6 ms·

I think you're right. Executives need to be held personally liable, it's the only way to ensure that they take these issues seriously.

hackerlight 4y ago
It's also fair to shareholders of public companies who are often also getting screwed by their executives who are abusing an agency conflict of interest in order to pad their own bonuses, at expense to both the shareholders and society.
dataking 4y ago
The whole idea of forming a business entity is to limit the liability of its principals. This is an important incentive to make people go into business without risking their home and whatnot. Let's not throw out the baby with the bathwater.
- chillfox 4y ago
  In this case it feels like the baby turned into a corpse some time ago from being left in the rancid bath water for too long.
- grecy 4y ago
  > The whole idea of forming a business entity is to limit the liability of its principals When you really think about it, that is a VERY scary thing. Quite literally it goes: "If I do this illegal thing myself, I'll get in lots of legal trouble." "If I form a company and do the illegal thing, I'm safe."
- doctor_eval 4y ago
  I’m not sure that’s right? I think the limited liability is for debts to creditors and shareholders, rather than limited liability against criminal or other behaviour. Maybe I’m wrong, but as I understand it, Australian law treats a corporation as a person and the directors are answerable if the corporation breaks the law. The real problem (as I see it) is that a company the size of Optus can afford to defend their behaviour for so long that enforcement itself becomes a burden. The closer you get to the CEO and board, the more they will spend shareholders money defending themselves.
- aussiesnack 4y ago
  Oh let's. Please. The 'baby' is killing our entire living world, and nothing short of removing the idiocy of limited liability is very likely to save it. Actions without proportional consequences were never going to lead to anywhere but destruction. Folk psychology told us that was likely (however much virtual-economists feigned ignorance). Empirical reality has confirmed it.
- LeonB 4y ago
  Directors in Australia can be personally liable for unpaid tax. So the limited liability is limited when it suits the right people.
- sjy 4y ago
  Companies exist to limit the liability of shareholders / investors, not principals. The idea is that you can buy equity and receive dividends if the company goes well, without standing to lose more than you put in if the company harms others through mismanagement. The company doesn't shield the directors from personal liability for that mismanagement as a matter of law, it just pays for high quality legal representation if the allegation is made.
fnordprefect 4y ago
With respect, that's not right. I've advised Australian companies of all sizes (from one-man bands to ASX-listed companies) for decades, and they are very heavily motivated by avoiding bad press from a preventable accident, avoiding company and personal reputational damage, being fired, being sued personally (noting that eg D&O insurance almost invariably excludes fraudulent acts), suffering regulatory investigation/enforcement (including eg fitness to hold licences) and because a surprising number of people believe that it is important to do the right thing, and (contrary to popular belief on the interwebs) this doesn't change just because they are employed in a business. In cases where there is intentional wrongdoing, existing laws already make complicit people liable both to civil action by people harmed, plus criminal or civil penalty provisions by ASIC (or the ACCC, depending on the industry and conduct). As a plaintiff, you typically join them to increase your potential pool of recoverable assets for your clients. The same is true if there are breaches of the Australian Consumer Law, and the person has a particular level of knowledge that is below intention. In cases of pure negligence, like this, if the negligence rises to a criminal standard, then criminal laws and penalties already apply. How and when this works has been a topic for over 50 years, since Tesco v Nattrass in the UK. In other words, there are already very significant legal mechanisms in place, and by and large they work - and not all of them involve having executives personally liable. In any event, many already do, and this has been worked out carefully over a long period.

hackerlight 4y ago

It's also fair to shareholders of public companies who are often also getting screwed by their executives who are abusing an agency conflict of interest in order to pad their own bonuses, at expense to both the shareholders and society.

dataking 4y ago

The whole idea of forming a business entity is to limit the liability of its principals. This is an important incentive to make people go into business without risking their home and whatnot. Let's not throw out the baby with the bathwater.

chillfox 4y ago
In this case it feels like the baby turned into a corpse some time ago from being left in the rancid bath water for too long.
grecy 4y ago
> The whole idea of forming a business entity is to limit the liability of its principals When you really think about it, that is a VERY scary thing. Quite literally it goes: "If I do this illegal thing myself, I'll get in lots of legal trouble." "If I form a company and do the illegal thing, I'm safe."
doctor_eval 4y ago
I’m not sure that’s right? I think the limited liability is for debts to creditors and shareholders, rather than limited liability against criminal or other behaviour. Maybe I’m wrong, but as I understand it, Australian law treats a corporation as a person and the directors are answerable if the corporation breaks the law. The real problem (as I see it) is that a company the size of Optus can afford to defend their behaviour for so long that enforcement itself becomes a burden. The closer you get to the CEO and board, the more they will spend shareholders money defending themselves.
aussiesnack 4y ago
Oh let's. Please. The 'baby' is killing our entire living world, and nothing short of removing the idiocy of limited liability is very likely to save it. Actions without proportional consequences were never going to lead to anywhere but destruction. Folk psychology told us that was likely (however much virtual-economists feigned ignorance). Empirical reality has confirmed it.
LeonB 4y ago
Directors in Australia can be personally liable for unpaid tax. So the limited liability is limited when it suits the right people.
sjy 4y ago
Companies exist to limit the liability of shareholders / investors, not principals. The idea is that you can buy equity and receive dividends if the company goes well, without standing to lose more than you put in if the company harms others through mismanagement. The company doesn't shield the directors from personal liability for that mismanagement as a matter of law, it just pays for high quality legal representation if the allegation is made.

fnordprefect 4y ago

With respect, that's not right. I've advised Australian companies of all sizes (from one-man bands to ASX-listed companies) for decades, and they are very heavily motivated by avoiding bad press from a preventable accident, avoiding company and personal reputational damage, being fired, being sued personally (noting that eg D&O insurance almost invariably excludes fraudulent acts), suffering regulatory investigation/enforcement (including eg fitness to hold licences) and because a surprising number of people believe that it is important to do the right thing, and (contrary to popular belief on the interwebs) this doesn't change just because they are employed in a business. In cases where there is intentional wrongdoing, existing laws already make complicit people liable both to civil action by people harmed, plus criminal or civil penalty provisions by ASIC (or the ACCC, depending on the industry and conduct). As a plaintiff, you typically join them to increase your potential pool of recoverable assets for your clients. The same is true if there are breaches of the Australian Consumer Law, and the person has a particular level of knowledge that is below intention. In cases of pure negligence, like this, if the negligence rises to a criminal standard, then criminal laws and penalties already apply. How and when this works has been a topic for over 50 years, since Tesco v Nattrass in the UK. In other words, there are already very significant legal mechanisms in place, and by and large they work - and not all of them involve having executives personally liable. In any event, many already do, and this has been worked out carefully over a long period.