Former CEO Andrew Scott and lawyer Leslie Glick. Photo: Wayne Taylor
THERE will be some disquiet in the legal community about the kinds of penalties Justice John Middleton has levied in the Centro case and, without doubt, much rejoicing in the business world.
Directors in plenty of boardrooms will say the Federal Court judge has demonstrated a remarkable pragmatism and that he has grasped the very special and unusual circumstances that applied in this case.
They will say that he fully comprehends how the Centro non-executive directors were let down both by management and by the company's auditors, who were paid millions of dollars to ensure the accounts were correct.
And they will say that to have banished from corporate life a group of men whom the court described as honest, diligent and conscientious would have been an extravagant exercise of punishment.
Yet there will be quite a few on the other side of the ledger who will look at Middleton's decision and shake their heads, saying that while the corporate regulator has achieved a lot in highlighting the duties of directors it has been mightily short-changed in penalties.
In truth, what Middleton has opted for is the Goldilocks position - not too hot, not too cold - and in effect he has dramatically watered down the impact of his liability decision.
The judge has not entirely exonerated the directors, nor has he struck them down with a wrath so vile that he opened the path for an appeal.
Middleton has carefully worded this decision to show these penalties apply because of the specific circumstances of the Centro case, but the inevitable questions arise. How much penalty is enough when a director has done wrong? Is a strike-out appropriate, or a financial penalty?
Is a penalty of tens of thousands of dollars ''about right'' when the offender is a multimillionaire? Or, to turn it inside out, what exactly is the point of levying a pecuniary penalty when the bill - legal fees and all - is picked up by the officer's corporate insurance policy?
What about a public shaming? Will that serve to punish and deter? Is it ''enough'' that the offender's failures are marched across the business pages so that the financial community bears witness and a prized reputation is undone?
Or is the shaming something to be presumed as the downside of the acclaim, high profile and fine remuneration that comes with prestigious positions such as directorships?
The Australian Securities and Investments Commission asked the court to levy financial penalties of $30,000 to $60,000 on each of the non-executive directors (all of which would be met by insurance policies) and strike-out bans of at least six months and up to 18 months.
It wanted Andrew Scott, the most senior managerial representative who was also inside the boardroom, struck out for three years and ordered to pay as much as $100,000.
But what the court has doled out for the non-executive directors is a suite of formal declarations, no fines and no corporate bans.
In the case of Scott, he has been issued with a similar declaration and ordered to pay just $30,000, which will be sent to the insurers.
From today, the man who for years was at the pinnacle of Centro's managerial tree, yet who seemed almost invisible during the trial, is free to roam the corporate world. Indeed, said the judge, Scott ''has abilities and skills, as with the other directors, that the public should not be deprived of in the future''.
But whether Scott or any of the non-executive directors should take that as a calling card for corporate work is a moot point.
