Westpoint asset stripping case dropped

Australia’s corporate regulator has dropped an asset stripping charge levelled against property entrepreneur Norm Carey, after the discovery of new evidence two weeks into a District Court trial.

ASIC announced today that a newly discovered document supported the Westpoint Group founder’s version of events.

The jury had been told by prosecutors that Mr Carey and his lieutenant Graeme Rundle had dishonestly backdated the transfer of an option to buy the Warnbro Fair shopping centre with the knowledge that Westpoint was in dire straits financially.

The transfer of the option to Mr Carey’s family trust company Bowesco came only a month after Westpoint had been offered $1 million by rival Perron Group for the right to buy the shopping centre and adjacent land.

Prosecutor Alan Macsporran alleged that Mr Carey and Mr Rundle had used their positions at Westpoint to give Bowesco an advantage, breaching multiple directors’ duties under the Corporations Act.

 It was also alleged that the transfer – which took place on the very day that receivers were appointed to Westpoint – was intended to prevent liquidators from being able to access the option.

But a file note from KPMG’s 2005 audit of Westpoint, revealed yesterday, showed that the directors had mistakenly believed that the option had not expired and as such, the transfer could not constitute asset stripping.

In keeping with its procedural fairness obligations, ASIC immediately provided Mr Carey and Mr Rundle with copies of the note and today filed to discontinue the case.

Mr Carey has consistently claimed that he believed Westpoint to be solvent even while ASIC were taking steps to have receivers appointed. He has indicated that he will seek substantial compensation over the failed prosecution.

Westpoint was placed in receivership in January 2006 and since then Mr Carey has faced multiple legal battles.