LAWFUEL – Australia Legal Jobs & News – Mr Stuart Adrian Corp, of Subiaco in Perth, and Mr Brian Millwood Smith, of East Perth, were today sentenced in the District Court of Western Australia on a total of 29 charges brought by the Australian Securities and Investments Commission (ASIC).
Messrs Corp and Smith were each sentenced to three years in prison, to be released on a recognisance after serving 16 months. They had been found guilty by a jury in relation to the charges on Thursday 4 October 2007.
The charges, which arose from Messrs Corp and Smith’s conduct as directors of two Australian publicly-listed companies, formerly known as Hallmark Gold NL (Hallmark Gold) and Welcome Stranger Mining Company NL (Welcome Stranger), represents the first successful prosecution relating to the use of offshore entities to avoid disclosure of director’s interests.
The charges, brought under the Corporations Act, follow a complex investigation by ASIC in Australia and overseas into relevant interests in significant parcels of shares in Hallmark Gold and Welcome Stranger.
Messrs Corp and Smith were found to have:
• engaged in conduct concerning the undisclosed relevant interest in shares in Hallmark Gold and Welcome Stranger while they were directors of those companies;
• controlled shares through the use of offshore entities, and used those shares to vote on related party resolutions at general meetings of Hallmark Gold and/or Welcome Stranger which delivered them financial benefits; and
• provided false and misleading information to ASIC and the Australian Securities Exchange (ASX) in documents required to be lodged under the Corporations Law which should have showed that they had an interest in those shares.
Ms Jan Redfern, ASIC’s Executive Director of Enforcement, said, ‘The integrity of the market relies on directors of listed companies acting honestly and transparently.
‘The actions of Messrs Corp and Smith undermine confidence in the market and demonstrated a blatant disregard for the law.
‘Their jailing should send a message to company directors there are serious consequences for those who deliberately seek to get around the disclosure provisions and provide misleading information to the market’, she said.
Mr Smith was jailed in relation to:
• six charges of knowingly providing misleading information as to his relevant interest in shares to ASIC and the ASX;
• six charges of failing to act honestly and hereby breaching his duty as a director; and
• two charges of unlawfully permitting voting on related party resolutions at general meetings of the shareholders.
He had been found not guilty in relation to six further charges.
Mr Corp was jailed in relation to:
• seven charges of knowingly providing misleading information as to his relevant interest in shares to ASIC and the ASX;
• six charges of failing to act honestly and thereby breaching his duty as a director; and
• two charges of unlawfully permitting voting on related party resolutions at general meetings of the shareholders.
Mr Corp had been found not guilty in relation to six further charges.
The Commonwealth Director of Public Prosecutions prosecuted the matter.
Further charges against Mr Corp and Mr Smith arising from a joint ex-officio indictment remain on foot.
Background
The prosecution of Mr Corp and Mr Smith follows Mr Corp’s arrest in January 2004 in relation to charges under the Corporations Act and the ASIC Act. Further charges were brought against Mr Smith in a joint ex-officio indictment filed in July 2005.
ASIC alleged that Mr Corp warehoused shares in Hallmark Gold and Welcome Stranger through the use of offshore entities registered in the British Virgin Islands and Gibraltar, namely Courtenay Investments Limited, Davenrite Limited and Happle Limited.
ASIC alleged that Mr Smith warehoused shares in Hallmark Gold and Welcome Stranger through the use of an offshore trust named the Gold Coast Trust, which was administered by the Centurion Trust Company Limited of Jersey.
The ASIC Act charges were brought as a result of Mr Corp’s and Mr Smith’s conduct during the course of the ASIC investigation. ASIC alleges that Messrs Corp and Smith made false and misleading statements at compulsory ASIC examinations and obstructed or hindered ASIC. These charges remain on foot and are to be heard on a date to be fixed.
