THE cabal of former directors who oversaw one of Australia's biggest financial collapses has been ordered to pay $615 million in compensation to thousands of long-suffering retirees.
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It is believed to be one of the biggest compensation orders relating to a company collapse in Australian history.
The directors of the former MFS Investment Management business and the officers of its operating entity MFS Ltd have also been banned from being company directors for varying lengths of time, and received financial penalties.
The payments ordered by the courts will be directed to the thousands of retirees who put their life savings into the Premium Income Fund that was managed by MFS Ltd.
The MFS Group collapsed in 2008 owing $2.5 billion. The Premium Income Fund, or PIF as it was commonly known, was frozen to redemptions from investors in 2009. At the time, it held $770 million in people's life savings.
The bannings, fines and ordered payments came after a long-running court case brought by the Australian Securities and Investments Commission.
On Friday, the Supreme Court of Queensland ordered:
- Former MFS chief executive Michael Christodoulou King be disqualified from managing corporations for 20 years, pay a pecuniary penalty of $300,000, pay $177,017,084 in compensation to PIF and 60 per cent of ASIC's costs;
- Former deputy chief executive Craig Robert White, who was also CEO for a short period, be permanently disqualified from managing corporations, pay a pecuniary penalty of $650,000, pay $205,755,601 compensation to PIF and 70 per cent of ASIC's costs;
- Former MFS Investment Management CEO Guy Hutchings be disqualified from managing corporations for 25 years, pay a pecuniary penalty of $350,000, pay $28,738,517 compensation to PIF and 70 per cent of ASIC's costs;
- Former MFS chief financial officer David Mark Anderson be disqualified from managing corporations for 25 years, pay a pecuniary penalty of $500,000, pay $205,755,601 compensation to PIF and 80 per cent of ASIC's costs;
- Former MFS Investment Management funds manager Marilyn Anne Watts be disqualified from managing corporations for five years, pay a pecuniary penalty of $90,000 and 40 per cent of ASIC's costs.
'Complete disregard to their duties'
The bans, compensation orders and fines come after the Supreme Court of Queensland found in March 2016 that Mr King, Mr White, Mr Anderson, Mr Hutchings and Ms Watts had collectively committed 217 contraventions of the Corporations Act.
The contraventions were related to their involvement in the misappropriation of $147.5 million of funds.
Justice James Douglas said legal requirements "were flagrantly ignored" and that the penalties "should reflect the complete disregard which these defendants had to to their duties under the Corporations Act."
"The insouciant attitude of the defendants to this misuse of money intended to be used for PIF's investors beggars belief," Justice Douglas said.
ASIC Commissioner John Price described the penalties as substantial.
"To say the least, the Court's judgment demonstrates that this trust was most seriously abused in this case," Mr Price.
Note: MFS Investment Management mentioned in this story is in no way related to the Boston-based investment management group of the same name.
