New Tel brass face court action
Michael Sainsbury The Australian
15dec04
FIVE directors of collapsed telecommunications company New Tel, including founder and managing director Peter Malone, will face charges of insolvent trading, two years after administrators walked into the company.
New Tel collapsed on December 10, 2002 with debts of up to $50 million, amid an investigation by The Australian which uncovered the company's potential insolvency and the lavish lifestyle of Perth-based Mr Malone.
PricewaterhouseCoopers, the liquidator, has commenced an action in the NSW Supreme Court against Mr Malone and four fellow directors. They are Perth corporate establishment figure Harry Sorensen, Hong Kong-based Garry Koh and Zhou An and US-based Mark Robert Hake.
PwC partner Phil Carter said: "Our action is against the directors jointly and severally. "Barring other mitigating factors you would expect us to have claim against each of them for up to $25 million. "But you can get different amounts from different individuals.
"Former New Tel chairman Domenic Martino, who was forced out of his executive role as head of accounting firm Deloitte's in Australia as a result of New Tel's demise, has escaped prosecution.
Mr Martino quit the New Tel board in February 2002, but PwC is using July 1 of that year as the date from which it alleges insolvent trading.
Further court actions, against companies or individuals who might have "pressured" New Tel for preferential payments in the lead-up to its collapse, were likely to be laid in the New Year, Mr Carter said.
"We have picked 1 July, 2002 partly because as the year-end date, there is better information that surrounds that date and also because credit incurred from that point until December, which was unpaid at the end, is in the order of about $25 million. It's quite a substantial claim over a relatively short period."
"It is well established that if you are a director of a business, and unless you have got a pretty good excuse, you are responsible for stopping a company trading insolvently. If you haven't done that you are potentially on the hook."
Mr Carter said the action would take about 12 months.As to why it had taken two years to reach this stage, he said: "In this cases it a reasonably large business, it's quite complicated."
"We have said from the first creditors' meeting (that) we believed there was a case to answer, but it takes some time to assemble the evidence and to put funding in place.
"The action has been approved by New Tel's committee of inspection ? a group of its four largest creditors, including Telstra, Optus, AAPT and the Australian Tax Office.
The committee accounts for about 60 per cent of New Tel's $40 million to $50 million worth of debts, Mr Carter said.
"The reason we don't now the exact amount is that we don't ask for proof of debt until funds become available," he said.
Mr Carter said he believed the directors would avail themselves of the insurance arrangements that New Tel had in place at the time, but declined to name the insurer. "We have previously notified them that the claim would be forthcoming," he said. |
