Mehajer and Australian Securities and Investments Commission

This matter concerned an application by the Australian Securities and Investments Commission (ASIC) to disqualify Mr Mehajer from managing companies. The dispute arose from the winding up of two related companies, SMPD P/L and SMEC P/L, where ASIC alleged Mr Mehajer, as a director, had engaged in conduct that warranted disqualification. The decision was made by Deputy President W Constance P of the Administrative Appeals Tribunal.

The Tribunal was required to determine whether Mr Mehajer should be disqualified from managing companies, specifically considering whether he failed to exercise due care and diligence as a director, failed to keep adequate company records, hindered and delayed the liquidation process, and failed to disclose fabricated proofs of debt. The Tribunal also had to consider the significance of the two companies being related and whether disqualification was in the public interest, as well as the appropriate length of any disqualification period.

The Tribunal found that Mr Mehajer had failed to exercise due care and diligence, failed to keep adequate records, and hindered the liquidation process. This was evidenced by his convictions for failing to provide a report to the liquidator and failing to provide company records. Furthermore, the Tribunal was satisfied, based on the liquidator's report and the lack of contradictory evidence from Mr Mehajer, that fabricated proofs of debt were lodged in the liquidation of SMPD P/L. The Tribunal noted that the power to disqualify under section 206F of the Corporations Act is enlivened when a person has been an officer of at least two companies that have both been wound up, indicating a pattern of failure.

Ultimately, the Tribunal affirmed the reviewable decision, finding that Mr Mehajer's conduct, including the lack of properly maintained records, the delay in providing them, and the failure to report, adversely affected the liquidator's ability to conduct the liquidation. The Tribunal was satisfied that Mr Mehajer failed to disclose the fabricated proofs of debt once he became aware of them, and that disqualification was justified in the public interest.