Re Abbott and Australian Prudential Regulation Authority

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 641

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N 2005/1136

GENERAL ADMINISTRATIVE  DIVISION		)
Re		CHARLES ABBOTT

Applicant

And AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Respondent

DECISION

Tribunal Mr P W Taylor SC, Senior Member

Date23 July 2008

PlaceSydney

Decision The decision under review is set aside and in substitution therefor the Tribunal decides that Mr Abbott is not disqualified from being or acting as the holder of a senior insurance role.

...................[sgd]...........................

Mr P W Taylor SC
  Senior Member

6.      This conduct is said by APRA to evidence Mr Abbott:

6.1:lacking candour in dealing with the HIH Board in matters involving his direct financial interest;

6.2:allowing himself to be placed in a position of conflict between his duty to HIH (and its policyholders) and his personal financial interests;

6.3:demonstrating an unseemly and improper fixation on his own financial interests when the risk of HIH’s insolvency was apparent;

6.4:being willing to prefer his personal financial interests to those of HIH;

6.5:displaying a lack of diligence in ensuring HIH’s assets were not distributed otherwise than in payment of properly due debts.

7.      APRA further contends that Mr Abbott’s conduct, particularly in obtaining payment of the Ashkirk invoices on 14 March 2001, is exacerbated by his failure to repay the money promptly in response to the liquidator’s demand.  APRA also complains that Mr Abbott failed to acknowledge any impropriety in obtaining the payment, despite the fact, as it contends, it was unarguably a preferential payment.

Disclosure of the Ashkirk / BDW consultancy

8.      Mr Abbott began to undertake insurance related consulting work, under contracts arranged with Ashkirk, in about 1995.  His decision to use Ashkirk as the contracting principal was based on advice from both BDW and KPMG.  It was a means of differentiating between work he did as a non-executive director, and other work that was in addition to any director’s responsibilities.  When Ashkirk rendered invoices for its consulting work, it provided detailed diary note summaries outlining the time Mr Abbott had spent and the nature of the work done.  The total invoice cost was calculated at an hourly rate for the time spent.

9.      Mr Abbott did consistently disclose the Ashkirk consulting agreement with BDW.  The disclosure is evidenced in various notices under Corporations Law ss 231 - 236. Mr Abbott produced copies of these notices, or correspondence referring to them, dated variously 15 August 1995, 10 July 1997, 6 January 1999, 16 and 22 February 1999 and 25 February 2000 (enclosing a copy of the 22 February 1999 Notice). The earlier notices and correspondence were directed to CE Heath International Holdings Ltd or HIH Winterthur International Holdings Ltd. The later notices were directed to HIH Insurance Ltd. The notices were tabled at the board meetings of the companies to which they were addressed. Consistent with that disclosure, the Ashkirk consultancy, and Mr Abbott’s interest in it, was noted in the 1999, and 2000 HIH Annual Reports. Those reports disclosed what…