ASIC cops flak over settlement
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".
Frequently Asked Questions about this Article…
The Victorian Court of Appeal issued blistering criticism of the corporate regulator, saying the agreed statement of facts used to settle the case against ex-AWB CFO Paul Ingleby underplayed the seriousness of his conduct. The court stopped short of saying ASIC had misled the court but said the statement left a less-than-sound basis for penalty decisions.
Paul Ingleby was the chief financial officer of AWB and one of six former executives facing civil penalty proceedings. As part of settling his case in June last year, he admitted breaching his duties under the Corporations Act.
The article estimates about $300 million of kickbacks were paid from 1999 to 2003 to the corrupt former regime of Saddam Hussein in Iraq.
The kickbacks were disguised as 'fees' for trucking AWB wheat from Iraqi ports to inland silos, and AWB was reimbursed for these fees via the UN's humanitarian oil-for-food program.
ASIC originally proposed a $40,000 penalty and a 15-month corporate ban. The trial judge reduced the fine to $10,000 and cut the ban to four and a half months.
The appeals court restored ASIC's original penalties — a $40,000 fine and a 15-month ban — ruling that because the agreed statement of facts downplayed the seriousness of Ingleby's conduct, the lower court judge was left in a difficult position.
Justice David Harper said the agreed statement did not present an accurate assessment of Ingleby's role, 'watered down' his culpability, failed to discuss harm to Australia’s reputation and to AWB, and did not explain how he could remain ignorant of serious fraud by others at AWB.
No. The appeals court issued strong criticism over how the case was settled and the agreed facts, but it stopped short of finding that ASIC had misled the court.
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