FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Vizard [2005] FCA 1037

SUMMARY

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v

STEPHEN WILLIAM VIZARD

VID 677 of 2005

FINKELSTEIN J

28 JULY 2005

MELBOURNE

1                     What I am about to say is a summary of my reasons for judgment.  The summary is not intended to be a substitute for those reasons.  Nor is it intended as an explanation or expansion of them. 

2                     The defendant was a director of Telstra, one of Australia’s largest public companies.  He owed his position to the belief that he was honest and capable.  Highly confidential information came his way in his capacity as a director.  He used the information on three occasions in the year 2000 for the purposes of benefiting himself and his family.  This was a contravention of s 232 and s 183 of the Corporations Law.  The contraventions were both  dishonest and a gross breach of trust.  They were carefully concealed and only discovered by chance. 

3                     When all is said and done, but for the fact that Telstra did not suffer any loss, the defendant’s actions would have been within the category of a worst case for an offence of this type. 

4                     To determine the appropriate penalty is a matter for serious consideration.

5                     On the credit side, the defendant admitted his wrongdoing and, through his counsel, has made a statement in open court expressing his unreserved contrition for his wrongdoing.  He apologised to his family, his colleagues, his friends and the community as a whole.

6                     On the other hand, “white collar” offences committed by prominent business people have a tendency to erode the moral base of the law and provide an opportunity for other offenders to justify their misconduct.  They are diffuse in their impact and are easily concealed.  Any slip from the high standards demanded of a director can put at risk the company, its investors and – in extreme cases – the economy.

7                     So, the punishment must be exemplary and sufficient to put members of the business community on notice that if they break the trust that has been reposed in them they will receive a proper punishment. 

8                     ASIC submitted that the appropriate pecuniary penalty for each contravention is $130,000.  The cases say that I should not depart from the amount suggested by the parties unless it is clearly out of bounds.  The proposed penalty is  low.  Left uninstructed I would have imposed a higher penalty, but I will adopt what has been suggested.  If this penalty is insufficient, Parliament should increase the maximum.   

9                     In fixing this penalty I have taken into account the public disgrace which has been suffered by the defendant and his family, the genuine and unreserved contrition expressed by the defendant together with the admissions of wrongdoing which have avoided a lengthy and costly trial. 

10                  And although the defendant’s general good character has been demonstrated, that can only play a minor role in fixing the appropriate punishment for white collar corporate offences.  It is usually an offender’s good character that has entitled them to occupy the position of trust which they have ultimately breached.  Indeed, it is their good character that is often used to facilitate the breach. 

11                  This brings me to the issue of disqualification.  It is my view that a disqualification for five years as suggested by ASIC is not sufficient.  Although specific deterrence is generally not in issue here, general deterrence is of primary importance in cases of this kind.  A message must be sent to the business community that for white collar offences “the game is not worth the candle”.  That is, the period of disqualification should reflect the need to protect society from the kind of unlawful conduct engaged in by the defendant.  In my view the appropriate period of disqualification is ten years. 

12                  There will be declarations that the Corporations Law has been contravened, the imposition of pecuniary penalties totalling $390,000 for those contraventions and orders requiring the defendant to pay ASIC’s costs of this application and of its investigation into the affair.  ASIC should bring in short minutes of orders within 14 days.