Asic Drops Final Charge Against Former Hih Chairman

Sydney Morning Herald

Saturday November 22, 2008

Elisabeth Sexton

THE seven-year official investigation of the $5 billion collapse of HIH Insurance has come to a sudden and, for the corporate regulator, anticlimactic close with yesterday's abandonment of a criminal charge against the former chairman Geoffrey Cohen.

A three-week trial had been set down to begin in the Downing Centre Local Court on Wednesday.

The decision not to proceed against Mr Cohen brings to five the number of people who have successfully defended criminal charges relating to HIH and the company it took over in 1998, FAI Insurances.

Ten were convicted, eight of whom pleaded guilty before trial.

The charge against Mr Cohen was the last action outstanding from the HIH taskforce set up in May 2001 by the Australian Securities and Investments Commission.

Described by the then chairman, David Knott, as the biggest team ASIC had ever assembled, at its height it comprised 50 people.

Mr Cohen said yesterday he was "very relieved" and "quite surprised how long it's taken them to get to this decision" over a charge laid in 2005. The retired accountant and company director, 74, said that if he had his time over he would probably do the same again.

"Maybe I am a bit stupid in the reliance I placed on the executive directors, but I took them to be honest people," Mr Cohen said.

"I was in a company where there were a lot of people who it was found were dishonest; look how many of them have been to jail."

He had also relied on his "highly respected" colleagues at the accounting firm Arthur Andersen, which had audited the accounts of both HIH and FAI for 20 years before he joined the board.

The decision by the Commonwealth Director of Public Prosecutions not to proceed follows a similar decision in February relating to a more serious charge.

The first alleged Mr Cohen knowingly misled investors about a joint venture between Allianz Australia and HIH when he spoke at the HIH annual general meeting in December 2000. The second alleged that he did not take reasonable steps to ensure that the information he gave the meeting was not misleading.

ASIC's barrister, Alan MacSporran, SC, told the Deputy Chief Magistrate Helen Syme yesterday that it had become apparent last week that there had been a "material" change in the available evidence.

He named the former head of HIH's Australian operation Terry Cassidy, who gave evidence at the hearing in 2006, when Mr Cohen was committed to stand trial.

Mr Cassidy was "a critical witness who for a number of reasons no longer adhered to important parts of his evidence", Mr MacSporran said.

Mr Cohen has applied for ASIC to pay his legal costs, a rare outcome in criminal cases.

"I'm told it's unusual, but this is an unusual situation," Mr Cohen said.

Referring to a formal application his lawyers made for the charge to be dropped for lack of evidence, he said: "We went on for a long time after putting in our no-bill submission."

© 2008 Sydney Morning Herald

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