‘Dishonest’ CEO gets long ban LEONIE WOOD
April 24, 2010
[b]A CHIEF executive who secretly bought shares in his listed biotech company to push the share price higher and secure for himself a $24,500 short-term pay bonus has been struck out of corporate life for 10 years.
Martin Soust, the Melbourne-based former chief executive of Select Vaccines, was also ordered by the Federal Court to pay a penalty of $80,000.[/b]
The Australian Securities and Investments Commission had asked the court to ban Dr Soust from being a director or manager for eight years and for a pecuniary penalty of $100,000.
Dr Soust was for several years during the 1990s chief executive of the Australian Ski Federation (now known as Ski and Snowboard Australia) and in 1998-99 he was an officer of Athletics Australia.
Justice Alan Goldberg said Dr Soust lied to fellow directors when questioned about the share purchase and then ‘‘consciously and deliberately concealed’’ the purchase, in part by claiming the shares were a ‘‘totally innocent’’ acquisition by his mother.
ASIC alleged Dr Soust’s purchase of Select Vaccines shares on December 31, 2007, and his subsequent cover-up of the trade amounted to four separate breaches of the Corporations Act.
In penalising Dr Soust yesterday, Justice Alan Goldberg said Dr Soust had ‘‘behaved in a dishonest manner repeatedly’’ from late 2007 to August 2008, when he resigned.
The judge said a big factor in determining the penalty for Dr Soust was his lack of remorse, and repeated instances of dishonesty in lying about the trade and concealing it.
‘‘Each step in the defendant’s pattern of behaviour was calculated and deliberate,’’ Justice Goldberg said, adding that the conduct in secretly buying the shares was ‘‘compounded by his subsequent dishonest behaviour’’.
The judge said Dr Soust had deceived Select Vaccines’ remuneration committee, lied to the company secretary about the shares, then formulated a document ‘‘designed to perpetuate his deceit and dishonesty’’, and later quit the company claiming there was an innocent explanation for the share purchase.
ASIC launched a civil penalty case against Dr Soust in early 2009, but it was not until just before the trial was due to start in October that ASIC became aware of a crucial document Dr Soust apparently drafted in mid-2008.
The document, found in a company laptop used by Dr Soust, outlined a series of mock questions and answers, presumably for Dr Soust’s mother to use if she was questioned by the corporate regulator about her son’s share purchases.
Justice Goldberg said while a significant component of the penalty was the need to deter Dr Soust personally, it was also ‘‘necessary to make it clear to directors and other persons in the commercial community that personal dishonesty in acting as a director of a corporation will not be condoned by the court and will be visited with severe sanctions’’.
‘‘Directors of corporations, and particularly directors of listed public corporations, must realise that they have a considerable amount of trust committed to them not only by the shareholders in their company, but also by the company’s creditors, the commercial community and the public generally,’’ he said.
The judge said he took into account character evidence that suggested Dr Soust had a previously unblemished record and was considered a man of integrity, but said it was ‘‘of limited assistance to me, particularly where the defendant has not sought to explain his conduct nor exhibited any contrition or remorse’’.
Nor was it clear that Dr Soust had fully apprehended the seriousness of his conduct.
The judge said that Dr Soust’s purported reason for not providing an explanation or expressing remorse - the possibility that he might face criminal charges - ‘‘rings hollow’’.
Source: The Age