THE former health minister Michael Wooldridge faces a ban from corporate life over his stint as chairman of the company that ran the failed retirement village group Prime Retirement and Aged Care Property Trust.
Dr Wooldridge, who was federal health minister between 1996 and 2001 and now sits on the boards of two listed companies, faces the ban as one of five former directors of Australian Property Custodian Holdings (APCH) targeted in legal action brought by the corporate watchdog.
The Australian Securities and Investments Commission alleges Dr Wooldridge and other directors of APCH breached their duties to investors by authorising the payment of a $33 million fee to managing director Bill Lewski when the trust listed on the ASX in 2007.
Investors pumped $550 million into the float, only to see Prime Trust collapse into administration in October 2010 after nervous lenders, led by the Queensland bank Suncorp, appointed receivers over its retirement villages.
Besides Dr Wooldridge, ASIC is seeking bans against Mr Lewski, the former business partner of murdered solicitor Max Green Peter Clarke, the head of the Victorian government's Urban Renewal Authority real estate agent Mark Butler and Kim Jaques, a former 7-Eleven franchising manager.
In an originating process filed with the Federal Court last week, ASIC alleges the directors "failed to act in the best interests of the members of the Prime Trust" and "failed to take all steps that a reasonable person would take" if in their position.
It has asked the court to ban them from managing corporations, make declarations they have breached the Corporations Act and order them to pay a pecuniary penalty.
ASIC has not said how long the bans should be or how large the penalties should be.
Mr Clarke told BusinessDay he was not aware of the lawsuit and denied ASIC's allegations. Mr Lewski's solicitor, Sam Bond, and Dr Wooldridge did not return calls while Mr Butler and Mr Jaques could not be reached.
A ban from corporate life would lead to Dr Wooldridge's ejection from the boardrooms of ophthalmology group Vision Eye Institute, Priceline franchisor Australian Pharmaceutical Industries, anti-wind farm group the Waubra Foundation, and the Royal Melbourne Tennis Club.
The Prime Trust Action Group, which claims to represent more than 70 per cent of unit-holders, welcomed ASIC's move but said more needed to be done. "It's a very useful first step, if nothing else - it's quite positive," the group's principal, Steve O'Reilly, said.