Malvern man Andrew Scott pleaded innocent but was found to have broken the law after presiding over the loss of $5 billion in Centro Properties’ share value, or other people’s money. Scott has been fined $30,000 – in a court case that cost taxpayers and shareholders more than $3 million.
Warrnambool man Tyrone Lynch pleaded guilty to causing $5900 damage after he ran out of grog at his mum’s house, broke into the local Terang Mortlake Football Netball Club and took 30 cans of grog then went back to his mum’s and kept drinking. Lynch was sentenced earlier this year to 18 months in jail.
The price of negligence in corporate Australia, and destroying a lot of financial assets, is … wait for it … embarrassment.
There is an important distinction here: the Centro trial was a civil proceeding and the Warrnambool a criminal matter.
Nonetheless, the Warrnambool man might have done a little better in court, perhaps even as well as the Malvern man, had he had shareholders to fund his QCs.
The fine handed out to Scott, the former chief executive of the Centro Properties empire, is equivalent to 1.05 per cent of his cash pay for 2007, the year when Centro blew up.
The independent directors of Centro, who were also found to have breached the Corporations Act, got off scot-free. The shame was enough, found the Federal Court’s Justice John Middleton.
Further to the relativities, let’s say Andrew Scott worked 48 weeks in 2007 – that’s 240 days – the fine was worth 2.52 days’ labour.
Or even better, 20 hours’ work on his hourly rate of $1489 per hour. Scott received $2.86 million in his final year including 100 per cent of his performance bonus.
Meanwhile, the non-executive directors were all paid fees of $1.1 million in 2007. That was the year they overlooked the billion dollar liability in the Centro accounts, an oversight for which they were found guilty.
They get to keep those fees, not to mention the $2.85 million in fees in aggregate over the three years prior to the cock-up.
The Warrnambool man, Tyrone Lynch, would surely jump at the chance to trade in his jail term for a spot of shame.
As for Andrew Scott, as one property analyst noted of the sentencing today, “That’s pathetic, just pathetic”. He said Andrew Scott would probably have bottles of wine in his cellar worth $30,000.
So it’s all smiles at the Melbourne Club once more. The judgement was kind to the unfortunate Centro directors. And the price of negligence in corporate Australia, and destroying a lot of financial assets, is … wait for it … embarrassment.