The man who presided over Australia's largest corporate collapse has been jailed for four and a half years, following one of his former directors to a maximum-security jail in Sydney.
The man who presided over Australia's largest corporate collapse has been jailed for four and a half years, following one of his former directors to a maximum-security jail in Sydney.
Ray Williams, the 68-year-old founder and former chief executive of the insurance giant HIH, had pleaded guilty to three charges of misleading shareholders and to failing in his duties as a director. HIH collapsed in 2001 with debts of £2.1bn, shocking corporate Australia and prompting comparisons with the subsequent demise of Enron and Worldcom in the United States.
Despite Williams expressing "shame and remorse", the Australian courts were determined to send a message about white-collar crime committed on such a phenomenal scale. Twenty-four hours earlier, a former HIH director, Rodney Adler, had also been jailed for four and a half years. Lawyers for Williams, who was notorious for his lavish lifestyle, said yesterday that they would appeal against the "manifestly excessive" sentence. The scandal affected thousands of policy-holders across the country, who were left without insurance or out of pocket. It plunged the insurance industry into a crisis from which it has yet to recover. In total, nine former executives were charged.
The media was full of stories about families with worthless HIH policies. One family whose home was destroyed by fire was forced to remain there, living in the burnt-out shell.
Williams had admitted reckless corporate behaviour and misleading shareholders. The court found he concealed the real extent of HIH's parlous finances, and concluded that his criminal conduct "went to the heart" of the company's collapse. He had resigned four months before.
As HIH foundered, it radically cut the price of its premiums to gain a larger share of the insurance market. But that left the company without enough funds to cover future claims.
Senior HIH executives were found to have indulged in creative accounting, manipulating accounts to show non-existent profits, and entering markets in Britain and the US without adequate financial provision.
Williams, a flamboyant character, reportedly spent vast amounts of money on himself, splashing out on expensive cigars and gold watches, as well as bestowing large loans on friends and colleagues. He even billed his company for £600-worth of jelly beans. One of his lawyers said yesterday he was "bitterly disappointed" by the sentence.
But Bruce Dennis, a lawyer representing 3,000 HIH shareholders, said the court had weighed up the case "very fairly". Some former policyholders said Williams had got off lightly.
He is now in Silverwater maximum-security prison, together with Adler, who was jailed for five counts of dishonesty. Neither of the men was held directly responsible for the company's failure, but New South Wales Supreme Court Justice James Wood said Williams' crimes "were part of a wider history and pattern of mismanagement which, in combination, eventually led to the collapse".
The court heard that Williams had been prescribed anti-depressants in recent years and was at one stage suicidal.
The sentence was welcomed by the state Premier of New South Wales, Bob Carr. "There is a sense of vindication and a great deal of satisfaction that the courts have held him responsible for ... very, very expensive criminal behaviour," Mr Carr said.
The chairman of the Australian Securities and Investments Commission, Jeffrey Lucy, said the sentence sent a strong message to corporate Australia.
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