Westpoint CFO gets suspended 18-month sentence

Former Westpoint chief financial officer Graeme Rundle has received a suspended 18-month imprisonment sentence in the Parramatta District Court today after being found guilty of two criminal offences of making a false or misleading statement.

Found guilty of obtaining a financial advantage for Scots Church Development Limited by a jury on June 24, 2011,  Rundle’s offences involved contraventions of section 178BB of the NSW Crimes Act.

The charges related to statements made to a financial institution in relation to obtaining a $71 million construction finance facility to complete a project at York Street, Sydney.

Following the announcement of the suspended sentence ASIC chairman Greg Medcraft notes chief financial officers, as officers of a corporation, must take their responsibilities seriously, and discharge their legal duties to the company and to comply with the law carefully.

“Chief financial officers must ensure that any representations made by them to financiers on behalf of companies are accurate,”  Medcraft says.

Medcraft suggests the case highlights ASIC’s willingness to address corporate misconduct.

“To date ASIC has pursued a wide range of actions and remedies concerning Westpoint against gatekeepers such as financial advisers, auditors, trustees and directors,” Medcraft adds

Rundle was sentenced to 18 months imprisonment on each count (to be served concurrently), with the sentence to be suspended contingent upon him entering into an 18-month good behaviour bond.

The Commonwealth Director of Public Prosecutions prosecuted the matter.

When the Westpoint Group collapsed in early 2006, investors in Westpoint-issued financial products had an outstanding total capital invested of approximately $388 million. The estimated losses to investors totalled approximately $310 million.

ASIC commenced compensation actions in 2007 and 2008.

In February 2011 ASIC announced it had reached agreements to settle the compensation actions it has conducted on behalf of the Westpoint Group of companies against certain directors of the companies and KPMG.

In addition to its compensation actions, ASIC has banned 23 licensed advisers, four unlicensed advisers and one corporate entity in relation to advice concerning Westpoint-related products for periods between three years and permanently.

ASIC has also accepted enforceable undertakings from three KPMG partners, preventing them from practising as auditors for periods between nine months and two years.