Australian Securities and Investments Commission v Andrew Alexander Lindberg Case Analysis

Running Head: BUSINESS LAW
Business Law
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1BUSINESS LAW
CASE INTRODUCTION
The case of Australian Securities and Investments Commission v Andrew Alexander
Lindberg [2012] VSC 332; 91 ACSR 640 is related to the breach of the Corporation Act 2001
(Cth). One of the most unique features about this case is that the defendant had admitted that he
have violated the provisions of the CA in his capacity as the director of the company. There was
an agreement between the ASIC and the Defendant director that the director will pay a pecuniary
penalty of $100000 and a management ban of two years. However the court stated that it would
only be satisfied with the settlement between the parties if the breaches alleged by the ASIC can
be established. This paper will provide a discussion in relation to this case as to what were the
facts, what duties had been breached by the directors, an analysis of the decision of the court
based on the current corporation law and the implications on company law of the decision
provided by this case.
INTRODUCTION TO FACTS
A civil penalty proceeding had been instituted by the ASIC against Mr Lindberg who was
the director of AWB Limited (AWB) for acting in a way which contravened the provisions of the
CA by being involved in the wheat trade of the company in Iraq where the Oil For Food Program
which was run by the United Nation had been misused by the director. The ASIC amended its
claim against the directors and the proceedings did not continue. However there were lengthy
negotiations between the parties and they reached a settlement. As per the settlement four
contraventions had been admitted by the directors in relation to s 180(1) of the CA as he failed to
deploy reasonable care and skill and other allegations against him had been withdrawn. The
parties tendered to four contraventions in relation to the CA, a statement of agreed facts,

2BUSINESS LAW
submission in relation to the applicable legal provisions. The statement of agreed fact provided
for a background in relation to contraventions. The court in this case found that the declaration of
contravention under the provisions of section 1317E cannot be provided merely because of the
consent of the ASIC or the defendant. The declaration is to be only provided when the court is
satisfied that the contravention had been made. In addition the burden of proof is upon ASIC to
show the contraventions made in the balance of probabilities. The court had to analyze that the
statutory conditions for the purpose of imposing the pecuniary penalties have been violated or
not. The ASIC had made a claim for pecuniary penalties based on evidence that the director had
made a serious contravention of the CA. The court will only allow the declaration if it is satisfied
that the contravention made by the director was serious in nature.
Iraq was the primary market of the sale of wheat produced by the company. There were
allegations that UN Escrow Account had been misused. The account was used to obtain money
for purpose other than foodstuffs and medical supplies and hard currency had been received by
Iraq in the violation of UN sanctions. This was because in relation to a contract of selling wheat
to Iraq the company was to be provided with money from the UN account for the wheat sold by
them in the country. The company was supposed to present before the UN Office of the Iraq
Program with the contract of sale of wheat in the country and UN would release the sale price
form the Account to the company in case the OIP was content that all requirements gave been
met. The sale price of wheat however actually included the price paid for inland transportation
and thus the money from the account had misused.
BREACH OF DIRECTORS DUTIES