Justice Michael Kirby’s decision last week could have huge ramifications
for ASIC in the future. See what our correspondent Richie
Rich has to say on the fallout:
Jodee Rich’s High Court win last week is assuming greater importance as Sydney business circles assess its importance.

They now say the real beneficiaries will be other business people in
the pipeline of ASIC prosecution actions, with Trevor Kennedy and then
Rodney Adler the first major names that come to mind as potential
beneficiaries.

The High Court allowed an appeal by Mr Rich and former One.Tel finance
director Mark Silberman against an ASIC order, which would have
required them to hand over documents and witness statements, which may
have been incriminating to them. ASIC had sought the documents as part
of its investigation into the company.

The High Court challenge hinged on claims by Mr Rich that ASIC did not
have the power to force him to hand over possibly incriminating
documents that could ultimately lead to a penalty. Rich and Silbermann
were appealing a NSW Court of Appeal decision last year which narrowly
allowed the ASIC appeal. High Court Justice Michael Kirby was reported
as saying said it was clear a $92 million compensation order was more
than simply compensation. “If it’s $90 million, that would sound like a
little bit of punishment,” Justice Kirby said. He was backed by Justice
Michael McHugh who said disqualifying a person from being a company
director, as Mr Rich faces, was surely a penalty. “In our society, a
director who is disqualified for 10 years is deprived of a civil right
and has to carry that around. He or she’s reputation in society is
lessened,” he said. “It just seems to me that it is a penalty.”

Now lawyers and others in Sydney say the upshot of the decision means
that where ASIC has a case where a penalty may be imposed on the
defendants, they (the defendants) do not have to hand over anything
incriminating before the trial.

This calls into question the documents already handed over to ASIC or
seized by ASIC in raids which were the subject of a lega-professional
privilege case in the NSW Supreme Court last month. There Justice Roger
Gyles ruled in favour of ASIC on most points and against Mr Kennedy who
claimed privilege on a number of documents seized by ASIC. His claims
were uncertain and much altered, but there is a feeling in Sydney legal
circles that the Gyles case could very well be reversed in the Court of
Appeal.

But they also say that beyond that the decision in favour of Jodee Rich
is a big win for all ASIC defendants, which will now have much greater
control over what ASIC is or is not entitled to before a trial.

While the ASIC case was in civil jurisdiction, the feeling is that the
decision will apply to all ASIC actions, including criminal. The
decision could very well put a crimp on ASIC’s recent preference for
civil actions against corporate wrongdoers as a means of imposing a
penalty with an easier burden of proof than in criminal actions.

Rich continues to have an impact on business practices, legal and accounting matters much greater than he is worth.

While Brad Keeling, his former partner in One.Tel, was quoted in the
weekend press in Sydney as finally confessing that he “could not run a
company”, Rich is continuing his struggle to avoid any ownership of the
debacle.

Already he has hurt the image of powerful people: the Packer and
Murdoch families and their business empires. He has challenged Family
Law through an arrangement with his wife, Maxine Brenner that generated
publicity. He has repeatedly challenged ASIC over the collapse of his
phone business, and scored a couple of small wins, up till last week’s
big victory.

For that Trevor Kennedy and anyone else in ASIC’s eye (and maybe Rene
and Richo if the Offset Alpine case goes anywhere) will be thanking him.

But perhaps the person most thankful will be his former co-director and
schoolboy friend, Rocket Rodney Adler. An investment banker told
Crikey the High Court case will have a very big impact on Rodney’s
various appeals and future prosecutions by ASIC. So much doubt has now
been thrown up by the Rich decision that Rod may very well be able to
go down Jodee’s route in almost continual legal stalling of ASIC.

Another triumph for the Cranbrook gang!

Peter Fray

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