FEATURE ARTICLE

FAKED DISCOUNTS: COLES AND WOOLWORTHS SLAMMED BY ACCC 

In another blow to already shaky reputations, the ACCC has accused supermarket giants Coles and Woolworths of misleading customers by faking discounts. Though advertised as “prices dropped” or “down down” promotions, it was found that everyday items actually increased in price, with costs artificially inflated then trivially decreased. For example, soft drink slabs priced at $24 earlier this year then rose to $35 for a week, before settling at the ‘discounted’ price of $26.

The ACCC has filed allegations of misleading consumer claims in the Federal Court, which could amount to Woolworths and Coles paying a maximum penalty of $50 million per breach or 30 per cent of their turnover during the time breaches occurred. Coles plans to defend itself against the claim, while Woolworths are yet to comment. The key legal question will be whether the price ‘drops’ occurred a reasonable period after the previous increases. Although legal action could result in only relatively small fines for the supermarkets, more meaningful impact will be felt through resulting clearer guidelines for appropriate pricing and promotional practice.

There have been calls from government to be given the power to force the corporations to be broken up if uncompetitive conduct is found, raising concerns from business groups. The Business Council of Australia has warned that this will have negative impacts on pricing and job security.

 

Welcome to the September edition of View from the Hill – our regular newsletter containing information and insights regarding legal and investigative issues concerning fraud, corruption, and professional misconduct.

IN THIS ISSUE:

  • FEATURE ARTICLE
  • IN THE NEWS
    • Domestic
    • International
  • CASES OF INTEREST & LAW REFORM
  • OUT AND ABOUT

Contact for further information:

Andrew Tragardh
Managing Partner & Founder

Tam McLaughlin
Partner

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IN THE NEWS – Domestic

FINES AND COMPENSATION:

Crackdown on scams has consequences for banks and other industry players

The government has proposed sweeping changes to laws that will require tech companies, banks and telecommunication organisations to abide by a mandatory code in the prevention and reporting of scams. Companies that do not comply may be forced to pay fines of up to $50 million and compensate victims.

Despite calls from consumer groups to replicate UK laws, which place responsibility solely on the banks, Minister Stephen Jones is determined that tech companies like Meta, X and Google are “not let off the hook.” However, other politicians have been critical of this decision, as tech experts warn it “may take years to see reimbursements.” The UK model is world-first, and after extensive trials, will begin in October, where all victims should see repayment within five days.  Read more

DPP Kerri Judd resigns, appointed as Supreme Court Justice

Ms Judd was the Director of the OPP since 2018, and was the first woman to hold the role. During her tenure, the office handled many high-profile and contentious cases including the prosecution of George Pell, the Bourke Street killing and the Lawyer X scandal.

She is succeeded by Chief Crown Prosecutor Brendan Kissane KC. Read More

New laws to rein in tax agents

New laws being drafted by the government will now require tax agents to disclose to prospective or current clients specific circumstances, such as being convicted of a serious tax or fraud offence within the past five years. The laws are aimed to address the issues that led to the PWC tax scandal, and to increase the self-regulation of the sector. Read More

New laws to rein in tax agents

ASIC will provide the government with updated regulatory guidance that recommends cryptocurrency exchanges be brought under corporations law, and be required to hold financial services licences. The watchdog seeks to ensure that cryptocurrency is classified appropriately as an investment, rather than a nebulous “financial product,” which will allow Australians who hold this asset protection under consumer law. Read More

Duxton Hill’s work in recovery from scams

We were recently engaged by clients affected by an international investment scam that defrauded Australians of over $14 million. The scam involved meticulously prepared documents, indistinguishable from publications by genuine financial institutions, which amongst other things deceived victims into believing they were making legitimate investments. As a result of our efforts, unlike other victims, our clients were able to recover over 50% of their losses.

Seven individuals involved in this scam now face multiple charges of handling proceeds of crime.

A common misconception amidst the rise of online scams is to rely solely on law enforcement for recovery loss. While seeing a fraudster face criminal court may bring some satisfaction, it is critical to recognize that law enforcement is not a recovery agency. Pursuing civil action is the most effective way to recover losses.

Contact us today to explore your options and get the help you need.

Gurney family business money funnelled into gambling by fraudster

Paul Montgomery was accountant, general manager and family to the Gurney brothers who owned RDS Civil, when it was found he had taken over $11.5 million from their business accounts. Forensic accountants traced this money to accounts held with various agencies including Sportsbet, Tabcorp and Bet365. Under financial crime and anti-money laundering laws, betting agencies are required to ask punters for proof of income. This should have raised flags, with Montgomery having turnover some turnover being around $5 million, while his salary was only $140,000 a year. Betting agencies nicknamed Montgomery “the Golden Goose,” and courted him as a VIP member, showering him with gifts and free entry to events, to encourage his continuous generosity.

While the brothers were able to recover around 10 per cent of losses their losses from investments Montgomery made in property, the money spent at betting agencies is harder to trace. In the UK, betting agencies in similar circumstances have been fined heavily for receiving “proceeds of crime,” while regulation in Australia is far less stringent.

Read More

IN THE NEWS – International

United States: Caroline Ellison sentenced

Caroline Ellison, who was a former top executive of FTX and ex-girlfriend of Sam Bankman-Fried has been sentenced to two years in prison for the infamous financial fraud committed by the firm, who stole $8 billion (USD) from customers. Her sentence was greatly mitigated by her admission to charges of wire fraud and money laundering, as well as her testimony against Bankman-Fried.  Read more

USA: Mayor of NYC Indicted on Bribery and Fraud Charges

Eric Adams, the mayor of New York City, was last week indicted on five criminal counts for his alleged involvement in a long-running bribery scheme. Prosecutors allege that Mr Adams solicited and received illegal campaign donations and travel perks from Turkish officials and businessmen in exchange for political favours – most notably the acceleration of safety clearances for the construction of a high-rise Turkish consulate building in Manhattan. The indictment contains Mr Adams’ private correspondence regarding the travel benefits, and what prosecutors allege are efforts to conceal the scheme with fake invoices and receipts.

Mr Adams has pleaded not guilty to all charges and remains in his position as Mayor, despite reports that New York governor Kathy Hochul is considering removing him from office. If found guilty Adams could face a prison sentence, with the most serious charge of wire fraud carrying a maximum sentence of 20 years.

Read more

Singapore: Former Minister convicted for accepting over $400,000 in valuables in office

Subramaniam Iswaran, former Transport Minister, plead guilty to five of the 35 charges he faced, as prosecution agreed to amend two of these charges from more serious corruption to the lesser obtaining valuable items as a public servant. During his time in office he was was gifted $403,000 worth of presents, including tickets to Premier League matches and Formula 1 races, as well as whisky, vintage wine, a business-class flight, a flight on a private jet and a folding bicycle. He has paid back $380,000 to the government and has agreed to return all the goods he received, though the prosecution is also concerned with the impact Iswaran’s actions have had on public confidence in the Singapore government, which prides itself on a reputation of cleanliness and propriety. His defence maintains that his decision-making was not affected by the receipt of goods. Prosecution have agreed to drop more serious charges.

Read more

UK: Overhaul of fraud prevention in social security system

Keir Starmer has announced a new bill that plans to modernise the Department for Work and Pensions, with a focus on fraud, error and debt. It will look to support recovery of funds for victims, and also to protect vulnerable people from fraud and further debt. He also looks to address more “sophisticated fraud,” which Labour has stated costs the social security system 10 billion pounds a year. Read the full story here.

CASES OF INTEREST & LAW REFORM

Specificity required in issuing search warrants

Hampton v Commissioner of the Australian Federal Police [2024] FCA 1079

Stacey Hampton appealed the validity of a search warrant obtained and executed against her by the Australian Federal Police. Hampton submitted that the conditions stated in the warrant were too broad, and did not validly identify the scope of the search permitted, nor the offences to which the warrant related. In his analysis of the warrants, Justice McDonald held that the warrants could be construed cumulatively to assess the scope of the search with sufficient precision. As for the specificity of the offence, assessment of precision is will vary according to the nature of the offence. McDonald J emphasised that at the stage of issuing a search warrant, there may be reasonable suspicion without requisite information to name a specific offence, and care should be taken so the purpose of a search warrant (e.g. to ascertain the quantum of goods involved) is not frustrated by too onerous a requirement for precision. The appeal was dismissed.

Read the full case here

AML/CTF Amendment Bill 2024

The proposed Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill hopes to modernise regulation, expanding its scope to include Tranche 2 entities and addressing problems in the current regime.

Major changes include:

  • Expansion of requirements in governance and board engagement.
  • Increase of customer due diligence processes.
  • Inclusion of Tranche 2 entities, such as real estate, precious metals & stones, and professional services.
  • New obligations surrounding electronic and international fund transfers.
  • Requiring reporting entities to adhere to additional procedures if documents or information is being withheld on the basis of privilege.
  • Refocusing prohibition on preventing disclosures that may prejudice an investigation.
  • Granting new authority to AUSTRAC to examine individuals in specific circumstances.

Read the AUSTRAC release here

DUXTON HILL OUT AND ABOUT

On Wednesday 11 September, Andrew Tragardh was invited to speak at the Melbourne Forum Discussion Group hosted at Rodgers Reidy about responding rapidly to fraud, and how to maximise recovery.

Tam McLaughlin attended the Corruption Prevention Network’s conference in Sydney on Monday 23 September, engaging with latest industry experts on high to take action beyond awareness.