Fund trustee hit with three years jail

A former director of the troubled hospitality industry Employees Productivity Award Superannuation Fund has been sentenced to three years jail-term by a Queensland District Court after being found guilty of 18 counts of breaching his duties as a director.

Terrance Robert James’ sentence, delivered after Southport district court jury found him guilty, is to be suspended after serving 18 months upon entering into a $500 good behaviour bond for five years.

TheAustralian Securities and Investments Commission(ASIC) alleged that James improperly used his position as a public company director of EPAS, the corporate trustee of the Employees Productivity Award Superannuation Fund, to gain advantages for himself.

The public offer fund, which is mainly comprised of casual and part time workers from the hospitality industry, reported significant write-downs of the value of its assets in its annual reports for the years ending 1998 and 1999. Member benefit accounts were frozen in August 1998 as part of the first spate of write-downs.

ASIC alleged that as a director of the trustee company, James approved EPAS into making loans to companies or enterprises in which he held an interest, or to companies that entered into joint venture agreements with companies he owned.

ASIC also claimed that James or related entities sometimes received a fee from the borrower obtaining a loan from EPAS, resulting in James and his related entities receiving approximately $248,000.

In handing down his sentence, Judge Healy said the directors actions were “a significant breach of trust …causing a great deal of distress to members of the fund”.

“ASIC will take action to ensure that directors of superannuation trustees who act dishonestly, misuse member's funds and withhold information from fund members about their investments, are brought before the Courts,” ASIC enforcement executive director Jan Redfern says.

James' co-accused, John Kenneth Sheilds, was sentenced in December 2003 after pleading guilty to charges of breaching his duties as a director. He was sentenced to a total of three years imprisonment, to be suspended after serving 12 months.