media release (15-099MR)

ASIC disqualifies former directors of Reed Constructions Australia Pty Limited

Published

ASIC has disqualified Mr Geoffrey Vere Reed and Mr Derry Bernard Hill, both of Sydney from managing corporations. Mr Reed is disqualified for three years and two months and Mr Hill is disqualified for one year. Mr Reed has already been disqualified for 14 months by reason of entering into a personal insolvency agreement. The disqualification follows an ASIC investigation which found Mr Reed and Mr Hill had breached their duties as directors.

Mr Reed was a director of Reed Constructions Australia Pty Limited (RCA), as well as a number of other entities, including RST Nominees Pty Limited (RST). Mr Reed was a director of RCA from 21 August 1987 to 21 May 2014.  Mr Hill was a director of RCA between 16 July 1998 to 24 February 2012. RCA went into administration on 15 June 2012 and into liquidation on 9 July 2012.

ASIC's investigation found Messrs Reed and Hill failed to exercise their powers and discharge their duties as directors of RCA with the degree of care and diligence required. ASIC found that they:

  • failed to ensure RCA held retention monies in a separate trust account, as required by a NSW Government contract
  • permitted RCA to make false statutory declarations to the NSW Department of Roads and Maritime Services representing that RCA had complied with its contractual obligations in relation to security of payment of employees and subcontractors
  • permitted RCA to use cash for purposes other than paying employee entitlements and tax.

In addition, ASIC found Mr Reed had also:

  • failed to ensure RCA dealt with trust monies in accordance with its contractual obligations
  • caused RCA funds to be paid to a related entity during a period in which there was reason to suspect the company was insolvent. 

In relation to RST, ASIC's investigation found Mr Reed failed to exercise his powers and discharge his duties as a director with the degree of care and diligence required.  

ASIC Commissioner John Price said, "Directors have a responsibility to manage the financial affairs of their company in accordance with the law. As this case shows, directors who cause or permit their company to breach legal obligations can face significant consequences."

Mr Reed and Mr Hill have the right to appeal to the Administrative Appeals Tribunal (AAT) for a review of ASIC's decision.

Background

In 2008 RCA secured major contracts with the NSW Government including contracts to the value of approximately $380 million with the NSW Government Department of Education and Communities. These were for building projects across 335 NSW schools part of the Federal Government's 'Building the Education revolution' program and contracts with the NSW Government Department of Roads and Maritime Services to the value of approximately $230 million.

The contracts required RCA to use the NSW Government's GC21 subcontract for the purpose of engaging its subcontractors.

RCA was wound up with an estimated deficiency of $183 million.

Editor's note: 1 

On 28 May 2015, both Mr Reed and Mr Hill filed applications at the AAT seeking a review of ASIC's decisions.

Editor's note 2:

On 21 March 2017, the AAT set aside ASIC's decision to disqualify Mr Hill from managing corporations and ordered that no disqualification order be made (refer: 17-079MR). 

Editor's note 3:

On 23 June 2017, the AAT affirmed ASIC's decision to disqualify Mr Reed from managing corporations.

Media enquiries: Contact ASIC Media Unit