Board of Directors and CEOs should be accountable for employee actions: Lessons from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

"BOARD OF DIRECTORS AND CEO'S SHOULD NOT BE ACCOUNTABLE FOR THEIR EMPLOYEE'S ACTIONS ACCORDING TO THE LAW"

I disagree with the idea that Board of Directors and CEOs should not be responsible for their employees actions according to the law. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Australia supports this stance.

The Commission identified crimes like fraud, money laundering, and conflicts of interest committed by banks and financial loss and damage reputation. The commission attributed some of these misconducts to a lack of proper oversight by Board of Directors and CEOs, leading to a culture of greed and unethical practices. 

To address these issues, the law has introduced strict and vicarious liability. Strict liability hold a person responsible without requiring proof of intent of negligence, while vicarious liability makes an individual responsible for actions of another in certain circumstances. 

Boards of Directors have legal obligation to ensure compliance with the law under the Corporations Act 2001 and can be held accountable for breaches. Financial institutions have similar obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and can be held liable for breaches by their employees. 

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry emphasised the need for accountability, and strict and vicarious liability to address corporate misconduct. Enforcement of these concepts is crucial to holding leaders responsible for their employees' actions.