ASIC lashed over light sentence

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 that it had misled the court.

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 that it had misled the court.

In a unanimous decision, the court said the Australian Securities and Investments Commission had presented a Supreme Court judge in 2012 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," Justice Harper said.

This latest decision pitches the Victorian Court of Appeal at odds with the full Federal Court over what role judges play in determining penalties when the court is presented with an agreed statement of facts and a proposed, agreed penalty.

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 former corrupt regime of Saddam Hussein in Iraq.

The $300 million of kickbacks were disguised as "fees" for trucking wheat from Iraq ports to inland silos. AWB received reimbursement via a UN program.

As part of settling his case in June 2012, Mr Ingleby admitted breaching his duties under the Corporations Act. The trial judge sliced the penalty that ASIC originally proposed, dropping it from $40,000 to $10,000 and cutting the length of Mr Ingleby's corporate ban from 15 months to just four and a half months.

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

"However, to his very great credit, he refused to 'rubber stamp' an 'agreed penalty'," appeals court judge Mark Weinberg said.

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