Stuart Corp and Brian Smith have been sentenced to three years each in prison after being prosecuted for using offshore entities to avoid disclosure of their interests, the Australian Securities and Investments Commission has announced.
Stuart Corp and Brian Smith have been sentenced to three years each in prison after being prosecuted for using offshore entities to avoid disclosure of their interests, the Australian Securities and Investments Commission has announced.
Messrs Corp and Smith, who were directors of publicly listed companies Hallmark Gold NL and Welcome Stranger Mining Company NL, will be released after serving 16 months, the Commission said.
The full text of an ASIC announcement is pasted below
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.
