THE former managing director of failed finance company Banksia has been fined $25,000 and will be banned from managing corporations for five years.
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Presenting his judgement over the civil proceedings, Federal Court Judge Mark Moshinsky ordered that Patrick John Godfrey be disqualified effective 4.30pm on February 1.
His judgement was based on an agreed statement of facts between ASIC and Mr Godfrey.
Judge Moshinsky declared Mr Godfrey had contravened a section of the Corporations Act in four ways:
He failed to take all reasonable steps to ensure the Kyabram-based company was compliant with an accounting standard.
Furthermore, that Banksia’s financial reports for the financial years ending 30 June 2011 and 30 June 2012, and its half-year financial report for the half-year ending 31 December 2011, did not comply with the relevant accounting standards or give a true and fair view of the financial position and performance of Banksia given the amount disclosed for the provision of bad and doubtful debts was inadequate.
Mr Godfrey was found to have failed to have or obtain a sufficient understanding of the requirements of the relevant accounting standard for the recognition and assessment of the impairment of mortgage investments made by Banksia.
The court declared Mr Godfrey's recommendations as to the appropriate amount of provision for bad and doubtful debts resulted in Banksia’s financial reports failing to give a true and fair view of Banksia’s financial position.
ASIC Commissioner John Price said Mr Godfrey fell short of the standards required of him.
“The importance of ensuring that the financial accounts of a company are reported in accordance with the law by complying with the correct accounting standards is essential to provide assurance and market confidence,” Mr Price said.
Banksia had raised about $663 million from 15,622 investors as at October 2012 – the same month receivers and managers Tony McGrath, Joseph Hayes, Matthew Caddy and Robert Kirman of McGrathNicol were appointed.
Liquidators John Lindholm and Peter McCluskey of Ferrier Hodgson were appointed by an order of the Supreme Court on June 24, 2014.
ASIC started civil penalty proceedings against Mr Godfrey in the Federal Court on June 23, 2017.
