Ex-CEO pleads guilty in HIH case
By CNN's Geoff Hiscock in Sydney
SYDNEY, Australia (CNN) -- Ray Williams, former CEO of HIH Insurance and the man at the center of Australia's biggest corporate disaster, has pleaded guilty to three charges over his management of the HIH group.
HIH Insurance collapsed in May 2001, leaving thousands of policy holders without cover and forcing the Australian government to bail them out.
The cost of the collapse has been estimated at Aust. $5.3 billion (about $3.9 billion).
Williams, who founded HIH in 1968 and stepped down as chief executive in October 2000, has already been banned from being a director for 10 years and fined A$250,000 following court action by the corporate regulator, the Australian Securities and Investments Commission (ASIC), in 2002.
On Wednesday, Williams appeared in the New South Wales Supreme Court in Sydney and pleaded guilty to three criminal breaches of the Corporations Act in the period 1998-2000.
The charges cover being reckless and failing to act properly as a director of HIH Insurance in 2000; authorizing the release of a misleading prospectus by HIH Holdings (NZ) in 1998; and making or authorizing a misleading statement in the 1998-99 annual report of HIH.
Williams will face a sentence hearing in March 2005.
He is one of a number of HIH executives and associates to have been pursued by ASIC in its investigation of the HIH collapse.
Late last year, William Howard, a former general manager of HIH Insurance, was sentenced to three years imprisonment -- a term that was suspended on the basis of his ongoing assistance to the HIH investigation.
This came after Howard made admissions to ASIC about payments made by HIH to business identity Bradley Cooper and his associated companies.
In October this year, Cooper was committed for trial on six charges of corruptly giving a cash benefit to an agent of HIH Insurance, and seven charges of making false or misleading statements.
In May 2002, former HIH director and Sydney entrepreneur Rodney Adler was found to have breached his duties under the Corporations Act.
Adler, who sold his FAI Insurance company to HIH for A$300 million, was banned from acting as a director for 20 years and fined A$450,000. His Adler Corp. was also fined A$450,000.
A high-level judicial inquiry known as a Royal Commission investigated HIH's collapse and found in April 2003 that it was primarily due to the insurer's failure to provide properly for future claims.
The head of that inquiry, Royal Commissioner Justice Neville Owen, found that 56 possible breaches of civil and criminal law should be referred either to ASIC or the New South Wales Director of Public Prosecutions.
Executives adversely named in the inquiry included Williams, Adler and former HIH finance director Dominic Fodera.
As a result of the inquiry's findings, former HIH Insurance deputy chairman Charles Abbott will face a committal hearing in May 2005, charged with dishonestly using his position as a company director.
Three other men, Timothy Mainprize, Daniel Wilkie and Stephen Burroughs, were committed for trial in July this year on charges of failing to act honestly as officers of FAI General Insurance.
ASIC chairman Jeffrey Lucy said in a statement Wednesday that Williams' guilty plea was a "significant" development in the watchdog's ongoing investigation of HIH.
