Shareholders’ Association labels Gay penalties ‘soft justice’
THE Australian Shareholders Association has renewed its criticism of the penalties handed down to former Gunns chairman John Gay.
Policy and engagement co-ordinator Stephen Mayne described as “soft justice” an Australian Federal Police decision against trying to retrieve money under proceeds of crime legislation.
He said it was the first case in which an ASX 100 chairman had pleaded guilty to insider trading, but the consequences had been “disappointing every step of the way — the lack of a custodial sentence, the size of the fine ($50,000) and now no ability to recover the proceeds in a company that went broke”.
Mr Mayne said Gay had still applied to manage companies despite the Supreme Court’s five-year ban.
Gay avoided a $797,798 loss by selling shares at 90c rather than the 68c that the shares fell to when the inside information became public.
The court heard that Gay had a $14.7 million debt with the ANZ Bank at the time of the $3 million share sale.
He had just received a cancer diagnosis and wanted to get his affairs in order.
His principal and interest repayments were $560,000 a year and he unsuccessfully sought a reduction to $280,000 a year.
In particular he wanted to clear a $2.1 million facility secured over the family home in Clarence St, Launceston, and a commercial bill facility.
Since the trade in December 2009 Gay has worked to get his affairs in order. His situation was exacerbated by the total loss of value in his personal shareholding as a result of the collapse of Gunns.
Gay once had 18.7 million shares worth more than $50 million but had reduced to 12.2 million shares, worth about $1.9 million, by the time Gunns collapsed.
Gay sold a house at Binalong Bay for $692,000 in November taking a loss of $143,000 from the 2005 purchase price. He has also sold a 162ha farm at Hagley last July for $1.8 million.
He retains the family home as well as a second farm at Hagley, where his son Richard farms, valued at $1.8 million.
Gay retains an interest in a family farm near Deloraine worth about $2.2 million.
Before his conviction, Gay was a director of a number of companies including Specialty Veneers, which bought several sawmills including the Deloraine sawmill and one at Somerset.
He resigned from Neville Smith Forest Products soon after insider trading charges were laid.
Sourced from The Mercury
Well this comes as no surprise… If it were you or I we’d be serving a prison sentence.
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