Wednesday 6 September 2006 06 – LAWFUEL – Australia Legal News – Former company secretary of HIH Insurance Limited (HIH), Mr Frederick Lo, has appeared in the Downing Centre Local Court in Sydney, New South Wales, on four charges arising from an Australian Securities and Investments Commission (ASIC) investigation.
Mr Lo is charged with: • making a materially false or misleading statement to officers of Westpac Banking Corporation with the intention of obtaining a financial advantage for FAI Insurance Limited on or about 26 May 2000. This false statement related to the availability of consolidated accounts of the FAI Group for the financial period ending 20 June 1999. These accounts were required to comply with a covenant under $150 million Medium Term Note Program between FAI Insurances Ltd and certain note holders.
ASIC alleges that in making the false statement, Mr Lo assisted FAI in avoiding the risk of the note holders calling in amounts owing under FAI Notes
• failing to properly exercise his powers and discharge his duties for a proper purpose as an officer of HIH by signing a letter on 19 October 2000 on behalf of HIH to Note Holders under the $150 million FAI Medium Term Note Program.
This letter misleadingly stated HIH managed FAI so that it complied with its obligations under the Note Program, despite being in breach of certain fundamental obligations
• acting with reckless disregard in making false or misleading statements to the Australian Prudential Regulation Authority (APRA) by not disclosing, contrary to the Insurance Act, that assets of CIC Insurances Ltd (CIC) were pledged to secure the liabilities of entities other than CIC between 12 May 1999 and 24 May 2000, and
• acting with reckless disregard in the making of a false or misleading statement on 22 November 1999 to APRA that CIC had exceeded the minimum solvency requirements of the Insurance Act by approximately $17 million, when, in fact, there was a deficiency of approximately $111 million. The matter was transferred to the Supreme Court for mention on 6 October 2006.
The Commonwealth Director of Public Prosecutions is prosecuting the matter. For further information contact: Allen Turton Deputy Executive Director, Enforcement Telephone: 02 9911 2338 Mobile: 0411 549 236 Emma Forehan ASIC Media Unit Telephone: 03 9280 3354 Mobile: 0409 702 310