So the news is that Stuart Ariff was released from prison on parole in late March 2015, having served four years on 19 counts of criminal fraud. You will recall that he was a liquidator who admitted in a 2009 Supreme Court case to 83 counts of misconduct including inappropriate drawing of fees, using liquidation funds for family expenses and failing to account to the creditors and shareholders. Subsequently, ASIC pursued him in a criminal case that resulted in a six year jail sentence, a life ban from being a liquidator and then his bankruptcy. You might recall I blogged here that my view was that, given the outcome, the law seemed to have worked slowly but effectively.
Well right on cue, using Mr Ariff as the reason reform is needed, the the media is calling for widespread changes to the Laws governing liquidation and liquidators.
Most prominently, there was an article by Adele Ferguson in the SMH, Age and AFR a week or so ago headed “Reform remains elusive for troubled insolvency sector.” Yes, there are some things that need fixing in the insolvency profession but these (regular) articles miss the main point for me. Liquidators are the piano players. There was an excellent response to the Adele Ferguson article, penned by John Winter, CEO of the Australian Restructuring & Turnaround Association (ARITA). Unfortunately, while the original article received excellent coverage, Mr Winter’s response is buried in the Letters to the Editor only. But it is well put so let me just quote directly from parts of that response:
“Corporate failure does not happen because of liquidators. Liquidators are only called in once the damage has been done. If the directors sought earlier help and intervention, there would be more left for creditors or collapse could be avoided altogether. Blaming liquidators for insolvency is like blaming your GP for you getting a cold.
Insolvency practitioners submit over 7,500 reports to ASIC each year that identify director misconduct, conduct that played a role in the failure of those businesses. Yet, due to ASIC’s lack of resources, only 136 of those reports resulted in a referral for compliance, investigation or surveillance, according to ASIC’s 2013-14 report.
…. we take issue with the constant rehashing of the abhorrent criminal conduct of one former practitioner.”