05-91 Rodney Adler sentenced to four-and-a-half years' jail
Thursday 14 April 2005
Mr Jeffrey Lucy, Chairman of the Australian Securities and Investments Commission (ASIC), today announced that Mr Rodney Adler, a former director of HIH Insurance Limited (HIH), has been sentenced to four-and-a-half years’ jail, with a non-parole period of two-and-a-half years, on four charges arising from his conduct as a director of the HIH group of companies in 2000.
‘ASIC is fully satisfied and believes this sentence appropriately serves the public interest, and reflects the serious nature of the charges on which Mr Adler has been convicted’, Mr Lucy said.
‘The custodial sentence handed to Mr Adler sends a clear message to corporate Australia that ASIC, the community and the Courts will not tolerate criminal behaviour against the interests of shareholders.
‘Mr Adler was in a position of trust as a director of HIH but he put his own financial interests before the interests of HIH shareholders.
‘The law is very clear, company directors must act honestly and in the best interests of shareholders. The sentence delivered today by Justice Dunford shows how the courts will deal with directors who fail to uphold their legal duty’, Mr Lucy said.
In sentencing, Justice Dunford said:
The offences are serious and display an appalling lack of commercial morality…Directors are not appointed to advance their own interests but to manage the company for the benefit of its shareholders to whom they owe fiduciary duties…They were not stupid errors of judgement but deliberate lies, criminal and in breach of his fiduciary duties to HIH as a director.
‘It is in the public interest that time and resources are saved by defendants pleading guilty early and, as required, the judge has recognised this in the sentence. He also recognised that these types of matters are notoriously difficult to investigate and successfully prosecute’, Mr Lucy said.
‘ASIC would like to thank the Commonwealth Director of Public Prosecutions, who has worked closely with ASIC’s HIH Taskforce and prosecuted this matter in the courts’, he said.
Mr Adler was sentenced after pleading guilty on 16 February 2005 to four criminal charges:
- two counts of disseminating information on 19 and 20 June respectively, knowing it was false in a material particular and which was likely to induce the purchase by other persons of shares in HIH contrary to s999 Corporations Act 2001
- one count of obtaining money by false or misleading statements, contrary to s178BB Crimes Act 1900 (NSW)
- one count of being intentionally dishonest and failing to discharge his duties as a director of HIH in good faith and in the best interests of that company contrary to s184(1)(b) Corporations Act 2001.
Background
Today’s sentencing of Mr Adler follows ASIC’s successful civil penalty proceedings against him, which were commenced in 2001 and resulted in him being:
- disqualified from acting as a director of any company for 20 years
- ordered to pay compensation jointly with Adler Corporation Pty Limited and Mr Ray Williams of approximately $7 million, and
- ordered to pay a pecuniary penalty of $450,000. Adler Corporation Pty Limited was also ordered to pay a pecuniary penalty of $450,000.
ASIC’s HIH investigation has already led to criminal prosecutions of 9 former senior executives, including directors, of FAI, HIH and associated entities on 31 Corporations and Crimes Act charges. These criminal prosecutions include:
- On 23 December 2003, Mr William Howard, a former General Manager of HIH Insurance Limited, was sentenced to three years imprisonment, fully suspended on the basis of on-going assistance to the HIH investigation. Mr Howard had pleaded guilty to two counts of criminal misconduct, namely that he dishonestly received from Mr Brad Cooper approximately $124,000 in return for facilitating payments by HIH directly or indirectly in favour of Mr Cooper. Mr Howard also admitted facilitating a payment of $737,000 to a company associated with Mr Cooper knowing that the payment obligation had already been discharged.
- On 22 October 2004, Mr Bradley Cooper was committed for trial on six charges of corruptly giving a cash benefit to influence an agent of HIH Insurance Limited, namely Mr Howard, and seven charges of publishing a false or misleading statement with intent to obtain financial advantage. The trial is set down to commence on 1 August 2005.
- On 20 April 2004, Mr Charles Abbott, the former Deputy Chairman of HIH Insurance Limited, was charged with dishonestly using his position as a company director. The committal hearing is set down to commence on 30 May 2005.
- On 19 July 2004, Mr Timothy Maxwell Mainprize was committed for trial on charges of failing to act honestly in the exercise of his powers and discharge of his duties as an officer of FAI General Insurance Company Limited. He was also committed on one count of providing false and misleading information. His trial is set down to commence on 5 September 2005.
- On 19 July 2004, Mr Daniel Wilkie was committed for trial on charges of failing to act honestly in the exercise of his powers and discharge of his duties as an officer of FAI General Insurance Company Limited. He was also committed on one count of providing false and misleading information. His trial is set down to commence on 5 September 2005.
- On 19 July 2004, Mr Stephen Burroughs was committed for trial on charges of failing to act honestly in the exercise of his powers and discharge of his duties as an officer of FAI General Insurance Company Limited.
- On 15 December 2004 Mr Ray Williams pleaded guilty to three charges, namely of failing to properly exercise his duties as company director by signing a misleading letter to FAI Note Holders, giving investors misleading information in the HIH 1998-99 Annual Report and omitting information from a prospectus to raise up to $155 million for the takeover of FAI. Mr Williams is to be sentenced on Friday 15 April 2005.
- On 24 March 2005 Mr Terry Cassidy pleaded guilty to two charges of recklessly making false statements and one charge of recklessly failing to discharge his duties as a director for a proper purpose. There will be a sentencing hearing commencing on 19 April 2005.
End of release
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