As the spotlight shines on white collar crime in the wake of the economic crisis, the laws aimed at dealing with it are adapting and evolving. Claire Chaffey reports

In 1939 Professor Edward Sutherland coined the phrase white collar crime, which he essentially defined as a crime committed by a person of respectability and high social status in the course of his or her occupation.

White collar crime includes fraud, insider trading, market manipulation and tax evasion, to name a few.

Just like the phrase itself, white collar crime has been around for a long time - essentially for as long as business and companies - though as the complexity of business structures and dealings grows, so too does the sophistication of the crimes.

Recent times have seen the law adapt to the nature of the crimes, and the global financial crisis has cast a spotlight on elements of white collar crime which were once far less conspicuous.

The rising power of ASIC

According to Armstrong Legal's John Sutton, one of the most significant developments in this area of white collar crime law is the increased power of the Australian Securities and Investment Commission (ASIC).

Traditionally, market regulation was the domain of the Australian Stock Exchange (ASX) but with the opening up of the market to other bodies, the transfer of regulatory power was inevitable.

"You couldn't have one market place organisation being both the trader and the watch-keeper for the industry," says Sutton.

Sutton adds that this shift is not one in which the business community particularly has a lot of faith.

"We have ASIC, who are not terribly well known for their competence and ability to investigate and prosecute matters, now being given far more broadly ranging powers," he says.

"Given abject failures in the past ... there is concern that they have gone from being big boys with small toys to big boys with big toys, with the ability to make the lives of individuals a lot more difficult."

Sutton is especially concerned that the ramped-up powers may reduce safeguards for those in the industry.

"I haven't seen anything to tell me where the safeguards are. I'm not saying they're not there, but there is a question mark as to where those safeguards reside," he says.

And for Sutton, there is no question there will soon be much more action on ASIC's behalf.

"If they've got these new toys to play with, they won't want to leave them in the cupboard," he says.

Criminalisation of cartels

Another major development changing the landscape of white collar crime is the criminalisation of cartel conduct.

The Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009 significantly amends Part IV of the Trade Practices Act 1974 by introducing criminal sanctions for cartel conduct.

Matthew Lees of Arnold Bloch Leibler says there is a lot of industry interest as to how exactly the amendments will play out.

"As yet, there have been no criminal prosecutions of cartels, but the criminal regime is now in place, so that will have to be looked at in current investigations," he says.

"Cartels are a good example of where ... parliament has said - probably as a reflection of community sentiment - they are going to take a tougher stance against this sort of behaviour and put it on a similar footing to other crimes."

And although the legislation is only a relatively recent development, Lees believes cartel criminalisation has long been on the cards.

"There has been a worldwide movement to strengthen criminal penalties against cartels, and for more enforcement and action between different national regulators. There is a lot happening and I think that due to a number of high-profile corporate collapses that have occurred over the last couple of years, ASIC has been expected to be seen to be doing a lot to uphold the legislation."

Tax evasion and Project Wickenby

One of the more high-profile developments has been the Australian Tax Office's (ATO) weeding out of tax evaders under the extensive and expensive Project Wickenby.

With a budget of $430 million, the project has claimed some high-profile scalps, including Glenn Wheatley and Paul Hogan, and that, says Armstrong Legal's Andrew Tiedt, is certainly not the end of it.

"[The project has] mushroomed into a massive investigation ... across various organisations and government departments. What's being investigated is high-level and systematic attempts to conceal taxable income," he says.

"[The ATO] doesn't just want to make a lot of noise and then ride off into the sunset. They want to make people pay and you can be sure there'll be further follow through on this."

According to Tiedt, the project has been quite successful thus far, and the high-profile nature of some of its scalps is certainly helping.

"They have had some wins and so there has been an increase in people making voluntary admissions," he says.

"We are expecting there to be a number of people chased further down the track, not only to reinforce the message that fraud is fraud, but also to try and recoup some of the losses." And Tiedt isn't expecting the ATO to tread lightly.

"We are expecting the ATO to be a bit more bullish and aggressive in prosecuting people in a criminal court, as opposed to the past where there would simply be a reassessment made of their income, with some penalties included," he says.

"If people cheat the tax office, it's fraud. The [Commonwealth Department of Public Prosecutions] is well entitled to prosecute people who have committed those offences."

Fraud and Identity Theft

Another significant change is the law regarding forgery and identity offences.

According to Lionel Rattenbury of Armstrong Legal, the Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009 has thrown a spanner in the works.

"It caught most practitioners by surprise," he says.

"We had about two weeks before [the Act] came into effect. But many practitioners, months afterwards, were completely unaware of the changes."

Due to the nature of the changes, Rattenbury believes practitioners now have to be aware of a swathe of previously unavailable outcomes.

"It's really changed the landscape we operate in, because you [used to] have one fraud offence and you would defend someone preparing for that offence, and that offence only," he says.

"What you have now is a general offence ... so you've really got to prepare [your case] for any number of outcomes." But the true effects of the changes, particularly in relation to increased penalties, will probably not be known for some time.

"It's likely there will be further individuals charged with offences, just coming out of the economic crisis, [but] due to the life cycle of a fraud, it takes 12 - 18 months for people to become aware of it," he says.

"It's usually during a crisis that people start looking more closely at their financials and that's where they discover fraud."

And despite the desired deterrent effect of the new laws, Rattenbury is not convinced it will work.

"This [crime] is with us to stay," he says.

"I don't think our community is getting any better."

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