Chubb Fined A1.51 Million
In October 2004, Chubb pleaded guilty to 12 charges of contravening s 58(b) and 14 charges of contravening s 75AZL(3) of the Trade Practices Act 1974, brought by the Australian Competition and Consumer Commission.
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The charges related to Chubb contracting to provide security services. At the time Chubb had reasonable grounds to know that it would not be able to supply the contracted services within the period agreed. The contracts were entered into between 5 June 2001 and 4 November 2002.
Clients affected by the conduct included a number of Commonwealth agencies and other businesses located in <?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Sydney, the Gosford region, Canberra and Tasmania.
In handing down the penalty, Justice Bennett noted: “It seems to me that the nature and circumstances of the offences demonstrate the seriousness of the failure of the part of Chubb to implement a system to ensure that it could meet the obligations which it had contracted to perform”.
ACCC Chairman, Mr Graeme Samuel, said the ACCC would not hesitate to use its power to seek criminal remedies for consumer protection breaches in appropriate cases where there has been deliberate, reckless behaviour causing significant harm to consumers.
“When people have entered into a contract to have their property protected, they are entitled to receive the full services”, he said.
In the wake of the decision ASIAL has revealed that an independent panel appointed by the ASIAL board has negotiated a $A500,000 financial contribution from Chubb to establish the ASIAL Centre for Security Compliance Excellence. Chubb will face no additional penalties – no losses of licence for behaviour that would have certainly seen smaller organizations turfed out of the industry for good.
ASIAL said in a release that while the association acknowledges the Federal Court decision has the capacity to harm the overall image of the security industry, recent important developments involving the Australian Security Industry Association (ASIAL) and Chubb Security Australia Pty Ltd (Chubb) mark a major watershed in raising standards in the private security industry.
The conduct that formed the ACCC’s action against Chubb also constituted a breach of the Association’s Code. Executive Director of ASIAL, Terry Murphy said.
“The Association determined that any remedy to restore the reputation of the industry would need to include a demonstrable shift in compliance within Chubb, as well as a commitment to deliver an outcome that was beneficial to the community and industry as a whole. To its credit, Chubb has accepted its responsibilities as an on-going member of ASIAL.
“An independent panel appointed by the ASIAL Board has negotiated an arrangement, whereby Chubb has willingly submitted to a range of measures, including a financial contribution which could total over $A500,000 to the establishment of the ASIAL Centre for Security Compliance Excellence” he said.
“We have taken tough measures against Chubb and believe these will help deliver greater compliance standards across the entire industry,” Mr. Murphy said.
Being assured by Chubb that it had remedied its past behaviour, the ASIAL Board adopted, as its preferred approach, the introduction of improved industry compliance training, ongoing assessment and testing which will lead to greater public trust and confidence in security industry products and services.
“This is an absolutely paramount consideration as far as we are concerned” Murphy added.
“The establishment of the Centre for Security Compliance Excellence will significantly build on the industry compliance program that has evolved over the past three years. The Centre for Security Compliance Excellence represents a significant long-term commitment by both Chubb and the industry in raising and maintaining industry standards.”
The Centre’s primary activities will be to develop a national cross-industry facility that incorporates:
* Development of a dynamic and robust culture of compliance within the security industry
* Improvement of Member knowledge skills and capabilities in compliance
* Establishment of a methodology that integrates compliance, ethics, governance and risk into the fabric of security organisations
* Implementation of professional compliance accreditation in the security industry through a rigorous inspection regime
* Development of a National Code.
Work will begin on the new national system early in 2005, including the appointment of an independent advisory council, which will assist in driving the direction of the Centre for Securty Compliance Excellence.
ASIAL’s Executive Director Terry Murphy has commended Chubb’s President, Tony Chamberlain for the leadership that he has displayed in assisting to bring about what ASIAL is calling a watershed initiative.
Along with the fact Chubb looks to have got away with a slap on the wrist for its outrageous behaviour in this instance it also looks to me like the payment being made by Chubb to ASIAL has all the hallmarks of a campaign contribution.
From the industry’s point of view, while it’s always going to be hard to criticize the establishment of something so awkwardly named as the “Centre for Security Compliance Excellence”, it’s equally difficult not to ask whether the centre’s stated activities will simply constitute tasks the association should have been undertaking anyway.
Goals like developing a “culture of compliance” within the national security industry; establishing a methodology that integrates compliance, ethics, governance and risk into the fabric of security associations; implementation of professional compliance accreditation in the security industry through rigorous inspection and the establishment of a “national code” all sound like things ASIAL either has always been doing or should have been doing for many a long year.
Instead ASIAL’s cleverly crafted punishment “contribution” looks to me like it will fund an internal structure designed to turbocharge the association’s own long term goals of national control. It’s very hard for to see anything in the wording of the Centre’s primary activities that actually gives something back to the industry.
– John Adams, Editor