Hastie Group collapse echoes ABC Learning, Centro failures
The sudden collapse of the Hastie Group has strong parallels with the failures of One.Tel, ABC Learning Centres, and HIH a decade ago, and the resulting litigation may mirror the recent James Hardie and Centro cases, say legal and accounting experts at the University of Western Sydney.
Professor Michael Adams, Dean of the UWS School of Law, and Associate Professor Philip Ross, from the UWS School of Business, have over 45 years combined experience in corporate governance, accounting and auditing.
Professor Adams says the corporate regulator, Australian Securities and Investments Commission (ASIC), will be watching closely to make sure the Corporations Act has been complied with, as well as the ASX listing rules on continuous disclosure.
"The directors' duties of large publicly listed companies are now well known throughout corporate Australia," says Professor Adams.
"The High Court and other superior courts have ruled on the objective standard expected of directors to take reasonable care and diligence. The question of law and fact for the Hastie Group now centre on who was asleep at the wheel. This is not a criminal matter, but like the major cases of James Hardie, HIH and Centro, severe civil penalties could apply."
Associate Professor Ross commented that whilst the full story behind the Hastie case is yet to be revealed, some comparisons can be made from an accounting perspective with the ABC Learning Centres case.
"There will be scrutiny over Hastie's strategy to grow through local and global acquisitions around the time of the GFC, and how the premiums paid for these acquisitions in the form of Goodwill are likely to have been impacted by declining economic conditions," says Associate Professor Ross.
Noting that Hastie had made some write downs of Goodwill, Associate Professor Ross indicated that the extent to which these values are impacted is complex, and there is always a margin for error.
Professor Adams and Associate Professor Ross are available for on-going analysis from a legal and accounting point of view as the investigations into the Hastie Group collapse continue. To organise an interview please contact the UWS Media Unit.
15 June 2012