PM Morrison's right hand man lashes ASIC for going easy on suspect directors
By Richard Baker
17 November 2018
Australia’s corporate regulator will not take any action against directors linked to alleged undisclosed share placements, stock price manipulation and misleading statements at an ASX-listed company that caused investors to lose $40 million.
In addition, senior executives from the Australian Securities and Investments Commission have admitted that the regulator may not act even when there is strong evidence to suggest breaches of law, saying aggrieved investors had the option of private litigation.
Over the past year, as serious concerns emerged about the actions of a handful of LWP’s past directors, a host of federal politicians - including Scott Morrison during his time as treasurer - have raised the company’s problems with ASIC.
ASIC’s senior executive, Warren Day, told a federal parliamentary committee in August the regulator had received information about alleged “insider trading, undisclosed related party transactions, manipulation of the share price… and misleading statements” involving LWP.
The ASX in 2016 queried LWP over breaches of disclosure rules in relation to share placements with shell companies associated with LWP's former chief executive, Sean Corbin, former chairman Siegfried Konig and members of their respective families.
The share placements occurred without LWP seeking shareholder approval and the ASX required all shares acquired through this process to be sold within a month and the proceeds donated to a registered charity.
The ASX also questioned a large share placement arrangement with an external company associated with Mr Konig.
A failed $770,000 investment in an Indian-based joint venture and shares issued to key staff shortly before the joint venture was announced to the market was also raised with ASIC.
Despite the serious allegations, Mr Day has said ASIC will not be pursuing anyone associated with LWP because of a lack of documentary evidence to support proceedings against the persons of interest.
Mr Corbin, the former chief executive of LWP, went on to found failed Brisbane company Franchise Retail Brands. LWP's former chairman Siegfried Konig was also a founding director of FRB.
FRB went into administration in January. Mr Corbin then registered a new company called Phoenix Franchising Pty Ltd.
Mr Corbin said ASIC's decision not to pursue him and other former LWP directors showed the allegations made being made against them could not be substantiated. He did admit there were some corporate governance issues at LWP during his time there, mostly relating to the placement of shares with adult children.
"There were some minor breaches. We were slapped over the hands and we rectified our corporate governance policy," he said.
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Mr Corbin said he was disappointed Mr Irons had made his comments at the committee hearing without speaking to him or Mr Konig. He also felt confident ASIC would not be taking action in relation to events at FRB.
Mr Konig did not respond to inquiries. He has previously said he personally lost more than $2 million in LWP's downfall.
Mr Day told Senator Hume in writing that ASIC was still assessing allegations of FRB’s “alleged illegal phoenix activity”.
LWP Price at posting:
7.0¢ Sentiment: None Disclosure: Not Held
