Breach of Director's Duties in AWA Ltd v Daniels

CORPORATIONS LAW
• BREACH OF DIRECTOR’S DUTIES

CASE INTRODUCTION
• The case in discussion is AWA Ltd v Daniels (1992) 10 ACLC
933; on appeal Daniels v Anderson (1995)
• AWA Ltd is an Australian Company dealing with dealing with
manufacture, import and export of electronic and electrical
products
• The company imported supplies from Japan and other
countries in large quantities
• Due to deregulations of the Australian financial markets and
severe fluctuation in the international currency markets there
was difficulty in conducting business

CASE INTRODUCTION (Contd.)
• To avoid potential risk the company purchased foreign
currencies in contracts for import of goods
• In the year 1985-86 the company stopped purchasing foreign
currency contracts and started to invest in managed hedging
• in the financial year 1986-87 25% of the company’s total
profit was anticipated from managed hedging
• In 1985 a Foreign Exchange Manager was appointed who
showed a profit of over 400% in just eight months
• It was later discovered that only contracts showing profits
were disclosed

CASE INTRODUCTION (Contd.)
• Contracts with losses were concealed by rolling over at
historic rates or paying by unauthorized borrowing of funds
• Two audits were done by Daniels
• None showed any deficiency in company’s accounting
structure
• Not statutory audits
• For failure of auditors AWA lost almost $49.8 million