Constitutional Law

The Secret Dealings Act 2012 of Australia provides that“any person who without his employer’s knowledge accepts a reward or pays a reward for any favor shown or to be shown in connection with his employer’s business in the course of or in relation to trade or commerce with other countries or among the states will be reliable for punishment.” The ongoing legal transformations in Australian industrial and commercial law have opened the business and commercial environment to the scrutiny by courts. This enables people dealing in questionable activities for personal or corporate gains to liable for punishment. The recent case is that of one Mr. David Ellery a former Chief Financial Officer of Securency who was sentenced for 6 months imprisonment by the Supreme Court of Victoria for one count of false accounting contrary to section 83(1)(a) of the Crimes Act 1958 (Vic) (Latimer, 2012).

This therefore indicates the seriousness with which Courts in Australia are starting to give commercial and business crimes. In the case of employee S and employee Y, their activities involving the trading of pianos between Piano Distributors and a sole trader presented a conflict of interests by the employees of the two businesses. Their agreement for distribution of pianos between their employers and the fact that they were brothers presented a violation of the law as stipulated in the Secret Dealings Act 2012 of Australia. This paper presents the advice given to S and Y in the case involving their agreement which ultimately resulted into them benefiting unfairly from their employers.

Advice to S

According to Boatright (2002), conflicts of interest in business dealings are bound to arise when care is not taken when dealing with individuals or companies. A conflict of interest can emanate from a link between two or more individuals, in this case employee S and employee Y, or organizations, or even involving a person and an organization. Another important thing in the case is the fact that the conflict of interest that arose from the agreement of S and his brother Y simply involved a business relationship but not an action that was consciously meant to defraud the two employers. Therefore, employee S can successfully argue that their agreement for the distribution of pianos did not amount to the violation of law since it was only a business relationship that was mainly aimed at benefiting their employers.

On the other hand, the case at hand presents a situation of conflict of interest where employee S has a double interest in dealing with the brother S to sell pianos to the sole trader (Boatright, 2002). First, employee S is in contravention of the marketing contract that probably covered the cost of marketing pianos in Australia. By directly allowing his brother to have the pianos for his employer, employee S intended to benefit from the marketing expenses by not actually engaging in any marketing. This means that he does not spend any money on marketing. This is contravening the agreement with the supplier and amounts to fraud punishable both by the law and the employer. The second mistake involves the conspiracy to defraud the Y’s employer through kickbacks and greater commissions on the sale of pianos with the brother. As per the provisions in the Act, S evidently engaged in activities that violated the agreement he had with his employer Piano Distributors on the distributorship of the pianos from the supplier in Germany. Besides engaging in activities outside the scope of his job description, he also put at risk the contract agreement that the Piano Distributors had with the supplier on the marketing and distribution of the pianos in Australia (Wyld, 2012).

Another area of argument of employee S is that he can appeal that his activity with his brother S did not result in the employer making any loses financially and therefore he is not reliable for any punishment. According to Bedford(2012), a given conflict of interest in the commercial dealings is neither good nor bad unless it results in the financial gains of loses to the parties involved. In the matters involving the marketing costs, employee S can argue that the money was already spent on marketing and therefore whatever he did with the money should not be the concern of his employer as long as the pianos were supplied on time and effectively.

Moreover, this argument can be premised on the fact that employees involved in the marketing can come up with creative ways that will enable their employers to make huge sales in the shortest time possible thus benefiting the employer. As such, employee S is supposed to be rewarded for the efforts of looking for the market and being able to supply the pianos as quickly as possible.  S can also prove to the employer and the prosecution team that the involvement in the activities did not interfere with his perceptions about his objectivity and independence in doing business on behalf of the employer. In this case, there is no an explicitly or implicitly exposed danger to Piano Distributors, which is a threshold for prosecution of fraudulent commercial activities. Piano Distributors did not suffer any consequences from the agreement as the supplier in Germany did not show any interest in cancelling the contract with Piano Distributors.  Ultimately, in his appeal, employee S can argue that in fact there was no conflict of interest because there was no harm done to Piano Distributors, Germany supplier, or the sole trader in Ryde (Cytraus, 2012).

The final advice that I could give to S is that, upon the involvement of the Germany supplier in the case, he was not subject to punishment under the Constitution that matters involving overseas trade and commerce did supersede the domestic or local trade and commerce and therefore were subject to the Commonwealth law pursuant to section 5(i) of the Constitution (Latimer, 2012). In this case, there is need to make the distinction between the types of case at hand and therefore a consideration of what is provided in the Constitution must be respected and followed by the prosecution team. This will definitely be done in the spirit of eliminating flawed preconceptions from the prosecution team concerning the dealings between the two brothers.

Advice to Y

Employee Y is reliable for prosecution upon the violation of the provisions in the Secret Dealings Act 2012 of Australia. One of the mistakes that the employee did was the failure to inform his employer about the agreements he has made with his brother in which employee S was to consign all grand pianos to Y’s employer’s business without the knowledge of the employer. In the end, employee Y received greater commissions plus the base salary from his employer. In this case, Y engaged in private interest dealings that led to him exclusively to get benefits that were a result of the conflict of interest between him and the brother. However, the dealings between Y and S did not result into his gaining of improved employment, business referrals, or even higher social positioning and therefore do not sufficiently fit the definition of private interest. However, employee Y failed to act in the best interest of his employer by engaging in activities that definitely defrauded the employer through payment of higher commissions. The employee however, can argue that his employer did suffer no harm in the dealings and in fact enjoyed higher supplies which translated to him making higher profits (Tomasic, Bottomley & McQueen, 2002).

The matters involving employee Y can only be prosecuted under the domestic and local laws and there should be reference to the commonwealth laws that would have protected him from the provisions of the Secret Dealings Act 2012 of Australia. Upon conviction employee Y has the chance to appeal on the ruling of the court by citing that the involvement with his brother on the supply of pianos to his employer did not amount to the definition of economic or commercial crimes as defined in the Act. As a first offender, he is qualified for leniency in the application of the law by the court given that his employer or the third party did not incur any loss from the agreement between him and employee S. Since the sole trader did not also present himself as an interested party to the case, it can be argued that Pianos Distributor has no legal foundation to bring charges against employee Y in courts as he only acted as the client of the company and not an employee of Piano Distributors. In any case, his agreement with employee S who happens to be his brother was not intended at defrauding any employer, much less Piano Distributor who provided employment opportunity for his partner in business (Tomasic, Bottomley & McQueen, 2002).

With regard to the provisions in the Constitution concerning the dealings that are questionable, I can advice employee Y to consider filing an appeal against the charges in court on grounds that the prosecutor did not follow the right procedure by allowing Piano Distributor to bring charges against employee Y without any evidence that the plaintiff had suffered a loss or sustained any commercial harm a result of the agreement between S and Y (Cytraus, 2012). The court should also consider the fact that in making the agreement with the employee S, no domestic or overseas commercial and trade laws were violated. In any case, the threshold for the commission of a commercial crime was not met because neither of the parties was harmed by the agreement. Therefore, the court should be able to assess the appeal and declare the claims by the prosecution as null and void as there was no breaking of law.  If the court determines employee S and Y conspired to defraud their employers, then I advice that employee Y should plead for leniency in the sentencing because they are first offenders and did not have explicit intention of defrauding their employers (Wyld, 2012).


The case at hand presents a situation where there is a flawed preconception of conflict of interest by the prosecution that the brothers in the agreement concerning the supply of pianos. In real sense, there was no harm that was inflicted to Piano Distributors, German manufacturer and a New South Wales manufacturer, and the sole trader in Ryde. At least as far as the facts presented in the prosecution are concerned. Moreover, the case involves the overseas trade and commerce thus requires application of the Commonwealth laws which supersedes the Secret Dealings Act of 2012 as outlined in the Constitution. My advice therefore to the two employees emphasizes the need to reevaluate the facts as presented by the prosecution team with the view of identifying inconsistencies with the interpretation and application of the law both in the domestic and local trade and commerce, and in the overseas commercial and trade laws. The underpinning factor in the application for their appeal should be the reference to the Constitution and consideration over the effects that a different interpretation will have on the evidences presented by the prosecution team.

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