media release (17-061MR)

Sydney man committed to stand trial

Published

Mr John Lindsay Merity, 70, of Vaucluse in New South Wales has been committed to stand trial on charges arising from an investigation by the Australian Securities and Investments Commission (ASIC).

The charges were brought by ASIC following an investigation into the identities of holders of an interest in 17,376,120 shares in Northwest Resources Limited (Northwest) that were held by Craigside Company Ltd (Craigside) and Broome Enterprises Ltd (Broome Enterprises). Both Craigside and Broome Enterprises were companies incorporated in the British Virgin Islands and operating from Hong Kong.

ASIC alleges that between October 2009 and December 2011, Mr Merity made or authorised the making of false or misleading statements to ASIC in response to its enquiries into the identities of the parties who had an interest in the Northwest shares that were held by Craigside and Broome Enterprises, contrary to section 1308(2) of the Corporations Act 2001.

ASIC also alleges that in June 2010, Mr Merity attempted to destroy documents by giving instructions to delete electronic communications relating to ASIC’s investigation into holdings in Northwest shares, contrary to section 67(1)(a) of the Australian Securities and Investments Commission Act 2001 and section 11.1(1) of the Criminal Code 1995.

Each of the offences carries a maximum penalty of five years' imprisonment.

Mr Merity's trial will be heard before the District Court of New South Wales on a date to be fixed.

The matter is being prosecuted by the Commonwealth Director of Public Prosecutions.

Background

Northwest is an unlisted public company with Australian mining interests. Between December 2004 and August 2015, Northwest was listed on the Australian Securities Exchange.

In December 2011, ASIC obtained orders from the Federal Court of Australia restraining Craigside from disposing of, or exercising any votes or rights attached to, 15 million shares that it held in Northwest (refer: 11-303AD). At the time of those orders, Craigside’s parcel of shares represented approximately 11.46 per cent of Northwest’s issued capital.

In April 2014, ASIC obtained orders from the Court cancelling the 15 million Northwest shares held by Craigside (refer: 14-076MR). Those orders were made with Northwest’s consent and not opposed by Craigside. In seeking the orders, ASIC alleged that although Craigside was the holder of the shares, it did not have a relevant interest in them and that those that did had not disclosed that interest to Northwest, contrary to legislative requirements.

Under the Act, a person has a 'relevant interest' in shares if, among other things, they:

  • are the holder of the shares;
  • have power to exercise, or control the exercise of, a right to vote attached to the shares; or
  • have power to dispose of, or control the exercise of a power to dispose of, the shares.

Editor's note:

On 24 March 2017 the Downing Centre District Court listed the matter for trial to commence on 4 December 2017.

Editor's note 2:

On 9 November 2017, the District Court vacated the trial and listed the matter for mention at 10:00am on 19 January 2018 to set a new trial date.

Editor's note 3:

On 19 January 2018, the District Court listed the matter for a trial commencing on 22 October 2018.

Editor's note 4:

In November 2018, Mr Merity pleaded guilty to charges of giving false or misleading information to ASIC about shareholding (refer: 18-336MR).

 

Media enquiries: Contact ASIC Media Unit