tip off

In Tasmania, even crooks like Gay can run a business

Tasmania’s judges just don’t have a bad word to say about John Gay. How is it the former Gunns boss can run a company again, asks business director and commentator John Addis.

What the hell do the judges smoke down in the Apple Isle?

First there was the insider trading case against John Gay, a former CEO of failed Tassie logger Gunns. Gay got wind of poor figures from a management report and sold a stack of shares before the information was released to market, saving himself around $750,000 in potential losses. The case was so open-and-shut that even the corporate regulator pursued it.

Gay pleaded guilty and faced up to five years’ porridge and a $220,000 fine.

But Justice Porter wasn’t convinced, describing Gay’s character as “exemplary” and his crime “not in the serious category of insider trading”. Gay was fined $50,000, was banned as a company director and kept the proceeds of his crime.

It makes you wonder what being of exemplary character means in Tasmania. Although Gunns entered bankruptcy a few years after Gay resigned, it was his expansive ambition and hardline approach to environmentalists that eventually bought the company undone.

Gunns also used 1080 poison for decades, which laid waste to many of Tasmania’s protected species. He dragged the environmentalists fighting the destruction through the courts. In the end so toxic was the company’s reputation, no one would lend to it.

Then on Tuesday, up popped Justice Robert Pearce of the Tasmanian Supreme Court. Gay had appealed his disqualification from being a director, requesting the right to run two companies. Pearce, incredibly, granted the exception, claiming “there is no appreciable risk he will reoffend” and that “his management of the companies poses no risk to the public and to the interests of the shareholders”.

Say whaaat? Gay is a criminal with a track record of ripping off his shareholders for personal benefit and there’s “no risk” of him doing that again? And anyway, whatever happened to the idea of, you know, punishment?

The only way this decision appears to make sense is if Justice Pearce doesn’t actually believe insider trading is a crime in the first place, in which case he should say so. Or perhaps he might explain what, exactly, constitutes a “serious case” of insider trading.

The folks running the case at the Australian Securities and Investments Commission must be in a state of despair today, jamming their heads into filing cabinets and throwing legal briefs out the window. If they couldn’t get a half-decent result out of a case like this, what hope is there?

But the message to potential insider traders everywhere — and believe me, they are everywhere — is loud and clear: get yourself down to Hobart, where “corporate criminal” and “exemplary character” aren’t mutually exclusive phrases, and the crime of insider trading has, to all intents and purposes, been abolished.

*John Addis is a director of Private Media (publisher of Crikey) and of Intelligent Investor Share Advisor  — get a 15-day free membership to unlock all of Share Advisor’s stock research and buy recommendations

8
  • 1
    mikeb
    Posted Thursday, 17 April 2014 at 2:36 pm | Permalink

    This is Tassie mate. Hodgeman promised to get rid of “red and green tape” and surely Gay leaping over the technicaltites of insider trading qualifies under that? Mustn’t let the little matter of a conviction stop progress (unless it happens to involve someone not friendly to the power base that is).

  • 2
    katas
    Posted Thursday, 17 April 2014 at 4:37 pm | Permalink

    Mr Gay was described at his trial as very ill; another amazing recovery! Plus he wanted the cost for his appeal paid by the other party. At least that was not granted. Lot of good ol’ boys in Tas with loads of self interest and Teflon skins.

  • 3
    zut alors
    Posted Thursday, 17 April 2014 at 6:51 pm | Permalink

    It makes you wonder what being of exemplary character means in Tasmania.’

    It applies to anyone who isn’t actually in gaol.

  • 4
    AR
    Posted Thursday, 17 April 2014 at 7:09 pm | Permalink

    If HH is a true taswegian, one of his heads will be able to convince tuther that Gay is lily white.

  • 5
    Ramon Meccho
    Posted Friday, 18 April 2014 at 8:44 am | Permalink

    Hobart, where “corporate criminal” and “exemplary character” aren’t mutually exclusive “

    John Addis is a director of Private Media (publisher of Crikey) and of Intelligent Investor Share Advisor  — get a 15-day free membership to unlock all of Share Advisor’s stock research and buy recommendations”

    Any Tasmanian companies recommended?

  • 6
    dazza
    Posted Saturday, 19 April 2014 at 9:56 am | Permalink

    Tasmanian cousins.

  • 7
    The Pav
    Posted Saturday, 19 April 2014 at 6:08 pm | Permalink

    It also begs the question where is the action under Proceeds of crime provisions.

    Thompson knocks off a few bucks from the union and faces gaol. Gay gets to keep his ill gotten gains and faces no sanctions.

    Australian justice at work

  • 8
    Liamj
    Posted Sunday, 20 April 2014 at 8:51 am | Permalink

    Exemplary character = Tory. See “honourable” Barry O’Farrell. But if questioned by the authorities say ‘Australia is a classless society’.

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