BizLawCentral : ASIC seeks orders banning Centro officers and non-execs.

ASIC is seeking declarations that the directors and an officer breached their duties owed to entities within Centro. The defendants to ASIC’s action are:

• Mr Brian Healey, former Chairman and non-executive director;
• Mr Andrew Thomas Scott, former Chief Executive Officer (CEO) and Managing Director;
• Mr Samuel Kavourakis, a former non-executive director;
• Mr James William Hall, a non-executive director;
• Mr Paul Ashley Cooper, a non-executive director;
• Mr Peter Graham Goldie, a former non-executive director;
• Mr Louis Peter Wilkinson, a former non-executive director; and

• Mr Romano George Nenna, former CFO.

  ASIC has issued civil penalty proceedings in the Federal Court of Australia against current and former directors and a former Chief Financial Officer (CFO) of various entities within the Centro Properties Group (CNP) and Centro Retail Group (CER) (Centro).

  Central to ASIC’s action is the responsibility of company directors and chief financial officers to take reasonable steps to ensure that information contained in financial reports and disclosed to the market, is accurate, complies with relevant accounting standards, and is not misleading.

ASIC is seeking orders to disqualify the directors and officer from managing corporations and will ask the Court to impose pecuniary penalties on them.

ASIC alleges that these directors and officer failed to discharge their duties with due care and diligence in approving the financial reports for Centro Properties Ltd, Centro Property Trust and Centro Retail Trust for the year ended 30 June 2007.

ASIC contends that these financial reports contained material misstatements, specifically, a significant amount of interest-bearing liabilities of each of the relevant entities were wrongly classified as non-current liabilities, rather than current liabilities. This resulted in the relevant entities not complying with the applicable accounting standard.

ASIC also contends that these directors and the officer knew that the entities had very significant short term interest bearing liabilities, and should have known that these liabilities were incorrectly classified in the 2007 financial reports.

ASIC notes that this is the first case brought where the requirement that a listed entity's CEO and CFO declare in writing to the company directors that the financial reports comply with the accounting standards will be an issue before the Court.

ASIC alleges the financial reports of the Centro Properties Limited, Centro Property Trust and the Centro Retail Trust for the year ended 30 June 2007 did not comply with the relevant accounting standards and regulations, nor did they give a true and fair view of the financial position and performance of the entities because they failed to classify, or failed to correctly classify, a significant amount of interest-bearing liabilities of the relevant entities as current liabilities, as required by the relevant accounting standard, AASB 101 Presentation of Financial Statements.

In relation to Centro Properties Limited and Centro Property Trust, their respective balance sheets as at 30 June 2007 did not correctly classify A$1,514,097,090 of interest-bearing liabilities as current in addition to the A$1,096,936,000 already classified as current.

In relation to Centro Retail Trust, its balance sheet as at 30 June 2007 did not correctly classify A$598,292,097 of interest-bearing liabilities as current.