Prime Trust property directors found to have breached duties
Former federal Health Minister Michael Wooldridge, and ex-Melbourne City councillor and Places Victoria chairman Peter Clarke, are among five former directors of the failed Prime Retirement and Aged Care Property Trust facing charges in the Federal Court of not acting in the best interests of their 8000 unit holders.
The men – and other former directors William Lionel Lewski, Mark Frederick Butler and Kim Jaques - are fighting possible corporate bans and hefty fines in the case brought by the corporate regulator.
Prime Trust was a managed investment scheme with retirement villages in Queensland, NSW and Victoria when it collapsed in 2010 owing investors around $550 million.
ASIC alleges the former directors erred when they approved changes to the trust’s constitution in 2006, allowing a $33?million listing fee to be paid out of trust funds to Prime’s founder, Lewski, who controlled its responsible entity.
Another contentious change to the constitution involved the inclusion of a so-called ‘poison pill’ clause ensuring the trust’s responsible entity to be paid out if it were removed.
ASIC commissioner Greg Tanzer said Tuesday’s judgement by Justice Murphy was a reminder that ‘’responsible entities have to put the interests of their unit holders first’’.
‘‘This is a significant outcome for investors. Directors are important gatekeepers who must discharge their duties with the appropriate care and diligence. This has not happened here. The conduct of the (Prime) board was unacceptable and today's judgment reflects that.’’
The penalty hearing will begin early next year. ASIC said the court can order maximum fines of up to $200,000 each over the charges.
Liquidators Lawler Draper Dillon are running separate civil proceedings in the Supreme Court of Victoria over payment of the listing fee and are seeking compensation and damages.