Illustration: Michael Mucci

Nighty-night non-executive directors of Australia! Sweet dreams, all you who are so fraught and put upon! The arms of Morpheus beckon once again. Sleep, nature’s nurse. O gentle sleep.

Though so rudely wakened by the ghoulish spectre of accountability, directors of Australia need vex and gnash their teeth no more.

Yes, ladies and gentlemen. It is official, made precedent by the courts this very week.

The penalty for blowing up $5 billion and being found guilty of breaking the law in Australia is … drum roll … embarrassment.

The sentencing of Centro directors by the Federal Court’s Justice John Middleton will be talked about for some time for its spectacular leniency.

The architect off the whole house of cards which culminated in the Centro collapse, its chief executive Andrew Scott, suffers a $30,000 fine.

That’s it, a penalty equivalent to little more than 1 per cent of his cash pay for 2007, or 2½ days’ work.

His chief financial officer Romano Nenna gets a two-year ban and Centro’s six non-executive directors receive no penalty whatsoever.

Even the directors’ trade union was stonkered: “The Australian Institute of Company Directors does not comment on the circumstances of individual directors or companies, or on matters before the courts, and so will not be commenting on the specifics of the Centro case or on the nature of the penalties imposed by the Federal Court on the individual directors and executives involved.”

Translation: Phew! Gee, those boys got off lightly. Duck for cover. We’d better play this one down.

On one view of it, the biggest victim in the case is the poor old AICD itself, whose raison d’etre would now appear to have been and gone. Job a little too well done!

All that bewailing the insufferable burdens for company directors, the sheer responsibility of it all, the bloodcurdling litigation risks!

Here was the marquee case for non-executive directors, a $1 billion company-busting stuff-up, and there was nary a ban imposed.

To be fair, the independent directors did get their just desserts, in punishment terms. The human condition is as much about expectations as reality, and the directors have had their fair share of shame.

Moreover, there are plenty of oversights and board failures. This, though majestic, was but one.

Another, arguably much more egregious, will be in court next week when former Allco directors David Coe and Gordon Fell face questions by the liquidators over the board’s decision to buy Rubicon in 2008. Allco and Rubicon collapsed not long after.

To borrow from Monty Python’s Dead Parrot sketch: the exotic Norwegian Blue was lying dead at the bottom of the cage with its claws in the air but the Allco directors still bought it, apparently with only a passing interest in its mortality.

The broader issue from the Centro case is perception and deterrence. Is zero punishment, apart from shame, a deterrent to negligence or bad behaviour? Hardly.

Directors themselves may be chastened but the feeble sentencing merely fuels a rising community perception that there is one rule for the rich and another for the poor.

On the day of “judgment” we compared Andrew Scott’s $30,000 fine for blowing $5 billion, pleading innocent and being found guilty with the story of Warrnambool man Tyrone Lynch.

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, nicked some cans of grog then went back to his mum’s place and kept drinking. He was sentenced earlier this year to 18 months in jail.

Clearly Lynch is in the wrong racket. What he needs is some insurance to take care of his legal defence for a start. Centro directors’ D&O policies cover their legal bills. And Scott’s insurer will probably pick up the $30,000 fine.

But Lynch could also do with some good PR. Besides Centro’s

in-house public relations, directors are represented – at shareholder cost of course – by communications firm Gavin Anderson, which was unable to communicate the status of company funding Scott’s insurance.

The Centro non-execs naturally had their own PR too, a communications mob called Hintons, which was also unable to communicate whether Centro shareholders were picking up the tab.

Finally, rather than resorting to flogging cans of pre-mix rum and coke, Lynch should get on a board or two where you get paid $150,000 to go to 12 meetings a year and you get aged claret for free.

All this dovetails into the general malaise of capitalism. Capitalism is meant to punish failure, just as much as it rewards success.

Instead of risk being appropriately priced and success rewarded we increasingly see, in Western democracies at least, a corporate welfare state that undermines both capitalist and democratic principles.

Nowhere was this more clearly evinced this week than by a US study which found that 25 of the 100 highest paid chief executives were paid more than their companies paid in federal income taxes.

Political donations and lobbying have neutered the administration in Washington from any meaningful action on the economy. So the markets look to the Federal Reserve which, short of a potentially reckless “QE3” money printing foray, has already clipped rates to zero and shot all its stimulus bullets.