Friday 1 December 2006 LAWFUEL – Law News, Law Jobs – Mr Jeffrey Lucy, Chairman of the Australian Securities and Investments Commission (ASIC), announced that Mr Antony (Tony) Boulden, a former Financial Controller of the Corporate and Professional Insurance Division of FAI General Insurance Company Limited (FAIG), was today sentenced to imprisonment for a term of 12 months to be served by way of periodic detention. Mr Boulden, 42 years of age, was sentenced after earlier pleading guilty to one count of being privy to the fraudulent altering of a book affecting or relating to the affairs of FAIG.
The charges related to entries recorded in the general ledger of FAIG, which had the effect of reducing claims estimates by approximately $5.5 million. Claims estimates are an estimate of the amount that FAIG would be required to pay out to meet outstanding insurance claims. The improper reductions to claims estimates were ultimately reflected in the financial results released by the FAI Insurances Group to the Australian Stock Exchange Limited for the half year ended 31 December 1997. The FAI Insurances Group reported an operating profit before tax of $3.175 million.
Without the improper reductions totalling approximately $5.5 million, the FAI Insurances Group would have recorded a loss of approximately $2.325 million. In sentencing, His Honour Justice Whealy said, ‘His criminality lies in the fact that he did not resist the urgings of his superiors but went along with them, no doubt influenced by the general culture of dishonesty within the corporate group. Additionally, he was, at least, the architect of the means by which the alteration to the record was to be effected’. Justice Whealy noted that the element of general deterrence is ‘…an especially important matter in crimes such as the present because of the need to mark out to employees of companies who hold office at the level of seniority of the offender that they have a social and moral obligation, as well as a statutory duty, to act honestly and responsibly’.
‘Financial controllers and other company officers have a very important obligation to ensure that financial information provided to the market is accurate and can be relied upon’, Mr Lucy said. ‘The jailing of Mr Boulden shows there are significant consequences for company officers who knowingly allow false and fraudulent information to be made publicly available. ASIC will act to protect the integrity of information in the market by ensuring that officers who fail to abide by this fundamental obligation are brought to account’, Mr Lucy added.
The matter was prosecuted by the Commonwealth Director of Public Prosecutions. Background Mr Boulden is the seventh person to be sentenced in relation to charges brought by ASIC as part of its investigation into the collapse of the HIH Group of companies and referrals made after the HIH Royal Commission. This now brings to a total of six persons to have received a custodial sentence, including Mr Ray Williams, former Chief Executive Officer of HIH Insurance Limited (HIH), Mr Rodney Adler, a former director of HIH, Mr Terry Cassidy, the former Managing Director of HIH and Mr Bradley Cooper, the former Chairman of the FAI Security Group, which had dealings with the HIH Group. Of the seven people who have been sentenced all, except Mr Cooper, have pleaded guilty to the charges brought by ASIC.
Criminal proceedings have also commenced against a further five people, including Mr Dominic Fodera, the former Chief Financial Officer of HIH, Mr Geoffrey Cohen, former HIH Chairman, Mr Frederick Lo, former HIH Company Secretary, (who has pleaded guilty and is scheduled for a sentencing hearing on 18 January 2007) and Messrs Daniel Wilkie and Ashraf Kamha, former officers of FAI General Insurance Company Limited. A criminal charge against Mr Charles Abbott, the former Deputy Chairman of HIH, was dismissed and a jury was directed to acquit criminal charges against three FAI company officers, Mr Timothy Maxwell Mainprize, Mr Daniel Wilkie and Mr Stephen Burroughs. In addition to its criminal proceedings, ASIC also successfully brought a civil penalty action against Messrs Adler, Williams and Fodera, who were found to have breached their duties under the Corporations Act. Messrs Adler and Williams were banned from acting as a company director and were ordered to pay aggregate compensation totalling nearly $8 million to HIH Casualty and General Insurance Limited (together with Adler Corporation).
All three men also received various pecuniary penalties. For further information contact: Allen Turton Deputy Executive Director Enforcement Telephone: 02 9911 2338 Mobile: 0411 549 236 Angela Friend ASIC Media Unit Telephone: 03 9280 3338 Mobile: 0412 058 800
