By Stephen Mayne, Crikey’s business commentator

Rene
Rivkin must be turning in his grave. Australia’s best known and most
prolific insider trader was arrested and eventually convicted in the
criminal courts for buying 50,000 shares in Qantas and pocketing a tiny
profit. While Rivkin had form with ASIC (having previously given
undertakings about his share dealings), the facts surrounding his
jailing were, in my opinion, nowhere near as strong as those involving
former Telstra director Steve Vizard.

Vizard’s exploits during
the dotcom boom in 2000, in my view, look like the most open and shut
case of insider trading since former Macquarie Bank executive director
Simon Hannes got jailed over $2 million worth of TNT shares.

Steve Vizard is an extremely lucky man. ASIC, a body responsible to
Treasurer Peter Costello, has treated him with kid gloves in the face
of strong evidence.

The
Howard Government appointed Vizard to the Telstra board in September
1996, so it didn’t look good to have long-time Liberal Party bagman Ron
Walker publicly defending him yesterday. Rivkin had strong Labor
connections, while Vizard is a Liberal Party man – and the treatment
appears to be quite different.

After all, Rivkin was not a
director of Qantas or Impulse Airlines when he got the tip on the sale
of the upstart airline (which wasn’t all that price-sensitive anyway).
Contrast that with Vizard, whose position on the Telstra board gave him
access to all the comings and goings during the dotcom boom.

He
splurged $500,000 on Sausage Software on 7 March 2000, and by 20 March
the merger with Solution 6 was announced and Sausage shares leapt $1.60
that day to a record high of $7.40. The Keycorp deal was just as bad,
as Vizard plunged $250,000 into the stock on 14 July 2000 and then
Telstra’s purchase of a controlling stake on 21 July saw the stock
rocket $2.39 to $14.95.

This line about him losing $335,000 on
the investments is self-serving because the insider trading saw him
enjoy paper profits of about $200,000 at the time. Like so many others,
Vizard obviously wishes he’d sold before the dotcom crash really set
in, but not realising the profits have probably helped him and his
lawyer Robert Richter persuade ASIC to take a softer line.


The media response has been interesting. News Limited’s Terry McCrann takes the strongest line, arguing today that ASIC has “effectively given the green light to company
directors to engage in insider trading.” Meanwhile Fairfax commentator Stephen Bartholomeusz
argues the decision to let Vizard “cop a plea” is appropriate because
ASIC needed to get a result and might not have been successful in
obtaining a criminal conviction.

CRIKEY: To jail Vizard ASIC needed to go after him for insider trading under the Crimes Act (here). Instead he fessed up to the civil offence of breaching his duties as a company director – under the Corporations Act (here).
You don’t need as much proof to establish a civil offence, but it’s
ironic that in admitting to breaching the Corporations Act Vizard has
now provided evidence the could’ve been used to pursue a criminal
conviction.

Peter Fray

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