Ms Jan Redfern, Executive Director of Enforcement at the Australian Securities and Investments Commission (ASIC), has welcomed today’s decision in ASIC’s civil penalty proceedings against former directors of Clifford Corporation Limited (Clifford), Mr John Barrie (Barrie) Loiterton, Mr Ian Robert Hall, Mr Ian Sapier and a director of a Clifford subsidiary, Signature Group Australia Limited, Mr Peter James Loiterton.

In relation to Mr Barrie Loiterton, the Court today 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.

In relation to Mr Hall, the Court ordered that he:

• be banned from managing a corporation for 14 years (from the date of his bankruptcy, 16 May 2002), pay a pecuniary penalty of $285,000, and pay a maximum of 60 per cent of ASIC’s cost.

In relation to Mr Sapier, the Court ordered that he:

• be banned from managing a corporation (other than two nominated companies associated with his accounting practice) for eight years, from 30 September 2004, pay a pecuniary penalty of $120,000, pay a maximum of 30 per cent of ASIC’s costs, and pay compensation of $120,000 to Clifford Corporation Limited (in liquidation).

The Court ordered that Mr Peter Loiterton pay a maximum of 2 per cent of ASIC’s costs, but declined to make any other orders against him.

ASIC did not pursue compensation orders against Mr Barrie Loiterton and Mr Hall, which were part of ASIC’s original application, as both Messrs Loiterton and Hall became undischarged bankrupts during the proceedings.

Today’s penalties follow formal declarations by the Court on 1 April 2004 that each of the directors of Clifford, and Mr Peter Loiterton had contravened various provisions of the Corporations Act.

At that time, the Court found that Mr Barrie Loiterton had committed 29 breaches of the Corporations Act (including 13 acts of dishonesty), Mr Hall had committed 32 breaches (including 12 acts of dishonesty), Mr Sapier had committed 18 breaches (including two acts of dishonesty), and Mr Peter Loiterton had committed two breaches.

‘Today’s result sends a very clear message to company directors that they must act honestly, and ensure that the information they provide in financial records is true and correct’, Ms Redfern said.

‘ASIC regards the failure of directors to abide by their duties by operating financial records that deliberately flout the law, very seriously. ASIC conducted an extensive investigation to ensure the directors of Clifford were brought to account, and will continue to vigorously pursue company directors who fail to uphold the high standards the community expects’, Ms Redfern said.

Today’s penalties conclude ASIC’s civil action which it commenced in 2000 following the collapse of the Clifford Group of companies in late 1998. The collapse of the Group left creditors and shareholders with a deficiency in excess of $90 million.

An ASIC investigation found 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.