19 Sep, 2013
Australian hotel group’s ex-CEO convicted of submitting false info to Securities Commission
Canberra, 18 September 2013 (Australian Securities and Investments Commission) – The former Chief Executive of West Australian hotel chain Compass Hotel Group Ltd (CHGL), Bryan Raymond Northcote, has been convicted of breaching directors’ duties and submitting false and misleading documents to ASIC.
Mr Northcote was the chief executive and executive director of CHGL which floated on the Australian Securities Exchange on 3 January 2008 and operated a chain of 12 hotels and taverns in Western Australia. CHGL went into receivership in March 2011.
Between October 2007 and April 2008, Mr Northcote dishonestly withheld information from the CHGL board and used his position to gain a financial advantage. In December 2012 Mr Northcote pleaded guilty to one count of breaching his duty as a director (refer: 12-312MR).
Mr Northcote also pleaded guilty to two counts of submitting documents to ASIC which were false or misleading.
Appearing at the Sydney District Court on 17 September 2013, Mr Northcote was convicted on all three counts and sentenced to two years imprisonment on the charge of breaching directors duties by gaining an improper advantage, and one year imprisonment on each count of submitting documents to ASIC which were false or misleading, with the latter two counts to be served concurrently with the first count, resulting in a total effective sentence of two years imprisonment to be served by way of an Intensive Correction Order (ICO).
‘One of ASIC’s primary goals is to ensure fair and efficient markets and this can only be achieved if company directors act appropriately,’ ASIC Commissioner John Price said. ‘Directors abusing their position to dishonestly gain a personal advantage, run the risk that ASIC will identify the conduct and bring criminal proceedings against them.’
The Commonwealth Director of Public Prosecutions prosecuted the matter.
Background
A company owned and controlled by Mr Northcote, Yard House Australia and New Zealand Pty Limited which traded as NovaPrime (YANZ), entered into a conjunctional agreement with a hotel broker whereby it would receive 50% of all sales commissions paid by CHGL and vendors to the hotel broker for hotels purchased by CHGL.
YANZ subsequently received $1,566,730 in commissions of which Mr Northcote received $1,091,984.19 either directly or via companies owned or controlled by him.
Between December 2007 and August 2008 there were 10 CHGL board meetings at which directors would be asked to declare conflicts of interest. At these meetings Mr Northcote never declared his interest in YANZ. Further, Mr Northcote never declared his conflict of interest at two meetings of CHGL’s Risk Management Committee where the issue of conflicts of interest were the first item on the agenda.
Mr Northcote submitted documents to ASIC which were misleading by falsely claiming he had resigned from YANZ in October 2007.
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