Penalties for Centro directors under fire

The head of the Australian Council of Superannuation Investors, Ann Byrne, said the financial penalty imposed on former Centro chief executive Andrew Scott was "much less than what he would have got in director's fees for one year" and she believed the non-executive directors deserved "something greater than bad publicity as a penalty".

"I think it sends a message to investors that in times when there clearly has been a lack of oversight the only people who must suffer a financial penalty are in fact the investors."

Ms Byrne, whose organisation provides corporate governance advice to superannuation funds that together control more than $300 billion, said the Centro board had failed to look after shareholders' interests.

"Therefore, as a representative of our funds, we have to question whether or not these particular directors will do that on any other company where they are in fact a member of the board," she said.

Centro said yesterday that Jim Hall and Paul Cooper, two of the directors who the Federal Court yesterday declared had breached the Corporations Act when approving company accounts in September 2007, would remain on its board.

Mr Hall is also a director of ASX-listed PaperlinX, Alesco and ConnectEast.

The other Centro directors declared to have breached the Corporations Act chairman Brian Healey, Mr Scott, Sam Kavourakis, Graham Goldie and Peter Wilkinson are no longer with the company.

Mr Scott has been ordered to pay a civil penalty of $30,000.

Australian Shareholders Association chief executive Vas Kolesnikoff said the Federal Court had "let down the entire community by imposing no penalty".

"Where the people see highly paid executives and directors found guilty of breaking the law, but no penalty is imposed, then it is no wonder that the legal community is seen to be out of touch," he said.

The Australian Institute of Company Directors said the decision raised important issues about how much directors could rely on the advice of management and external advisers.