ASIC cops flak over settlement

The Victorian Court of Appeal has issued a blistering criticism of the corporate regulator for the way it settled a case against the former chief financial officer of AWB over the Iraq kickbacks scandal, stopping just short of saying it had misled the court.

In a unanimous decision, the court said the Australian Securities and Investments Commission had presented a Supreme Court judge last year with an agreed statement of facts that underplayed the seriousness of the conduct of former AWB executive Paul Ingleby.

The appeals court said the agreed statement "did not present an accurate assessment of Mr Ingleby's role in the enterprise" and "represented, at the very least, a watered-down version of Mr Ingleby's true level of culpability".

Justice David Harper said the agreed statement was "a less than desirably sound basis" upon which to base penalties as it did not discuss the harm caused to Australia's reputation as a result of the kickbacks, the harm caused to AWB, and it did not explain "how Mr Ingleby could remain ignorant of the serious fraud being committed by others in AWB".

"The upshot is that the statement of agreed facts does not place the court in a position from which it can properly discharge its constitutional responsibilities," he said.

Mr Ingleby was one of six former AWB executives who faced civil penalty proceedings for allowing AWB to pay kickbacks from 1999 to 2003 to the corrupt former regime of Saddam Hussein in Iraq.

The estimated $300 million of kickbacks paid over four years were disguised as "fees" for trucking AWB wheat from Iraqi ports to inland silos. AWB was reimbursed for these fees via the UN's humanitarian oil-for-food program.

As part of settling his case in June last year, Mr Ingleby admitted breaching his duties under the Corporations Act. The trial judge sliced the penalty that ASIC originally proposed, from $40,000 to $10,000, and cut the length of Mr Ingleby's corporate ban from 15 months to 4½ months.

ASIC appealed the lightness of the sentence. The appeals court has now imposed the original penalties of $40,000 and a ban of 15 months, saying that because the statement of agreed facts played down the seriousness of Mr Ingleby's conduct, the lower court judge was left "in a difficult position".