discussed by me here.

8 former US KPMG partners indicted

This New York Times story carries details of indictments presented against 8 former partners of the US branch of KPMG accountants (a separate firm from KPMG Australia) together with an outside lawyer.

The indictments allege not only that the accused conspired to defraud the government by advising clients to enter fraudulent tax shelters and preparing tax returns to conceal them but also that they concealed information from investigators.

The article says "According to the indictment, one defendant, Mr. Eischeid, gave "false, misleading and evasive" testimony to the I.R.S. in 2002 about certain tax shelters. The indictment cited an e-mail message from one KPMG partner who wrote that the firm's general counsel and outside lawyer "determined that the best strategy was 'the less said the better.' " As a result, the e-mail message continued, "the record will reflect repeated 'I don't knows,' 'I don't recalls,' and 'I was out of the loops' - the rope-a-dope/Enron defense."

A federal judge has approved a US$456 million (AUD 606 million) settlement between KPMG and the Justice Department that allows the firm to avoid a criminal indictment.

UPDATE 18 July 2007: Washington Post reports that a federal judge has tossed out indictments against 13 former KPMG executives in the government's largest criminal tax-fraud case ever, citing "intolerable" prosecutorial abuses that deprived the officials of their constitutional right to a defense.

Australian immigration detention: the Palmer Report

The Palmer Report into the immigration detention of Australian citizen Cornelia Rau has been released.

The report exposes serious cultural and organisational problems in the Immigration Department.

The Main Findings conclude that compliance officers had "little or no formal training and a poor understanding of the legislation they are enforcing". "Officers lack basic investigative and management skills". "There was a failure of executive leadership".

It's a tragedy.

Money laundering

New international anti-money laundering standards will oblige Australia to expand customer due diligence requirements for financial institutions and extend anti-money laundering obligations to non-financial businesses and professions such as real estate agents, dealers in precious metals and stones, accountants, trust and company service providers, legal professionals and notaries.

Existing account identification requirements will be strengthened and better record keeping will be required.

A new Bill is expected to be introduced into Parliament this year.

More (PDF)

Commonwealth Parliament resumes

Parliament resumes next Tuesday 8 February 2005.

Sitting dates for the Autumn sittings are as follows (all dates inclusive):            

- 8 to 10 February 2005
- 14 to 17 February 2005 (House only - further sitting day on 18 February 2005, if required)
- 7 to 10 March 2005
- 14 to 17 March 2005.            

Budget Night this year is on 10 May 2005.

Parliament dissolved

Federal Parliament was "prorogued" (dissolved ) on 31 August following the calling of a general election to be held on 9 October.

As a result, any Bills currently in Parliament but not passed, will lapse and will need to be reintroduced when Parliament is reconvened after the election.

Until the election, the Government is in caretaker mode and no decisions will be made.

Co-operatives and demutualisation

The latest edition of ACCORD News carries these items relevant to demutualisation:

The New Zealand Experience;

Why do co-operatives fail as co-operatives?;

the Social Attitudes Survey (When asked if they agreed or disagreed that changing ownership from members to shareholders for high profile mutual organisations such as the AMP and NRMA Insurance, was a mistake for these organisations, almost half (49%) agreed it had been a mistake. In contrast, only 19% disagreed.)

Not-for-profits, mutuality and tax

The Federal Court decision in Coleambally Irrigation Mutual Co-Operative Ltd v Commissioner of Taxation created a controversy when it decided that the co-operative was not a mutual (and therefore its income was taxable) because its constitution prohibited the distribution of surplus assets to members on a winding-up.

The ATO has long insisted on the clause as a prerequisite for income tax exemption for not-for-profits.

Mark Lyons discusses the case from a public policy perspective here.

The decision is on appeal.

IT Governance

IT Governance is based on principles from risk management and disaster recovery. It is directly relevant to implementation of prudential standards and corporate governance.

Standards Australia has issued a draft standard "Corporate governance of information and communications technology".

Most useful are the checklists for assessment of ICT governance.