Hastie directors 'may have breached duties'
HASTIE Group failed due to poor management of its international operations, and its directors may have breached their duties, a second creditors' report on the collapsed company by administrator PPB says.
A 10-bank syndicate owed more than $500 million is unlikely to recover all its money and unsecured creditors will get nothing, but employees have been paid entitlements thanks to a government scheme.
Former directors may be questioned in court by the administrators over Hastie's financial statements, corporate governance, and the possibility it was trading insolvent.
"We have reported to ASIC the possible breaches of directors' duties and, where relevant, the failure to provide required statutory reports to the administrators," PPB's Ian Carson, Craig Crosbie and David McEvoy said, adding that there "appears to have been a general culture of ignoring bad news" within Hastie.
It found the company's audit and risk committee was "largely inactive" and the board did not have an "inquiring mind" until Bill Wild was appointed chief executive in 2011.
The audit and risk committee in mid-2011 contained Harry Boon, currently chairman of Tatt's Group, former Hastie chairman Trevor Bourne, and Philip Anderson.
PPB's latest report also found the company's auditor, Deloitte, may have breached Australian Auditing Standards by failing to identify and warn the board about management and control issues that led to $100 million of impairments in early 2012.
The administrators recommended to creditors that all Hastie Group companies be placed into liquidation. They said they did not expect Hastie Group's banking lenders, which include Australia's big four banks, to receive sufficient funds to cover debts of about $530 million. "Accordingly, we do not expect any surplus funds from the receiverships will be available for distribution to ordinary unsecured creditors," the administrators said.
About 7000 people were employed by the Hastie Group globally when it went into administration on May 28, 2012. To date nearly 2000 employees have received $27.4 million from the federal government's employee entitlement program and a further 350 are expected to claim money. Entitlements for a further 1523 employees have been preserved.
PPB's preliminary findings raised concerns the Hastie Group's books and records "do not correctly explain the Hastie Group's financial performance and position" and may have led to a presumption of insolvency. It has referred several concerns to the corporate regulator, including seven potential breaches of directors' duties, and recommends a liquidator continue the investigations.
The second creditors' meeting will be held at different venues across Australia on January 30 and 31.