Reflective Writing Task – Blog #4

Reflective Writing Task - Blog #4

I agree with the statement that strict or vicarious liability is the only way to make directors and senior management serious about minimizing fraud, bribery and corruption. 

During my research I came across the Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd [2016] case.  A manager at Pioneer was authorised as part of her employment to make customer redraws via the company’s software system.  This employee made multiple fraudulent redraws from customer accounts into her husband’s account.  The court held Pioneer liable on the basis of vicarious liability.  Despite executives of Pioneer having nothing to do with the fraud, the circumstances illustrate a very close connection between the fraud committed and the acts of employment.  Her fraud was only possible due to her management authority and access to the software system, (Young, 2016).

Vicarious and strict liability attempts to address incidences of crime by making executives more accountable for employee actions.  Executives may be willing to spend more capital on corporate and IT governance mechanisms to reduce the threat of crime.

The major categories of crime include;

1. White Collar crime (e.g. false accounting, money laundering, theft)
2. Organised crime (e.g. illegal drugs, illegal services)
3. Computer crime (e.g. unauthorised access, internet fraud)
4. Regulatory, Corporate and Compliance Offences (e.g. insider trading, competition offences) (Latimer, 2012, p.96).

References

Latimer, P. (2012). Australian Business Law (31^st Ed.). Sydney, NSW: CCH Australia Limited. 

Young, S. (2016). Federal court affirms an employer’s vicarious liability for fraudulent acts of employees. Moray & Agnew Lawyers. Retrieved from http://insurance.moray.com.au/publication/can-a-mortgage-intermediary-be-vicariously-liable-for-the-fraudulent-acts-of-its-employee/.