Ex-Hastie Services finance boss gets two years for cooking the books
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The former chief financial officer of Hastie Services, Glyn Raines, has been sentenced to two years in prison for falsifying company accounts.
Mr Raines pleaded guilty in 2016 to two charges of conspiracy to falsify the books and records of Hastie Services, and one charge of conspiracy to give false or misleading information to an auditor. The charges were brought by ASIC.
He faced up to five years in prison.
District Court of New South Wales Judge Peter Whitford took into account Mr Raines’ “significant degree of contrition” and extensive co-operation with ASIC.
This follows the sentencing in August of co-conspirator Samantha Cousins, a former finance manager of Hastie Services, for the same charges.
She was released immediately on condition of good behaviour for two years and payment of a $1000 security.
Hastie Services was a subsidiary of Hastie Group, an ASX listed company that was put into administration in 2012.
Engineering firm Hastie Group and 44 subsidiaries collapsed after it found $20 million in “accounting irregularities”.
“These irregularities date from the financial year 2009 and appear to have resulted from the deliberate actions of a current employee,” the company said at the time.
Mr Raines was the CFO of Hastie Services, not the broader group.
The collapse cost 2700 jobs and cut an estimated $300 million from bank profits – they’d lent the business about $503 million in loans and guarantees to fund rapid growth.
A report by the administrator PPB Advisory that came out in 2013 suggested management systems and controls at the company were inadequate, particularly given its massive, acquisition-funded expansion.
A class action was launched in June this year, alleging a $160 million capital raising prospectus in 2011 breached the Corporations Act, the ASIC Act, and the Australian Consumer Law by giving assurances about the reliability and accuracy of its financial statements and earnings forecasts.
Because Hastie Group itself is no more, the defendant in this case is Deloitte.
IMF Bentham investment manager Michael Kennedy says they’re in the very early stages of the suit, and they may get to the evidence presentation stage by early next year.
Cooking the books
ASIC said in a statement that Mr Raines and Ms Cousins admitted they “conspired with two other senior staff members of Hastie Services to make false entries into the books of the company to reduce the “gap” between the forecast Earnings Before Interest and Tax (EBIT) and the actual EBIT”, between November 7, 2008 and June 30, 2011
Furthermore, between May 5, 2010 and February 13, 2011, with the same two senior staff members they made false entries into the books of Hastie Services in order to conceal the true financial position of the Western Australia branch.
And finally, between June 17, 2010 and April 9, 2011, the four provided false information to auditors to conceal the above offending.
“On any view, the offending is objectively serious. There was no issue concerning that conclusion on sentence,” Judge Whitford said after sentencing Mr Raines.
“[He] must have been acutely conscious of the impropriety of his conduct and, even if they were not intended, the serious consequences to which conduct that character could reasonably rise, both for the company directly and more broadly for its parent, the parent’s company’s shareholders and the market generally.”