In 2001, ASIC commenced proceedings against four erstwhile members of the Board.

Brad Keeling (One.Tel’s joint managing director) and John Greaves (the company’s chairman) were part of ASIC’s original proceedings. However, both agreed to settlements with ASIC in 2003. Mr Keeling agreed to a ten-year disqualification from acting as a director and liability to pay compensation of AUD92 million. Mr Greaves settlement involved a disqualification from being a director for four years and liability to pay compensation of AUD20 million. But joint Managing Director, Mr Jodee Rich and the company’s Finance Director, Mr Mark Silbermann decided to defend ASIC's action.

ASIC sought rulings from the court on the duties and obligations of officers to disclose a company’s financial position to the board and the market.

And it sought massive penalty payments - a total of AUD93 million, being "the reduction in the value of One.Tel over a period of approximately eight weeks during which time One.Tel continued to trade because of the alleged failure of the defendants to properly discharge their responsibilities."

ASIC Chairman, Mr Tony D’Aloisio said the case should provide important guidance to executives and directors on the exchange of information between the board and management.

But ASIC was taken aback when the civil proceedings against Rich and Silbermann were dismissed.

The regulator tried to put a brave face on it saying "the case has shed light on several important legal issues, notably the additional responsibilities of the chairman of a public company, particularly one with a finance/accounting background and considerable experience on public boards. It also identified the right of defendants in civil penalty proceedings not to give discovery or file witness statements until the conclusion of evidence by ASIC’s witnesses."

ASIC Chairman, Mr Tony D’Aloisio said "The case has also provided important guidance to ASIC on how to run similar matters in the future."

The judgment, ASIC said, was "lengthy." It would, it said, read it carefully, and decide whether to appeal.

Today, ASIC announced that it has lodged a Notice of Intention to Appeal in the NSW Court of Appeal. The Appeal proper must be filed no later than 27th February 2010.

The road so far has been arduous for all parties.

The action was started in December 2001 after an investigation that started in May 2001. In June, ASIC secured orders restraining assets of Jodee Rich, Bradley Keeling and Mark Silbermann - and undertakings from them not to leave the country without providing at least a week's notice to ASIC. An undertaking was also provided by Mr Rich's wife Maxine, freezing the assets recently transferred to her by her husband. However, ASIC agreed not to seek the freezing of the assets of Beaulieu Holdings, or Mrs Nicolet Long (Mr Rich's sister) after receiving undertakings freezing the assets of companies of which she is a director. Proceedings against them were discontinued and dismissed respectively. Those undertakings were modified in September 2001.

In December, the action was commenced against the three former directors plus former chairman John Greaves.

ASIC sought orders from the Supreme Court that each of the four defendants be disqualified from managing or being a director of any company for such period as the Court thinks fit.

ASIC also sought compensation of between AUD30 million and AUD50 million for the reduction in the value of One.Tel over a period of approximately eight weeks from 30 March 2001 to 29 May 2001 (being the period during which One.Tel continued to trade because of the alleged failure of the defendants to properly discharge their responsibilities).

The compensation claim excluded a further AUD50 million liability incurred over this period but which was the subject of a settlement between Lucent Technologies and the Administrator.

ASIC alleged that Messrs Rich, Keeling and Silberman had information or access to information regarding the financial condition of One.Tel that was withheld from the One.Tel Board and the market. ASIC alleges that their conduct constituted a breach of their duties as officers of the company.

ASIC alleged that the fourth defendant, Mr Greaves, breached his duty to exercise the standards of care and diligence required by the law of a company Chairman.

At the time, ASIC said that evidence indicated that the true financial position of One.Tel was not known to the remaining directors of the company, Messrs Lachlan Murdoch, James Packer, Rodney Adler, Peter Howell-Davies and Pirjo Kekalainen-Torvinen, until shortly before the appointment of the administrator on 29 May 2001.

In February 2003, Greaves made an application to strike out the action insofar as it related to him on the basis that the duties of a Chairman were not, at law, as extensive as ASIC wished to establish.

An ASIC statement at the time said

‘This is a landmark decision that explores the legal responsibilities of company Chairmen’, ASIC Chairman, Mr David Knott said.

‘ASIC believes that Chairmen have responsibilities beyond those of other directors. Generally, those responsibilities relate to overseeing adequate processes to enable the Board to properly and effectively discharge its supervisory role.

‘We argued that those responsibilities include such things as: - the general performance of the Board; - the flow of financial information to the Board; - the establishment and maintenance of systems for information flow to the Board; - the public announcement of information; - the maintenance of cash reserves and Group solvency; and - making recommendations to the Board as to prudent management of the Group.

‘After a comprehensive review of existing legal authority, academic texts, and expert evidence Mr Justice Austin has concluded that ASIC had made out a reasonably arguable case. On that basis he dismissed the application by Mr Greaves to have the proceeding against him struck out,, Mr Knott said.

In September 2004, Greaves settled with ASIC.

ASIC said:

"Under the agreement with ASIC, Mr Greaves has admitted to contraventions of the Corporations Law between January 2001 and 30 March 2001 in relation to the discharge of his duties as a non-executive director, and the chairman, of One.Tel.

Pursuant to the agreement, ASIC and Mr Greaves made joint submissions to Mr Justice White at hearings on Tuesday 31 August and Thursday 2 September. As a result of the hearings and submissions, Mr Justice White made orders that Mr Greaves:

- be prohibited from managing a corporation for a period 4 years; - be found liable for the compensation of AUD20 million to One.Tel; and - be ordered to pay ASIC’s costs of AUD50,000.

As part of the terms of agreement, Mr Greaves admits that during the period January 2001 to 30 March 2001, he failed to take the steps that he should have in order to ensure that he and the board of One.Tel properly monitored management and were aware of the true financial position of the company.

It has never been part of ASIC’s case that Mr Greaves acted in any way dishonestly in relation to the performance of his roles at One.Tel."

That followed a settlement in March 2003 between ASIC and Keeling. But the Court did not immediately approve the settlement.

ASIC said

"Under the agreement with ASIC, Mr Keeling has admitted to contraventions of the Corporations Act 2001 between February and May 2001 in relation to the discharge of his duties as a director of One.Tel.

Pursuant to the agreement, ASIC and Mr Keeling have made joint submissions to Mr Justice Bryson requesting orders that Mr Keeling:

- be banned from being a director, or otherwise being involved in the management of any corporation, for between 10 and 15 years. In light of Mr Keeling’s contrition and cooperation with ASIC the parties have submitted that the banning period should be at the lower end of that range; - be found liable for the compensation of AUD92 million to One.Tel; and - be ordered to pay ASIC’s costs of AUD750,000.

As part of the terms of agreement Mr Keeling denies that he deliberately misled the board and the market, but admits that he failed to take the reasonable steps he should have in order to apprise himself of the true financial position of the company during that period. "

But things were not all going ASIC's way.

The regulator sought to set aside a transfer between Rich and his wife, Maxine. ASIC thought the facts spoke for themselves.

Rich was a director of the company. He resigned on 17 May 2001. On 19th May he transferred approximately AUD5 million to his wife under an agreement made under the Family Law Act, including his interests in the family home and the proceeds of sale of another property. One.Tel was placed in administration on 29 May 2001. ASIC applied in the Family Court to set aside the transaction. Rich and his wife opposed the application on the basis that the Family Court had no jurisdiction to hear an application by a third party.

The Judge reluctantly agreed saying "In my view there is prima facie evidence that the husband and wife entered into the agreement in order to reduce the extent and value of the husband's assets. … Prime facie the evidence supports the contention by Senior Counsel for ASIC that the agreement was entered into because of a concern about claims on the husband's property by third parties as a result of the collapse of One.Tel Limited. It was therefore entered into to defeat the interests of third parties."

ASIC said "In the course of the judgment [Mr Justice Ryan] added that consideration should be given to conferring jurisdiction on the Family Court to deal with an application to set aside a binding financial agreement by a third party whose interests may be adversely affected by the terms of the agreement."

The Regulator went on "ASIC intends to commence proceedings in the Supreme Court of New South Wales to challenge the validity of the Agreement under the voidable disposition provisions of the Conveyancing Act (section 37A). In order to succeed in this action ASIC will need to prove that the transfer of property was made with the intent to defraud creditors. If ASIC is successful in obtaining a compensation order against Mr Rich in its civil penalty proceedings (see below), then the compensation will be payable to the liquidators of One.Tel Limited and a costs order will be made in ASIC's favour. ASIC therefore alleges that it has standing as a creditor to bring this action."

In November 2003, the Rich couple announced that they had "terminated the asset transfer agreement."

But the civil penalty proceedings rumbled on. In April 2004, Rich and Silberman were granted special leave to appeal in respect of an order for Discovery (i.e. the disclosure of all documents relevant to an action) and file witness statements prior to the commencement of the action. The Court allowed Rich and Silberman's appeal. Incredibly, this meant that ASIC would not see the Respondents case or evidence until after ASIC's own case had closed.

ASIC said "The decision of the High Court means that Messrs Rich and Silbermann will not be required to give discovery and file witness statements until the conclusion of evidence by ASIC’s witnesses during its civil penalty proceedings."

The trial started in August 2004. It was listed for eight months but ran over.

The Decision was at last handed down on 18th November 2009 with a decision in favour of Rich and Silbermann, despite the compromises reached by Keeling and Grieves.