The James Hardie directors should have faced jail terms and trading bans should be imposed on companies for director's breaches, Professor Mark Findlay, director of the Institute of Criminology at the University of Sydney, told Lawyers Weekly today.
Findlay said there was no reason directors shouldn't suffer similar punishments to individuals, including jail terms, under the Corporations Act.
"For example, if you fine [directors] what happens then to the company? Is it something that actually hurts the shareholders rather than the people who are responsible? And if you can't send people to jail, the question is 'How can you show the severity of how we see things meriting punishment or the severity of the harm if we simply see it in money terms?'," he said.
Findlay said he believed the courts were reluctant to impose jail terms because "they believe that directors - as representatives of the company - fall into a different category than normal offenders".
"I think the issue is that we need to start thinking more creatively about the sorts of punishments we impose, because relatively small fines and bans from sitting on company boards for people who have lots of money doesn't really have an enormous impact. So I think we need to start thinking ... [about] punishments on companies that really hurt," he said.
"Punishments like restricting their capacity to trade - which is not a feature of our courts in Australia to deal with corporate crime. In fact, courts in Australia seem to deal with corporate crime in an unusually lenient fashion, relative to what courts do in other countries and certainly relative to the way in which we punish an individual for doing what the directors or the company have done in this case."
The NSW Supreme Court found earlier this year that 10 former executives and directors of James Hardie had breached the Corporations Act following misleading comments in a board-approved press release regarding its ability to meet asbestos compensation liabilities.
Justice Ian Gzell disqualified former CEO Peter Macdonald and former chairman Meredith Hellicar from directing companies for 15 years and five years respectively.
Former General Counsel Peter Shafron was disqualified for a period of seven years, while the remaining seven directors involved were struck off for five years each.
Macdonald was also fined $350, 000, while Hellicar was fined $30, 000.
- Sarah Sharples