THE corporate regulator, under fire for failing in high-profile cases against Jodee Rich in NSW and Fortescue Metals in Western Australia, has told the Victorian Court of Appeal that its actions in launching a second civil penalty case against former AWB boss Andrew Lindberg were entirely reasonable.
Mr Lindberg's lawyers told the appeals court yesterday that the businessman would face ''intolerable prejudice'' if the Australian Securities and Investments Commission's second case went ahead.
Mr Lindberg's counsel, David Collins, SC, told the court his client had already endured long delays and weeks of hearings in ASIC's first case in October and November.
''It is a shocking burden for someone to have to live under, and he is now confronted with new allegations (in the second case),'' Mr Collins said.
ASIC is appealing against a decision of Justice Ross Robson, who last month halted the regulator's second case, saying it ''unreasonably'' delayed launching it.
That decision came just days after ASIC lost a seven-year legal battle against former OneTel boss Jodee Rich in the NSW Supreme Court. Soon after, it lost a case in the WA Supreme Court against Pilbara iron ore miner, Fortescue Metals.
ASIC is appealing in the Rich case and is appealing againts Justice Robson's decision in Mr Lindberg's case. Its first civil penalty case against Mr Lindberg continues, but it has been adjourned until the result of ASIC's appeal is known.
If ASIC succeeds, the two cases against Mr Lindberg would be heard simultaneously, although a trial of the joined cases might not begin until 2011.
The Court of Appeal, comprising President Chris Maxwell, Justice Mark Weinberg and Justice Peter Buchanan, reserved its decision.
The judges' deliberations will focus on whether ASIC acted reasonably in not launching its second case sooner, and consideration must be given to the possible prejudice caused to Mr Lindberg if the case went ahead.
ASIC argues that any detriment to Mr Lindberg amounts to a few months of extra delay and that, it argues, is not serious enough to warrant the case being halted.
Mr Lindberg is facing allegations arising from AWB's payment of $US225 million of kickbacks to Saddam Hussein's regime between 1999 and 2003. AWB's actions breached UN sanctions that barred payment of hard currency to Iraq.
ASIC's first case alleges Mr Lindberg breached his fiduciary duties because he knew, or ought to have known, about the illicit payments to Iraq, and by not halting them he brought the wheat exporter into disrepute.
ASIC's second case alleges Mr Lindberg purposely misled fellow AWB directors about the kickbacks, the extent of an internal investigation into the kickbacks, and about the serious nature of allegations levelled against AWB by authorities including the UN Volcker Inquiry.
ASIC's counsel, Michael Colbran, QC, said ASIC's allegations against Mr Lindberg in the second case were ''more important, more serious'' than those in the first case because they amounted to ''positive, misleading statements by the managing director to the board''.
In his decision of December 9, Justice Robson said, by December 2007, ASIC had all the material it needed to launch the second case and could have done so if it had exercised care and reasonable diligence. But he added that ASIC offered ''no satisfactory explanation for failing to consider the consequences of Mr Lindberg's conduct after the fall of the Government of Iraq''.
The Court of Appeal heard ASIC did give an explanation but the trial judge did not accept it.
Mr Colbran said ASIC investigators at the time were preparing cases against Mr Lindberg and his colleagues over five Iraq wheat export contracts, and were not focused on a failure to inform the board.
'We put the resources into what needed to be done,'' Mr Colbran said. ''We did not put the resources into what seemed …''
''Less urgent,'' President Maxwell suggested.
The 2006 Cole Inquiry named 11 AWB officials and a former BHP executive as worthy of further investigation, but only Mr Lindberg has faced court. Cases against five of his former AWB colleagues have been halted because they may face criminal charges.
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