Centro directors on notice

The civil suit launched by the Australian Securities and Investments Commission represents one of the most ambitious regulatory responses yet on behalf of stricken investors who were left exposed to companies that imploded in the financial crisis.

In its 90-page statement of claim, ASIC alleges that PwC partner Stephen Cougle told the Centro board's audit committee in September 2007 "that PricewaterhouseCoopers had signed off the full accounts".

That reassurance, and pressure from Centro's chief executive, Andrew Scott, about the "practical consequences" of delaying signing the accounts, were cited by ASIC as some of the events leading up to Centro's audit committee recommending to the main board that the accounts be approved.

ASIC contends that Centro directors knew, or should have known, when signing off the annual accounts that they were wrongly classifying more than $1.5 billion in Centro Properties and almost $600 million in the Centro retail trust, as long-term liabilities when they really needed to be repaid or refinanced within the year.

Mr Cougle's comment came in the wake of questioning by the head of the Centro board's audit committee, Sam Kavourakis, who wanted another two or three days to review the financial statements after submissions from the company's senior executives that said while several entities in the group had deficiencies of net assets at balance date, they were not insolvent and were able to pay their debts as they fell due.

Mr Kavourakis is one of the people ASIC is trying to have disqualified from managing companies and fined for their role in producing what it alleges were "material mis-statements" in Centro company accounts for the year to June 30, 2007.

The others are Mr Scott, former chairman Brian Healey, current chairman Paul Cooper, non-executive director Jim Hall, former non-executive directors Peter Wilkinson and Graham Goldie, and former chief financial officer Romano Nenna, who made the submission to the audit committee about the deficiencies.

Poor governance has been a growing concern among investors.

An ASIC review last year of the accounts of 100 companies raised concerns that several did not meet detailed disclosure requirements.

The regulator cited "poor disclosure of debt maturity profiles" as a particular issue.

Others likely to face scrutiny from ASIC include directors of Oz Minerals, which came under intense criticism for poor disclosure in relation to the timing of a major debt repayment, and the Allco Finance Group.

For infrastructure octopus Babcock & Brown, which collapsed this year with debts of more than $3.3 billion, ASIC's interest has centred on whether there was a breach of the Corporations Act after four directors resigned en masse within weeks of the company putting itself into administration.

ASIC has declined to comment on specific investigations.

Possibly in the spotlight for any future actions is Allco, which collapsed a year ago under the weight of $1 billion of debt. The actions of Allco's board are believed to be under investigation by ASIC, along with several deals leading up to its collapse.

While there is no suggestion of wrongdoing, the investigation is believed to be the key reason independent Allco director Rod Eddington opted not to take up the role of chairman at ANZ, given the potential for the probe to act as a distraction. Others on the Allco board at the time include chief executive David Clarke and acting chairman Bob Mansfield.

Allco deals being examined by ASIC include a move to full ownership of Rubicon property group in the second half of 2007 by way of a share issue and $63.7 million cash payments to investors including Allco's founder and then executive chairman David Coe.

The departures at Babcock & Brown, which include Elizabeth Nosworthy and Pat Handley, both long-standing and experienced non-executives, left it without a functioning board and any directors.

Meanwhile, Babcock's board is being investigated by administrator Deloitte over whether the company may have traded while insolvent.

PETER WILKINSON Centro: director 2004-09 Career: David Jones, Myer, Coles Myer

Former board memberships: Fone Zone, Galileo Shopping America Trust, David Jones

ANDREW SCOTT Centro: managing director and CEO 1997-2008 Career: Centro, Coles Myer, CT Retail Investment Trust Former board memberships: Galileo Shopping America Trust, CT Retail Investment Trust SAM KAVOURAKIS Centro: director 2003-09 Career: Centro, Coles Myer, National Mutual, Traffi c Technologies, Infosentials

Present board memberships: Australand Wholesale Investments Former board

memberships: Galileo Shopping America Trust, Ticor, Traffi c Technologies, Infosentials, Flinders Industrial Property, National Mutual, Collins House Financial Services Other memberships: Rio Tinto Staff Super Fund BRIAN HEALEY Centro: director 1993- 2008, chairman 2005-08 Career: Portfolio Partners, Incitec Pivot, Centro, Biota, CT Retail Investment Trust, Nambisco, Sara Lee Present board

memberships: Citipower, CGNU Australia, Prime Property Management Former board

memberships: Incitec Pivot, Galileo Shopping America Trust, Fosters Group, outhcorp, Prime Retail Group, Orica, Biota, CT Retail Investment Trust, Portfolio Partners PAUL COOPER Centro: director 2006-, chairman 2008- Career: Centro, AXA Australia Staff Super, Investec Wentworth, Chronworth Advisory, Freehill Hollingdale, Citadel Securix, Gane Corp Present board memberships: AXA Australia Staff Superannuation, NM Super Centro Retail Trust, Centro Shopping America Trust, Investec Wentworth, Chronworth Advisory, AXA Asia Pacifi c, National Mutual Life Association. Former board memberships: Citadel Securix, Investec Wentworth JIM HALL Centro: director 2005- Present board memberships: Centro Shopping America Trust, PaperlinX, Centro Retail, Alesco Corp, ConnectEast. Former board memberships: Symbion Health, Galileo Shopping America Trust, Mayne Group, Orica, Incitec, Affi nity Health Career: Orica, BHP Billiton GRAHAM GOLDIE Centro: director 1994- 2009 Career: Australian Discount Retail, David Jones, Just Jeans, Coles

Myer, Target Former board memberships: Galileo Shopping America Trust, CT Retail Investment Trust ROMANO NENNA Centro: chief fi nancial offi cer 2004-08 Career: Coles Myer, Prime Retail GroupSOURCES: CENTRO, BLOOMBERG