A former chief executive of Centro Properties Group has been fined and its former chief financial officer banned from management for two years for breaches of corporate law.
In Melbourne on Wednesday, Federal Court Justice John Middleton imposed no penalties on the six other former non-executive directors who were also involved in breaches of the Corporations Act relating to Centro’s misleading financial reports for the 2006/07 financial year.
All eight defendants had their applications for exoneration dismissed.
Included in the six former non-executive directors is current Centro Properties chairman Paul Cooper and current Centro Properties non-executive director Jim Hall.
“We look forward to Paul Cooper and Jim Hall continuing their contribution to the board,” said Rob Wylie, chairman of Centro’s special matters committee.
“As previously stated, the board and management of Centro remain focused on the critical task of restructuring in the best interests of all stakeholders.”
In handing down the penalties, Justice Middleton said the court recognised the seriousness of the breaches, while also taking into account the circumstances of the contraventions.
“Very much at the forefront of my consideration has been the issue of general deterrence,” he said.
“In my view, the orders go far enough to indicate the court’s disapproval of the actions of each of the defendants, and to satisfy the requirements of the principle of general deterrence.”
Former CEO Andrew Scott was fined $30,000, while former CFO Romano Nenna’s two-year ban from any corporate management positions begins on October 10.
In June, Justice Middleton ruled Centro’s directors failed to fulfil their corporate duties when they approved the annual reports of three related companies for the 2006/07 financial year.
The annual reports failed to disclose about $1.5 billion in short-term liabilities, or debt, held by Centro Properties Group by classifying them as non-current, or long-term, liabilities.
They also failed to disclose guarantees of short-term liabilities of an associated company worth about $US1.75 billion (then worth $A2.1 billion) that had been given after the balance date.
About $500 million of Centro Retail Trust’s short-term liabilities were also classified as non-current.
Centro Properties is currently undertaking a significant restructure which, if successful, will cancel $2.9 billion worth of debt due to mature in December.
Its securities lost 0.3 of a cent to four cents.
