Messrs Allan Mason, Douglas Crago and Peter Kinnaird, former directors of Heydon Park Limited, and Mr Andre Backhaus, a former employee of Heydon Park, have been banned from managing corporations by the Federal Court in Sydney following an application by the Australian Securities and Investments Commission (ASIC).
Mr Mason was banned from managing public and private companies for five years. Mr Crago was banned from managing public companies for five years and private companies for three years. Messrs Kinnaird and Backhaus were banned from managing companies for two years.
The Federal Court also declared that Heydon Park’s representations in promotional documents for a managed investment scheme for growing ginseng in Tasmania were misleading and deceptive.
ASIC alleged and Messrs Mason, Crago, Kinnaird and Backhaus agreed that Heydon Park misrepresented the true nature and trading activities of a Singapore company, Panax Ginseng Wholesalers, which Heydon Park promoted as having contracted to buy the ginseng produced by the project at an agreed price. Panax Ginseng Wholesalers is not an established commodity trading company but is a company established and controlled by people involved in the Heydon Park Ginseng project, which according to financial returns filed with the Singapore Registry of Companies and Businesses, has no record of ever having traded.
Messrs Mason, Crago, Kinnaird and Backhaus also consented to the declarations and banning orders when they agreed with ASIC in a statement of facts that the promotional documents contained misleading and deceptive statements. The former directors agreed to pay ASIC’s costs of $30,000.
‘Directors must ensure that any document used to promote investments to the public contains information that is correct and not misleading or deceptive. ASIC will hold companies and their directors responsible through the courts if investors are mislead or deceived’, said Mr Mark Steward, ASIC’s Deputy Executive Director of Enforcement.
Background
Heydon Park was the holder of an Australian financial services licence and the responsible entity for a ginseng-growing managed investment scheme in Tasmania.
ASIC commenced action in May 2004 to stop Heydon Park promoting the ginseng scheme to investors because of concerns that three product disclosure statements and other promotional material contained misleading and deceptive statements. These Federal Court orders bring to an end court action by ASIC.
Investors earlier this year voted to remove Heydon Park as responsible entity for the scheme after the company collapsed following its parent company being placed in receivership by a secured creditor and later being ordered by the Supreme Court of New South Wales to be wound up. A provisional liquidator was appointed to Heydon Park in December 2004 and it is now in liquidation.
In June 2005, the Federal Court appointed a new responsible entity to take over the ginseng scheme in Tasmania and investors will decide at a meeting next week whether to continue the project under the new manager.