Government lawyers yesterday blamed greed, questionable accounting practices and a bungling board for Australia's biggest-ever corporate collapse.
In final submissions to a government inquiry into the bankruptcy of HIH Insurance Ltd, the lawyers counted more than 1,000 breaches of civil and criminal law.
"[There are findings of] undesirable corporate governance, inappropriate discharge of regulatory obligation, possible breaches of civil and criminal law," said Wayne Martin, senior legal counsel for the government. "Well over 1,000 in total."
Government lawyer Simon White said HIH's founder and former chief executive, Ray Williams, should be referred to prosecuting authorities "to consider the question of whether criminal charges or civil penalty proceedings should be commenced against him."
HIH, Australia's second-largest insurer, collapsed in March 2001 with debts of about A$5.3 billion Australian (US$3 billion), leaving thousands of policy holders with outstanding claims.
It was Australia's biggest-ever corporate failure and put the spotlight on management and corporate governance practices in Australia well before the Enron Corp and WorldCom Inc scandals in the US.
Lawyers are trying to determine if there was wrongdoing by the board of directors, senior executives and government regulators such as the Australian Prudential Regulation Authority.
"Executive self-indulgence and corporate expenditure" also hurt HIH, Martin said. During the inquiry, evidence was given of multimillion dollar bonuses for executives. The company was "unduly dominated" by Williams, while the board was "ultimately ineffective," Martin said.
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