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Charging compliance offences v e.g. fraud

Editorial Staff

If one searches for Adrian Maxwell Ballintine, the first entry is from a source that the unaware would consider useful for Know Your Customer / CDD checking. It says "Founder of NewSat. Ltd, Adrian Maxwell Ballintine is currently Chief Executive Officer and Executive at this company."

There are records to set straight, not the least of which is the relevant criminal record.

The big question is this: why, given the facts, has the Defendant been charged with what amounts to a regulatory offence when the conduct bears all the hallmarks of fraud. Also, why, then, was the Court happy to fine him AUD15,000 in relation to an offence involving AUD357,000.

The Australian Securities and Investment Authority, ASIC, has secured a conviction against Adrian Maxwell Ballintine, now 64, of Yaroomba, Queesland. In the County Court of Victoria, he pleaded guilty to one count of "authorising the making of false or misleading statements in documents required by, or for the purposes, of the Corporations Act."

Between 18 January 2012 and 15 September 2012, Ballintine, a former director and chief executive officer of NewSat Limited, authorised the making of three invoices for amounts totalling AUD357,000 to be addressed to NewSat Limited (NewSat). The invoices were issued for purported financial and advisory services, however no such services were provided to NewSat. Following the issuing of the invoices, NewSat made payments totaling AUD357,000 to an accounting and financial advisory firm, with NewSat receiving no benefit for the payment. Of the total paid by NewSat, AUD320,000 was then transferred to Cresta Motor Yachts Pty Ltd, being a company for which Ballintine was a director and in which he held 73% of its shares in his own name and through a private company.

Although NewSat was not on the verge of insolvency, these facts are highly reminiscent of the facts in a case, also in Australia and brought by ASIC, last week ( here. One of the defendants in that AUD3 million case was jailed for five years and another for four and a half.

The material difference appears to be that the earlier case was in relation to defrauding creditors. While NewSat did in fact go into liquidation, receivership having failed, in late 2015, the Ballintine transaction does not appear to be related to that. Cresta Motor Yachts Pty Limited went into liquidation in late 2016.

In the Ballintine case, it was different. A director was extracting funds for his own purposes.

But it's a clear money laundering scheme - clearly Ballintine was not entitled to the money - if he had been he would not have used such a device and he would not have paid the "accounting and financial advisory firm" some AUD37,000 dollars to launder it.

It appears that the reason for the apparently lenient sentence on Ballintine is that the device appears to have been done not to defraud NewSat, as such, but to support Cresta. However, NewSat was listed which means that, in effect, there was a fraud on shareholders. Also, if there was an element of tax evasion, then Ballintine and the "advisory firm" look increasingly likely to be at least investigated for money laundering.

Judge Sarah Dawes said: ‘Ballintine held a position of trust and was obliged to protect the interest of NewSat. His conduct was knowingly dishonest and financially motivated. Such conduct erodes public confidence in the share market and public companies.’

For Financial Crime Risk Officers, the warning signs here were that the advisory firm turned moneys around between two connected companies while retaining a percentage which would have been, one expects, a very substantial fee relative to their usual billings.

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