The ACTU today called on the Federal Government to set up an independent Office of Corporate Audit to prevent company rorts and failures such as HIH, One.Tel and Harris Scarfe.

ACTU Secretary Greg Combet said company misbehaviour resulting in massive financial losses for thousands of Australians required substantial changes to improve corporate governance.

“The Prime Minister says some people have been getting away with murder in terms of corporate excess, but he has done nothing to reign in the big end of town,” Mr Combet said.

The new Office of Corporate Audit should form part of a package of reforms to tighten audit, accounting, reporting and disclosure standards for listed companies including:

  • increasing penalties under the Corporations law for breach of Directors
    duties;
  • banning auditors from providing non-audit services to audit clients;
  • enforcing disclosure requirements for all executive remuneration;
  • requiring executive share options to be expensed in company profit and loss
    statements;
  • protecting corporate whistleblowers; and
  • removing corporate tax deductibility for corporate salaries of more than $1
    million.

    • “Even when ASIC prosecutes over corporate failures, it is often too late for employees who have lost their jobs and entitlements, shareholders who have lost their investments and taxpayers who may foot the bill after assets have been transferred,” Mr Combet said.

    “An independent Office of Corporate Audit Office could act before it is too late. An Office staffed by investigators, lawyers and accountants could investigate and audit companies on a random basis or in response to complaints from shareholders or others.

    “Rather than the hands-off approach advocated by John Howard, the Government should act to improve corporate governance regulation as eagerly as it has moved to impose new regulation on the construction industry,” Mr Combet said.

    Evidence last week confirmed that one-in-four of Australia’s top 100 companies are failing in their legal duty under the Corporations Act to disclose the value of share option deals for directors and executives.