Can you fault this reasoning from Crikey?

I can’t.

Confession 1: American track star Marion Jones admits using performance-enhancing drugs and will almost certainly be stripped of the five medals she won at the 2000 Sydney Olympics. She will probably face a maximum of six months in jail for perjury, but that could be reduced to three months under a plea-bargain agreement with US federal agents. I have let my country down, and I have let myself down. It is with a great amount of shame that I stand before you and tell you I have betrayed your trust,” she said, tearfully, last Friday.

Confession 2: Australian billionaire Richard Pratt is set to admit his involvement in the nation’s biggest cartel case as part of a settlement between his company, Visy, and the Australian Competition and Consumer Commission. His guilty plea is expected to result in Visy paying a $30-40 million fine. “I was not involved in any of the detail of this supposed deal,” Mr Pratt told The Australian today, claiming he was caught unwittingly in the case by approving the actions of his senior executives without knowing details of the price-fixing and market-sharing deal they had agreed with Amcor.

Hang on a minute … an athlete who admits to drug use which harms no-one else ends up in jail, while a stupendously rich businessman who admits to rigging one of the biggest markets in Australia — a crime which probably increased the price most Australians paid for almost every consumer good — gets a relatively mild fine and continues to deny his own personal involvement.

Respectability in the world of white collar crime comes damn cheap if Richard Pratt’s enhanced performance is any example.

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Gummo Trotsky
Gummo Trotsky
14 years ago

How about we compare like with like for a start? On the one hand, you have a US athlete, facing prosecution under the US justice system, making a statement that is probably drafted with an eye to the plea bargain. On the other hand, the ACCC going to water (?) on price fixing – a matter that would be dealt with under Australian law, not US law.

It would be more appropriate to compare the Pratt case with an Australian case, if you insist on making comparisons. Or how about coming up with an argument to show that the ACCC has mishandled the matter without the emotive language.

Crikey Nick, I think you might be pulling our legs a little when you say you can’t find anything wrong with the argument.

Ken Parish
Admin
14 years ago

The argument that Marion Jones’ drug use “harms no-one else” is no doubt one that her non-steroid-fuelled competitors would strongly dispute.

And $30-40 million doesn’t really sound like a “relatively mild fine”. AFAIK Visy is a privately held company, so the impact of that fine will fall on a relatively small group of shareholders with Pratt himself prominent among them. He might well choose to spend 6 months in chokey and keep $40 million if offered the choice!!

I’m not seeking to minimise Pratt/Visy’s conduct, but it’s certainly not beyond argument that Jones’ conduct was trivial by contrast. Moreover, as Gummo suggests, it’s a fairly cheap and meaningless comparison (and therefore typically Crikey-ish) given that both the conduct and the legal systems under which Pratt and Jones respectively are being dealt with are so radically different.

Finally, even if one regards such blatant cartel behaviour as meriting a prison sentence (as I certainly do), whether a court actually imposed such a sentence would no doubt be dependent on the ACCC being able to prove that Pratt himself was sufficiently aware of the details of arrangements with Amcor that he knew or ought to have known that they were unlawful. Presumably the ACCC is prepared to cop a plea because it isn’t sufficiently confident that it can prove sufficient personal knowledge on Pratt’s part, presumably because his fellow executives are “taking the rap” and refusing to dob him in. Again as Gummo observes, it’s impossible to know whether ACCC has made an appropriate judgment call without knowing a lot more about the details and evidence of the case than any of us does.

gilmae
14 years ago

I’ll grant you that it may still seem pretty minor compared to Pratt’s white collar crime – in terms of effects on others – but she’s not facing prison for drug use. She’s in danger of going to prison for lying to a federal investigation re: her drug use.

Caroline
14 years ago

I find it hard to draw a comparison. ‘Wrongdoers of the day’ perhaps?

I read the profile on Pratt in the Weekend Magazine and I felt that deep down, he was a fairly unsavoury character, albeit charismatic and obsessively hard working. The 30-40 mil fine I guess will hurt a bit, but the damage to his reputation will hurt him much more. When you’re that wealthy and money is merely expendable, it ‘all comes down to you’ and who or what you are. Having money to spend tends to lose its meaning. Its hard to buy ‘good character’.

He is, to give him credit, one of Australia’s most generous philanthropists (apparently), but there too it would seem strings attach and to be a beneficiary of his largesse is perhaps to kiss all one’s autonomy away.

Like Rivkin, it is a bit sad (for some reason) to see these men fall from their own ideas of self-munificence. They are in the end only humans, albeit greedy ones. Giants in their own eyes, the fall into ignominy is a long drop.

ab
ab
14 years ago

No possibility of jail for cartel conduct in Australia, Ken. It isn’t even a crime.

Tony T.
14 years ago

Pratt: “My trainer told me the price fixing was flax-seed.”

Patrick
Patrick
14 years ago

He might well choose to spend 6 months in chokey and keep $40 million if offered the choice!!

I am not sure anyone but hardened criminals have made that choice before. I suspect he would pay twice as much to avoid it.

Yobbo
14 years ago

You even quoted the part where it says “Jones faces 6 months in jail for perjury.”

Then you try and claim Jones is going to jail for using steroids?

What a stupid post.

Ken Parish
Admin
14 years ago

As I said in my previous comment, it’s a glib, superficial comparison that tells us nothing useful. Compare that Crikey item with the discussion here at Troppo, which is already much more substantial and enlightening.

As Patrick pointed out above, breaches of Part IV of the TPA don’t carry imprisonment as a potential penalty. See section 78. By contrast, they DO carry potentially huge financial penalties – $10 million per breach or 3 times the benefit obtained from the breach where capable of calculation, or 10% of the corporation’s annual turnover. See section 76.

I think you can argue that the most serious anti-cartel infractions SHOULD be subject to imprisonment. In fact I suggested it above. But one needs to be cautious about any such argument; you can certainly also mount a respectable contrary argument. We need to strike a balance between strong regulatory provisions inhibiting anti-competitive behaviour on the one hand, and rules which make a corporate career such a minefield of potential personal ruin that it stifles entrepreneurial activity and therefore impoverishes all of us. There are some sorts of collaborative/co-operative arrangements between corporations that are desirable and should not be prohibited, and the dividing line between those sorts of arrangements and the nasty anti-competitive sort isn’t necessarily self-evident (although the Visy arrangement must have been pretty decisively on the wrong side of the line otherwise Pratt wouldn’t be copping a plea).

The argument in favour of pecuniary rather than criminal sanctions is similar to the fairly generally accepted proposition that limited liability for company shareholders has been one of the primary engines of growth and dynamism in the western capitalist system. One can take that sort of argument too far, of course. However, a legislative regime that generally favours very large financial penalties rather than criminal/imprisonment sanctions is not self-evidently absurd or unfair or unduly lenient, and is not established as such by drawing a cheap and spurious comparison with the fact that perjury DOES carry potential imprisonment.

Finally, a quick Google indicates that, at least 4 years ago, a total fine of $53 million was the largest in Australia’s corporate history. Thus a mooted/likely fine of $30-40 million for Visy would appear to be in the ballpark, and not absurdly lenient having regard to the fact that Pratt is effectively copping a plea and saving the taxpayer a long and expensive trial.

George
George
14 years ago

“Perjury and diddling people out of millions of dollars. Seems fair enough comparison to me”

No worries Nic, lets just have everyone lie before a court of law and we’ll see what kind of legal system we end up with. Besides in Pratt’s case, the company has committed the crime not the invidual himself. The company will pay a hefty price.

So apart from brushng off behaviour which undermines the integrity of the legal system, you then compare it to an offence committed by a company not an individual. Last time I looked an individual and a company are two different legal enitities.

Bill Posters
Bill Posters
14 years ago

Last time I looked an individual and a company are two different legal enitities.

But that’s part of the point of the comparison, isn’t it? That Pratt is allowed to hide behind the corporate veil?

Caroline
14 years ago

Looks like Pratt has made an out of court offer to the ACCC which they have accepted. Do you think an out of court settlement is appropriate? Something is unsettling about it.

Bill Posters
Bill Posters
14 years ago

While I agree with you that its important that running a company should not be a minefield of potential liabilities,

Why not? Serious question. The government gives you a license to create a fictitious person. It’s a hefty privilege.

Yobbo
14 years ago

Why not? Serious question.

Because if they did, nobody would start companies, and we would still be pledging allegiance to our feudal lords instead of buying hamburgers from Multinationals.

Bill Posters
Bill Posters
14 years ago

But in fact running a company already is a minefield of potential liabilities in the shape of directors’ duties. And people are still starting companies.

rog
rog
14 years ago

Not only is Visy facing a fine from the ACCC they are also facing a class action claim for loss from customers – incl the big names like Coca Cola. Once the dust has settled any advantage gained by price fixing will be overwhelmed by loss by legal action and claim for damages sending a clear message to those that wish to try to collude.

If he went to gaol (for a short stint) he would still come out a rich man, this could hit him hard.