THE former CEO of ASX-listed and collapsed Compass Hotel Group, Bryan Northcote, has pleaded guilty in the Downing Centre Local Court in Sydney to three charges of breaching the Corporations Act 2001, brought by ASIC.
Compass Hotel floated at $1 a unit in January 03 2008 raising $123 million and operated a West Australian hotel chain consisting of 12 hotels and taverns. In March 2011, the company went into receivership, when it was trading at just 1.5 cents.
The charges follow an ASIC investigation into the activities of Northcote while he was CEO and executive director of Compass Hotel Group Limited (CHGL).
Northcote pleaded guilty to one count of breaching his duty as a director between 9 October 2007 and 22 April 2008, by dishonestly withholding information from the board and using his position to gain a financial advantage. ASIC alleged a company owned and controlled by Northcote, Yard House Australia and New Zealand Pty Ltd (YANZ), entered into a conjunctional agreement with a hotel broker whereby it would receive 50% of all sales commissions paid by CHGL and vendors to the hotel broker for hotels purchased by CHGL. YANZ subsequently received $1.566 million in commissions.
Northcote also pleaded guilty to two counts of submitting documents to ASIC which were misleading by falsely claiming Northcote had resigned from YANZ on 1 October 2007.
ASIC deputy chairman Belinda Gibson said company directors and officers were critical gatekeepers in the management and oversight of listed companies.
Northcote will appear in the Sydney District Court on 25 January 2013, when it is expected a sentence date will be set.
A breach of directors’ duties carries a penalty of five years imprisonment and / or a fine of $220,000. Submitting false or misleading documents to ASIC carries a penalty of five years imprisonment and / or a fine of $22,000.
Property Review