Behind the sickening video footage of thousands of sheep, dead and dying of heat and thirst aboard the Awassi Express in the Middle East last year, is the company Emanuel Exports Pty Limited.
Emanuel Exports, a Liberal Party donor, is apparently Australia’s largest live sheep exporter, claiming it exports more than one million sheep a year to the Middle East. And behind Emanuel Exports is a story of perennial regulatory failure. So often, regulatory failure begets corporate failure.
In this case, the regulator is the Federal Department of Agriculture and Water Resources. The Department has finally clicked into gear, sending Emanuel Exports a show-cause notice a few weeks ago, and it is understood lawyers for the company sent back a 30-page response about two weeks ago.
It is supposed to act as a regulator of live animal exports and it has clearly failed. Only now the have the ambulances arrived at the scene and there is an investigation afoot into breaches of the Meat and Livestock Industry Act, the Export Control Act and the Criminal Code Act.
For years however, Emanuel Exports appears to have been breaching the Corporations Act with impunity.
As is so often the case – whether it be royal commissions into the banks and institutional child abuse, or thousands of other prosecutions over the recent decades – it is only media coverage which has driven regulatory action.
Gatekeepers missing in action again
Emanuel Exports Pty Limited is an old company which was registered in 1955. The corporate database of the Australian Securities & Investments Commission (ASIC) does not show any records for the company before 1990. Have these records been lost, or were 35 years of documents never filed in the first place?
The company enjoyed an exemption known as “grandfathering” – also fortuitously won by many of Australia’s wealthiest family companies – which means it was not required to place its annual accounts on the public record provided it meets certain conditions which includes having its accounts audited every year.
It seems Emanuel Exports must have lost its grandfathered status some time ago because the company lodged annual accounts for June 30, 2006 with ASIC on March 2, 2007, which had been audited by KPMG. As is also invariably the case, the Big Four “guardians of commerce”, the auditors, have also failed yet again.
Emanuel Exports has not lodged any more annual accounts with ASIC since then. Prima facie, this company has at least eleven years of missing accounts and therefore total failure of accountability to the public since 2006.
Were penalties enforced, fines and director bans as stipulated in the Corporations Act? Probably not. Why not? The fish rots from the head. Even the nation’s elite business lobby, which preaches and cajoles politicians on policy and good governance, has failed to comply with the company laws and has got away scot free.
BCA investigation: power of the business lobby in Australia
Eleven breaches in 20 years by the BCA and nary a penalty to show for it. But try being a small business and fail to lodge on time; see what happens.
And what of the “gatekeepers”?
According to ASIC’s company extract for Emanuel Exports, the company does not currently have an auditor. If this is true, it is extraordinary for an outfit described as Australia’s largest live sheep exporter.
The company extract also shows the auditor from June 1990 to June 1998 was Ernst and Young. KPMG appears to have been removed as auditor shortly after the annual accounts for 2006 were filed.
Graham Daws, the managing director of Emanuel Exports, was recently inducted into the LiveCorp Hall of Fame after being presented the Lifetime Achiever Award at the LIVEXchange gala dinner in November 2017, held shortly after the video footage was shot but before it was shown on national television.
If regulatory actions were as frequent as industry awards, the corporate sector might provide a tidy income stream for regulators. Rising compliance might entail better corporate behaviour too. Penalties however, even though they are enshrined already in legislation, are very rarely enforced.
Besides enforcing fines and director bans, reform must run deeper. There should be no KPIs or bonuses for regulator bosses, as is the case with ASIC. These merely enforce official obeisance to whoever is running the agency, and for their political overlords.
Instead of enacting draconian espionage laws which can plonk whistleblowers and journalists in jail, as is happening right now, bureaucracy ought to be quarantined from politics.
Good deeds ought to be rewarded not penalised. Independence ought to be cherished, not attacked.
A few years ago, we looked at the nexus between regulator failure and corporate failure. It is undeniable. Of 26 big players in the construction industry, 18 failed to lodge their annual accounts within four months of the end of the year, in compliance with the law. A number, such as Kell & Rigby and Reed Constructions, bit the dust.
What happens to creditors? Why are they not availed of the requisite public information which allows them to make a decision about whether to deploy countless hours working for a company which might never pay them? What will happen to the creditors of Emanuel Exports who have been in the dark for so long? Family companies, suppliers?
Prevention is always preferable to cure. In the present political climate however, legislative energy is seemingly directed at supporting ideological friends (big business tax cuts) and attacking ideological adversaries (the espionage bill) rather than defending the public interest and preventing corporate disasters.
The soft underbelly of the regulator