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Thursday, 27 March 1941

Senator McLEAY (South Australia) (Postmaster-General) . - I move -

That the bill be now read a second time.

This bill is designed to make more stringent the existing provisions of the Defence Act relating to fraud in connexion with the supply of food, material and equipment to the Defence Forces. Section 73c of the act makes guilty of an offence any contractor, purveyor or other person, including any employee, who fraudulently supplies for use by the Defence Force certain inferior goods. Honorable senators will appreciate that it is one thing to prove that a contractor has supplied goods of an inferior quality, but quite another thing to prove that he fraudulently did so. The presence of a fraudulent intent may be obvious, but it is one thing for the fraudulent intent to be obvious and another thing to prove it before a court. The purpose of clause 3 is to remove the word "fraudulently", but, at the same time, to make it a good defence if the contractor is able to show that there was no intent to defraud and that he was not aware of the inferior quality. In other words, instead of the Commonwealth having to prove fraud, it throws on the person charged the onus of showing an absence of fraud. The same section of the act also makes it an offence for an officer of the Commonwealth fraudulently to receive any such goods. Consequently, the clause omits the word " fraudulently " in this case also, and casts on the officer the onus of proving that there was no intent to defraud on his part and that he did not know that the goods were supplied in contravention of the section.

As honorable senators are, perhaps, aware, when the Commonwealth enters into a contract for the supply of certain goods for the Defence Force, it usually arranges for the inspection of the goods, and places on them certain seals, or marks, to indicate that they are up to standard. Only goods so marked will then be accepted in fulfilment of the contract. There was a case in which goods bearing a forged mark are alleged to have been delivered. The most effective way to obviate any use of forged marks is to make it an offence for any contractor to have in his possession goods fraudulently marked. If the Commonwealth can nip this sort of thing in the bud, as it were, by catching the offender while the goods are still in his possession, rather than await delivery of the goods, this practice will quickly be stamped out. That is the purpose of the new section 73d which clause 4 of the bill proposes to insert.

To persons of a certain type, who are able to make a substantial profit by their fraud, the imposition of a penalty, however large, may not always be a sufficient deterrent. Unfortunately, a company cannot be imprisoned. The new sections 73e and 73f proposed to be inserted by clause 4 are designed to bring these provisions of the Defence Act in line with the provisions of the National Security Act, and to make every director and person concerned in the management of a company guilty of the offence of which the company is guilty unless he can show that the offence took place without his knowledge, or that he had no reasonable means of preventing it. Proposed section 73f is designed to bring into line with the provisions of the National Security Act the penalties which may be imposed in respect of serious frauds of the nature to which I have referred.

The provisions of the bill will, by virtue of clause 2, be made retrospective to the date on which the present war commenced. The measure is, undoubtedly, drastic ; but I find it difficult to conceive of crimes of a more reprehensible character than those with which this bill deals. This country is at war. To defraud the Commonwealth during a period of war is, in itself, most reprehensible ; but when that fraud takes the form of supplying to the Commonwealth equipment for the use of its forces of such an inferior quality that the safety, and, perhaps, the lives, of men may be endangered the natural hesitation to make retrospective any measure appertaining to the criminal law must disappear. I commend the measure to honorable senators.

Debate (on motion by Senator Collings) adjourned.

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