Pharmaceutical giant, Johnson & Johnson, is unable to explain why it remains in breach of the Corporations Act – in multiple breaches in fact – and is yet to do anything about it. The corporate regulator, Australian Securities & Investments Commission (ASIC), has also failed to explain why it has done nothing about it.
PwC, which took $6.6 million over the past decade in fees for signing J&J’s financial statements, can’t explain it either.
This is typical of regulatory double standards. There is one rule for the powerful, another for the powerless. While small operators are pursued and fined by the Tax Office for failing to produce a BAS statement on time, multinationals breach the laws with impunity.
In its 2016 financial statements, Johnson and Johnson admitted it was required to file financial statements for seven Australian subsidiaries.
Section 319 of the Corporations Act says large proprietary companies must file their accounts within four months of the close of the financial year. Not to do so constitutes an “offence of strict liability”.
Schedule 3 of the Act: Penalties, Item 112, says the penalty for breaching Subsection 319 (1) of the Act is “60 penalty units or imprisonment for 1 year, or both”.
If a penalty unit is $170, and seven sets of financial statements are collectively 82 days late, Johnson and Johnson could be up for $97,580 in fines. Directors could even, at a stretch, face imprisonment.
But in Australian director-land, they hold little fear of regulatory reproach or reprimand. Johnson & Johnson declined repeated requests to respond for this story, as did ASIC.
After publication, Johnson and Johnson responded with a statement saying it was committed to best practice in corporate governance. It also said “the matter has been resolved”. Once this is confirmed we will publish the statement.