Phoenix is the name of a mythical bird which, after death, rose from the ashes to live with renewed vigour and start the cycle all over again.
It鈥檚 also the name of an illegal activity in Australia where directors wind-up a company and then create a new one while leaving their debts behind.
Workers loose their wages and entitlements, and other creditors are left with no chance of recovering the debts they are owed.
It鈥檚 a rort that鈥檚 common in the construction industry, and fiddled to the tune of more than $3 billion a year.
Preventing it, and other white collar crime, is the responsibility of the corporate regulator, the Australian Security and Investment Commission (ASIC).
One remedy that springs to mind is for ASIC to recover money owed as a result of phoenix scams from directors鈥 personal wealth and then bar them from ever being a company director.
Yet ASIC鈥橲 action to combat this illegal activity includes removing directors who have been involved in two or more failed companies from the industry. This seems more like an invitation to do it at least once, free of charge 鈥 than a punitive penalty aimed at prevention.
According to its biannual report covering the period July 1 to December 31 2014, ASIC engaged in 345 鈥渆nforcement outcomes鈥. It laid 173 criminal charges after completing 94 investigations.
The civil penalties imposed totalled just over $3 million. Their deterrent value isn鈥檛 immediately obvious. One company director was fined $230,000 for illegally paying himself $30 million.
The telling statistic of the report that reveals the 鈥渓ight touch鈥 approach taken to corporate crime is the number of criminal charges laid. Only 14 people faced criminal proceedings and of these only 10 received a custodial sentence.
The chairperson of ASIC, Greg Medcraft, has asked the Abbott government on several occasions to increase the penalties for white collar crime.
He has previously pointed out that they are so lax by international standards as to be seen as an incentive rather than a deterrent.
The result, according to Medcraft, is that Australia is a 鈥減aradise鈥 for white collar criminals where the slight slap of financial penalties hasn鈥檛 been indexed to inflation for more than twenty years.
But not only has the Abbott government ignored Medcraft鈥檚 pleas for more resources, it has shackled ASIC by constraining its budget.
ASIC鈥檚 biannual report coincides with a Senate inquiry into corporate tax avoidance 鈥 a legitimate activity under Australian tax laws.
In the period between 2004 and 2013, 84% of Australia鈥檚 top 200 stockmarket listed companies, those who the Abbott government maintains are the 鈥渉eavy lifters鈥 in society, paid less than the company tax rate of 30%. This amounted to $80 billion in forgone tax revenue.
In the last five years, the proportion of total tax revenue from business has fallen from 23% to 19%. Over the same period, the proportion of tax paid by individuals increased from 37% to 39%.
Company tax avoidance comes courtesy of establishing subsidiaries in tax havens such as Bermuda and Jersey, where the tax rate is 0%. Among the companies asked to provide submissions to the Senate inquiry are BHP Billiton, Rio Tinto, Telstra, 21st Century Fox, Aurizon Holdings, Toll Holdings, and the owner of Bunnings Wharehouses, BWP Trust.
Aurizon Holdings was the successful bidder for the Central Queensland Coal Railway Network when it was privatised by the Queensland ALP government in 2010. Its effective tax rate for the year ending June 2013 was just 2%.
A spokesperson for Aurizon said that the company鈥檚 low effective tax rate comes from 鈥渟pecific tax adjustments applicable to Aurizon as a result of its privatisation and as a result of ordinary tax adjustments that arise for an Australian business that has a large, fixed asset base.鈥 Nice work if you can get it.
On recent past performances, any findings from the Senate inquiry that might result in companies being forced to pay their taxes could expect to be ignored by the Coalition government.
But its hand may be forced by a global crackdown on tax avoidance through the use of tax havens led by the Organisation for Economic Cooperation and Development in response to the lingering global financial crisis.
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