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Paltry fines raise questions over compliance enforcement

Adam Zuchetti
Adam Zuchetti
14 February 2018 1 minute readShare
Money bags

The tiny $500 fines handed down to two businesses under surveillance for phoenix activity has raised questions about whether courts are taking the issue seriously.

While penalties generally act as a deterrent for non-compliance, two separate branches of the Magistrates Court – Southport Magistrates Court and the Magistrates’ Court of Victoria – have both been handed fines of just $500 for failing to produce their financial statements to ASIC.

Victorian motorcycle transport firm Motorcycle Express and Sydney-based labour hire company MJC Project Group were both investigated as part of phoenix surveillance activity by ASIC between December 2016 and February 2017.

Part of this surveillance involved demands to produce records of their financial affairs.

Motorcycle Express did not produce any records, while MJC Project Group initially responded to ASIC saying it had the documentation but needed more time comply. It then did not respond when a second demand was issued two months later.

The directors of both companies were then dragged before the courts on charges of failing to comply with a notice. Both pleaded guilty, although MJC Project Group provided its books a day before the hearing.

While the maximum penalty for the offence sits at $21,000, two years’ jail or even both, the two companies were each given a fine of $500.

Concerned that such small fines will fail to act as a deterrent for operators who wilfully flout the law, and may simply consider it a “cost of doing business”, My Business contacted ASIC to ask if it would appeal and whether there is a risk more businesses would withhold their books from regulator scrutiny.

A spokesperson for ASIC said it had no plans to appeal, but would not comment on the last point as the penalty is decided in each case by the court.

Paltry fines raise questions over compliance enforcement
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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