AICVIC “Strongly Recommends” Against Corruption?

Peter Mericka B.A., LL.BOPINION
by Peter Mericka B.A., LL.B
Real Estate Consumer Advocate
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd
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If the head of a police force or a government department were to attack entrenched corruption by telling its members that it “strongly recommends” that they refrain from involvement, one would question whether the organisation was serious.It's not enough to just "strongly recommend" against corruption!

In earlier postings I have attacked the Australian Institute of Conveyancers (Victorian Division) (AICVIC) not only for failing to take action to stem the spread of client-trafficking corruption in the real estate conveyancing industry, but also for advising its members in a manner which, in my opinion, is calculated to condone and encourage the problem. See previous postings:

Licensed Conveyancer Corruption Must Be Stopped and

Licensed Conveyancers – A Serious Risk For Consumers

On 24 November, 2008 I emailed every committee member of the Australian Institute of Conveyancers (Victorian Division) as follows:

“I note that the AICVIC website includes a PDF document titled “Startup Kit”, and which advises those interested in commencing a conveyancing business, “When commencing your business and establishing contacts you may consider paying referral fees…”  I believe that this statement suggests to newcomers to the industry that this practice is the norm, that AICVIC condones the practice, and that AICVIC seeks to warn newcomers to take care when paying for referrals.

I request that, as the AICVIC committee, you take a leading role in banning the corrupt and unethical practice of client trafficking.”

On 4 December, 2008, having received no response from any of the AICVIC committee members, I sent the following email:

“I refer to my previous email and advise that it is my intention to write a further article about the role of AICVIC in real estate corruption in terms of condoning the payment of “referral fees” by licensed conveyancers to estate agents.

I intend to state the following in an upcoming article:

“It is my belief that the committee members of AICVIC are reluctant to remove reference to the payment of “referral fees” from the Startup Kit published on the AICVIC website for fear of appearing hypocritical.  This is based on the assumption that the committee members follow their own advice and are loathe to criticise others who have done the same.  Before publishing this article I emailed each of the AICVIC committee members and invited them individually and collectively to confirm or deny that they have each, at some stage in their conveyancing careers, made gifts to estate agents of cash, lunches or goods in return for client referrals.  Not a single committee member responded.”

If you do wish to respond, please do so within the next 7 days, as I will be publishing my article in a week’s time.”

On 6 December, 2008 I received the following response from Ms. Jill Ludwell, President of the Australian Institute of Conveyancers and CEO of the Australian Institute of Conveyancers (Victorian Division):

“Your interpretation of what was on our website in 2002 does not reflect the actual position of the AIC but merely preliminary advice to conveyancers.   Although we disagree with your interpretation we are changing our website to better reflect the Institute’s policy…We do however agree with your stance on the payment of referral fees and the AIC strongly recommends against it’s Members offering “kickbacks”, referral fees and commissions (secret or otherwise).”

I immediately responded as follows:

“I remind you that the AIC’s advice to would-be conveyancers for the best part of this decade has been,

“When commencing your Business and establishing contacts you may consider paying Referral Fees. Whilst this is your decision you should remember that depending on how you conduct this, it may constitute an offence under the Crimes Act.”

Any reader of this advice from the AIC would be entitled to believe that the AIC accepts the reality of corrupt client trafficking, and leaves it to the individual AIC member to decide as to whether or not they should participate in this insidious practice.

While I congratulate AIC for agreeing to remove this material from its website, I must again condemn its failure to take positive action to halt the spread of client-trafficking.  It is simply not good enough for the “peak representative body for conveyancers” to “strongly recommend” that its members avoid participating in corrupt, unethical, and illegal behaviour.

If the AIC is to be seen as taking a genuine stance against corruption and criminal conduct in the industry it must clearly confirm to all of its members that the payment of “referral fees” is corrupt, unethical and illegal.  It should prohibit its members from participating in this corrupt practice, and back this up with expulsion from the AIC.

Of course, members of AIC may resist calls for reform if their businesses are heavily reliant on client trafficking, or if the AIC’s leadership is known to be, or to have been, involved in client trafficking.  I note that when I asked each member of the AIC Committee to admit or to deny their individual involvement in client trafficking, not a single committee member made any denial.”

It seems to me that the Australian Institute of Conveyancers (Victorian Division) (AICVIC) fails to comprehend that corruption is profoundly wrong, and cannot be tolerated to any degree. A corruption policy whereby, as Ms. Ludwell puts it, “the AIC strongly recommends against it’s Members offering “kickbacks”, referral fees and commissions (secret or otherwise)” is not a policy at all – it’s a cop out.

My advice to Ms. Ludwell and the Committee of the Australian Institute of Conveyancers (Victorian Division) is that they should immediately set up an ethics committee, similar to that operating within the Law Institute of Victoria. The first task of the AICVIC Ethics Committee should be to clearly identify the various forms of corruption in the conveyancing industry and to issue a clear statement condemning them. The Ethics Committee should then educate AICVIC members on acceptable forms of marketing, and provide an advisory service to guide members who are unsure of their ethical position in any given situation.

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