Prosecutor Piles Up Hih Charges
The Age
Wednesday November 9, 2005
THE Director of Public Prosecutions has laid an additional charge against former HIH Insurance finance director Dominic Fodera, of authorising a prospectus containing a material omission.
The new charge is the same as that to which the former chief executive of the collapsed HIH, Ray Williams, pleaded guilty last March and for which he was subsequently jailed and has more than two years still to serve. Fodera now faces seven charges under the Corporations Law, with six charges laid two weeks ago of failing to act honestly as a director and company officer in the discharge of his duties and knowingly giving false and misleading information to directors and auditors in relation to a reinsurance arrangement. Yesterday in Downing Centre Local Court the DPP asked that Fodera accept changed bail conditions. Not only does he now need to notify the Australian Securities and Investments Commission of any change of address 24 hours in advance but he has been asked to relinquish his passport to ASIC although he can request its return as long as he submits a travel itinerary. DPP lawyer Janet Austin told local court chief magistrate Derek Price that she did not think Fodera was a flight risk but that he must also inform ASIC before approaching points of departure from Australia. Mr Price ordered the matter back in court on February 7 for directions and for a setting of a date for Fodera's committal hearing. The new charge relates to a complex transaction carried out in October 1998, when HIH was looking to take over FAI Insurances. The proposed acquisition was coded Project Vitamin. HIH needed money for the takeover and hit on the idea of raising $150 million via an issue of convertible notes. The DPP's statement of facts claims Fodera misled investors by allowing a material omission from the prospectus for the note issue. The prospectus provided that Societe Generale Australia, which co-underwrote the note issue, would to take up a priority allocation equivalent to $35 million. But the prospectus failed to disclose that HIH and SGA had also entered into a transaction in October 1998 referred to as a Total Return Swap, which effectively meant SGA's subscription of $35 million was fully secured and risk free.
© 2005 The Age
