Opinion
The authorities responsible for overseeing the conduct of corporations frequently remind the public of the cost of illegal phoenixing.
Billions lost every year. Responsibly run businesses damaged through innocent association with unscrupulous recidivists. The undermining of public confidence in free and fair markets.
“In 2016, evidence was obtained by the Australian Taxation Office “during an access without notice” attendance on the debtor suggesting his personal living and household expenses were not consistent with his reported income.” Judge Anthony “Tony” Kelly.
So what happens when these authorities get a habitual proponent of illegal phoenixing, a man who’s reportedly cost the Commonwealth more than $15 million in unpaid taxes, dead to rights?
They impose the maximum ban allowable in the circumstances, which it turns out will prevent Philip Damien Whiteman – also known as Philip Damien Graham – from managing corporations for a period of five years, though the utility of such a ban is questionable given Whiteman is currently a bankrupt, again.
iNO readers will recall the how the fuse on this long running saga was lit after the Australian Tax Office (ATO) in 2017 obtained orders for the appointment of Pitcher Partners Andrew Yeo and Gess Rambaldi as provisional liquidators to Whiteman’s Armstrong Shaw accounting and advisory group.
Subsequently A&S Services Australia Pty Ltd A&S); Bolton & Swan Pty Ltd (B&S); ACN 147 341 991 Pty Ltd (DNV); Armstrong and Shaw Pty Ltd (Armstrong); and Ainslie Harding & Wood Solicitors Pty Ltd (AHW) were wound up, the Pitchers pair were appointed liquidators and, armed with funding from the ATO, unleashed.
Weeks of public examinations followed involving multitudes of examinees, including some prominent Victorian liquidators who’d accepted referrals from Whiteman or his cronies, who included struck off former liquidator Andrew Dunner.
Whiteman was eventually bankrupted in September 2021, a state with which he is not unfamiliar having been previously a bankrupt from January 2010 to March 2014.
Now, two years later, ASIC, the authority responsible for enforcing penalties against directors found to have broken the law, has slapped him on the wrist with an almost pointless five year ban.
If the the powers that be want the public to have confidence that they are safeguarding the integrity of the system, this ban needed to represent the beginning and not the end of the enforcement measures planned for Mr Whiteman.
But an ASIC spokeswoman today said the regulator had concluded its investigations and chosen not to proceed with further action.
This is despite the judge who first found in the ATO’s favour in 2017 ruling that the AS Group corporate defendants” were collectively operating a business of defrauding creditors involving phoenix activities for their clients”; that those corporate defendants were controlled by the Whiteman; that he was the de facto director of each of them and that other persons registered as directors were merely ‘puppets’. See: Deputy Commissioner of Taxation; in the matter of Whiteman v Whiteman [2021] FedCFamC2G 131
If you’re wondering how law breakers develop their sense of impunity, ASIC’s attitude is the answer.(Read the ASIC release)
ASIC once again failing the “pub test”!
GB
Not another 5 years… 😮💨
I well remember some comments posted over time concerning ASIC’s preoccupation with squeezing money out of Liquidators (using a terribly inefficient model, I might add). Indeed, I recall posting some missive myself about how ASIC’s looking the wrong way (more or less).
The ‘squeezing’ preoccupation is still evidently a higher priority than addressing both the reality of serial phoenixing and the attendant expectation that the perpetrators can get away with it.
Strange how, yet again, the corporate cop is not the one providing the majority of the funding. That comes from the ATO. However, armed then with court transcripts, judgements and some really helpful commentary from the Bench, ASIC does… well, not much.
The other aspect which the Editor has not mentioned is that another bucket of money and resources is invariably kicked in by the Liquidators who pursue these cases. They’re the ones who go cap in hand to ASIC and the ATO, with frankly nothing but their good names and a good dose of corporate morality as their motivators.
Pretty poor state of affairs, innit? Planet Earth is indeed a very strange place.
I hope I don’t die waiting for ASIC to be comprehensively redirected on these matters, and the Government of the day to get fair dinkum about helping those who really do the work (that’s the Liquidators!!) instead of a piecemeal little grant to the Liquidators from time to time, to make us all feel better.
It also wouldn’t hurt for Jimbo Chalmers and his Katy Gallagher to get serious about this. They’re the ones who can bring in suitable changes to seriously discourage this serial naughty behaviour.
Cheers,