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Thursday, 29 March 1979
Page: 1369

Mr JACOBI (Hawker) - I support the honourable member for Kingsford-Smith (Mr Bowen). Firstly, I will deal with clause 8 which deals with the question of passports for minors. I agree with the honourable member that the question is complicated. Much child abduction in Australia can be traced to the parents having dual nationalities and acting in defiance of custodial orders. I feel that this area could be dealt with expeditiously in the Family Court of Australia. Where there is an application for a custodial order the Family Court judges have the power to call for passports and impound them until such time as the court determines which parent will have the custody of the child. The issue on whose passport the child should be cited could then be determined by the court and notified to the Department of Foreign Affairs in the respective State. This question needs legislation both in relation to this Bill and the Family Law Act. I trust that the interdepartmental committee will consider it. I made a submission upon it.

In support of my colleague I return to the question of corporate crime and the judicial process of warrants. I ask the Minister for Immigration and Ethnic Affairs (Mr MacKellar): If he is concerned about human rights and civil liberties- I confess that it is an area that has never bothered me- how many people have really suffered? How many passports have preceding Ministers withheld or refused to issue? Did they consider that this infringed human rights? Where has any company director subject to investigation by either a corporate affairs commission, an insurance office or the Taxation Office, had his civil rights infringed? I challenge the Minister to show where that has happened. I turn to the question of trust of the judiciary. We seem to have a propensity in this country to trust the judiciary in everything. There is an excellent book which I commend to honourable members, by Trevor Sykes called Money Mines. I will quote from it because it highlights this question.

Those to police the corporate area have also encountered obstacles in the interpretation of law in the courts. The most notable instance of this was the judgment handed down by the . . . Justice of the New South Wales Supreme Court, Mr Justice Taylor, in the case of the Crown versus McMahon, Nestel and others. . . directors of Mineral Securities were charged with having published a false statement when they announced a profit of more than $3.5m for the 1970-71 half year. It will be remembered that this profit statement was withdrawn following advice from . . . Q.C., because it contained a $7m profit on the Robe River transfer. ... 10 days after announcing its profit, Minsec retracted the statement and announced a $3.3m loss. The Minsec directors were charged with breaches of Section 176 of the Crimes Act (publishing a false statement of profit) . . .

The important point to remember is this:

After a long trial, Mr Justice Taylor ordered the jury to find the directors not guilty. One of his main reasons was that the Crown had not established the true profit of the Minsec group for the period.

HisHonour's judgment could be reduced to the proposition that a charge of announcing a false profit cannot succeed unless the prosecution can establish what the true profit was. This may seem a reasonable proposition to a layman, but in practice it is impossible. The profit of a company is the end product of a number of assumptions made when preparing the balance sheet. A variation in any one of a number of items will produce a variation in the profit.

Depreciation rates can be varied, assets can be revalued, the estimate of likely bad debts can go up or down, or a host of other assumptions can be made . . .

Mr JusticeTaylor's judgment established a precedent which was soon followed by Mr Berman, S.M.

This is important: in a committal hearing in which Alexander and Thomas Barton were charged with publishing a false profit statement for Brins Australia Ltd in the half-year to December 1970. Mr Berman dismissed the charges on the same grounds as laid down by Mr Justice Taylor.

A more subtle enemy than the state of the law is the state of mind sometimes displayed by judges and magistrates. The bench has an occasional tendency to be more deferential to a company director or stockbroker who has landed in the dock, although the charges may relate to defalcations involving large sums. Mr Justice Gillard, sentencing Cornelius after the Barewa case . . . described Cornelius as an intelligent, ambitious and successful businessman who had brought financial ruin upon himself. Mr Justice Gillard said he had little sympathy for the victims of the conspiracy, who were speculators in the mining boom. 'Most were advised by brokers, who must have seen the emptiness in the prospectus and the grave risk their clients were taking,' . . . 'The victims were seeking the same benefit as you and equally relying on the greed and stupidity of a speculating public'. In the business world Cornelius lived in, his conduct had been no different to that of many other people.

Mr JusticeGillard said he had been tempted to impose a non-custodial sentence upon Cornelius until he had learned that Cornelius and another man had plotted to steal about 400 exhibits . . . from the offices of the Crown Law Department.

Now this is not a typical assessment by the judge, but nonetheless it needs to be taken into account if we are to rely on the judiciary in complex matters such as corporate defalcation. It is another instance, I suggest, where, in these sorts of matters- corporate law, insurance law or taxation- I would have more faith in company inspectors and their reports to the Minister than I would in the judiciary. But I suppose that members of the judiciary act on the old dictum:

You are guilty until proven rich.' I strongly suggest that the Minister again takes into consideration the argument that in this area the status quo should remain.

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