05-275 Former director of Clifford Corporation jailed
Tuesday 13 September 2005
Mr Jeffrey Lucy, Chairman of the Australian Securities and Investments Commission (ASIC) today noted that Mr John Barrie Loiterton, known as Barrie Loiterton, had been sentenced to three years in prison by the New South Wales Supreme Court following an ASIC investigation.
Mr Loiterton was jailed after pleading guilty to one charge of making a false or misleading announcement to the Australian Stock Exchange (ASX) in late 1998 while a director of Clifford Corporation Ltd (Clifford). At the time, Clifford was Australia’s largest manufacturer of heavy vehicles, such as buses and coaches. Mr Loiterton was ordered to serve a minimum of 18 months in prison.
Mr Lucy said company directors are expected to act honestly, and ensure that the information they provide to the market is true and correct.
‘ASIC will continue to vigorously pursue company directors who fail to uphold their responsibilities.’
‘The public is entitled to expect that they can trade in a fair and open market. ASIC will ensure that anyone who makes misleading statements to maintain or stabilise the market price of securities or induce persons to purchase shares is brought to account for their actions’, Mr Lucy said.
Mr Loiterton was a director of the Clifford Corporation Ltd Group of companies (the Group), which collapsed in late 1998, leaving creditors and shareholders with a deficiency in excess of $90 million.
The charge against Mr Loiterton arose from an announcement made by Clifford to the ASX on 21 October 1998, relating to the purported sale of Signature Group Australia Limited (Signature), one of the Group companies, to an American company IB Your Office International Holdings Inc. The announcement was misleading because it stated Clifford was to receive cash for its Signature shares when in fact, Clifford was to receive shares in the company IB Your Office International Holdings Inc. Further, Clifford had an obligation to locate buyers for the shares in IB Your Office International Holdings Inc.
On 11 November 1998, the ASX suspended trading in Clifford shares because of its failure to lodge its accounts. The company was placed in voluntary administration on 9 December 1998, and it soon went into liquidation.
Today’s result follows the conclusion of a civil penalty proceeding with penalty judgement handed down against Mr Loiterton on 30 September 2004. The civil penalty hearing was taken in 2003 against Mr Loiterton, Mr Ian Robert Hall and Mr Ian Sapier, also former directors of Clifford, and Mr Peter James Loiterton, a former director of Clifford’s subsidiary, Signature.
ASIC’s investigation, commenced in late 1998, disclosed that the directors of the Clifford Group and its subsidiaries entered into various fictional and non-commercial transactions, which had the effect of increasing the Group’s reported profit for the 1996-97 financial year.
In 2000, ASIC commenced proceedings in the NSW Supreme Court seeking declarations that Mr Loiterton and his co-defendants had contravened various provisions of the Corporations Act 2001(the Act). ASIC’s actions also sought penalties, banning orders and compensation orders.
Penalties were handed down by the Court on 30 September 2004. The penalties followed formal declarations by the Court on 17 May 2004 that each of the directors of Clifford, and Mr Peter Loiterton had contravened various provisions of the Act.
The Court found that Mr Loiterton had committed 29 breaches, including 13 acts of dishonesty, and on 30 September 2004 ordered that he be banned from managing a corporation for 17 years (from the date of his bankruptcy, 12 July 2002), pay a pecuniary penalty of $400,000, and pay a maximum of 70 per cent of ASIC’s costs.
ASIC did not pursue the compensation orders given that Mr Loiterton is an undischarged bankrupt.
Last Friday, 9 September 2005, Mr Ian Robert Hall was sentenced to two years and one month in prison, after pleading guilty to one charge of insider trading in late 1998 while a director of Clifford. Mr Hall was ordered to serve a minimum of one year in prison.
The Commonwealth Director of Public Prosecutions conducted the prosecutions and the sentencing of Mr Loiterton and Mr Hall.