Mr David John Muir, a former director of Hallmark Gold NL, was today sentenced in the District Court to two years in prison following an investigation by the Australian Securities and Investments Commission.
Mr David John Muir, a former director of Hallmark Gold NL (Hallmark), was today sentenced in the District Court of Western Australia to two years in prison following an investigation by the Australian Securities and Investments Commission (ASIC).
Mr David John Muir, a former director of Hallmark Gold NL, was today sentenced in the District Court to two years in prison following an investigation by the Australian Securities and Investments Commission.
Mr Muir was sentenced to two years in prison to serve 10 months and then enter into a recognisance in the amount of $10,000 to be of good behaviour for 14 months.
Mr Muir pleaded guilty to seven charges of making improper use of his position as a company director on 13 June 2006, and was remanded in custody from that date.
Mr Muir was charged in relation to a directors meeting of Hallmark in October 1998 when a number of resolutions were made. Mr Muir, who resides in the ACT, was a director of Hallmark at the time. Mr Muir was charged in 2001. ASIC alleged that the prime purpose of the resolutions was to remove cash from Hallmark for the benefit of third parties known to Mr Muir.
Entities controlled by associates of Mr Muir, and that benefited from the transactions, included Davis Samuel Pty Ltd, Kamanga Holdings Pty Ltd, Qancorp Pty Ltd and CTC Resources NL.
An ASIC investigation found that, as a result of the resolutions:
- Hallmark executed a retainer agreement with consultants, Davis Samuel Pty Ltd, for $350,000 a year for three years;
- Hallmark purchased 8.2 million Kanowna Lights NL options for $656,000;
- Hallmark purchased 3.6 million Kanowna shares for $720,000; and
- Hallmark entered into a contract with Kanowna to exercise the Kanowna options for $1,640,000.
Hallmark purchased the Kanowna options at a premium of over 300 per cent and the Kanowa shares at a premium of over 100 per cent. The Kanowna Lights NL shares were purchased for 20 cents each when they were trading on the ASX for 9.5 cents each. The Kanowna Lights NL options were purchased for 8 cents each when they were trading for 1.9 cents each.
The owner of the Kanowna shares was CTC Resources NL, and the owner of the Kanowna options were companies connected to the partners of Davis Samuel Pty Ltd. ASIC further alleged that the agreement entered into with Davis Samuel Pty Ltd was to the detriment of Hallmark.
The Executive Director of Enforcement, Jan Redfern said that company directors are entrusted with important responsibilities and those that deliberately acted in spite of the law would face consequences.
"The failure of a director to carry out their duties with integrity and honesty is a very serious matter. The jailing today of Mr Muir illustrates how serious ASIC and the courts view such matters. ASIC will continue to vigorously pursue company directors who fail to uphold the high standards the community expects," Ms Redfern said.
The charges were prosecuted by the Commonwealth Director of Public Prosecutions. Mr Muir's co-directors, Mr William Forge and Mr Peter Clarke, were found guilty in March 2004 on charges of making improper use of their positions as company directors of Hallmark and were sentenced to terms of imprisonment.
