The Australian Securities and Investments Commission (ASIC) has taken collapsed funeral insurer Youpla Group's (formerly Aboriginal Community Benefit Fund) directors and officers to court for alleged breaches of their duties.
ASIC commended civil penalty proceedings in the Federal Court against Ronald Joseph Pattenden, Jonathan Glen Law, Michael Brendan Wilson, Bryn Elwyn Jones (CEO), and Geoffrey Peter Clayton (COO).
ASIC claimed that the directors maintained insurance arrangements with Crown Insurance Services (Crown), a Vanuatu-based company beneficially owned and controlled by Pattenden and Law, even though these arrangements were not in the interests of the Aboriginal Community Benefit Fund (ACBF) entities and stood to benefit Pattenden and Law.
The corporate watchdog further claimed that the arrangements with Crown left the ACBF entities vulnerable to unaffordable premium increases (as occurred to ACBF 2 in September 2017). Additionally, First Nations people continued to make premium payments to ACBF while being unaware of the risks to the viability of the funds and their ability to meet their commitments to members.
“First Nations people took up policies with ACBF to ensure their family members had cover for their funeral expenses. ASIC alleges the defendants maintained the arrangement with Crown, which moved funds into an overseas company owned and controlled by two of the directors and did not act in the best interest of the ACBF entities and members,” said ASIC Deputy Chair Sarah Court. “The payments to Crown impacted the viability of the ACBF entities and put at risk their ability to meet their commitments to members.”
ASIC seeks declarations of contraventions of s180, s181, and s182 of the Corporations Act, pecuniary penalty orders, and orders disqualifying the defendants from managing corporations. The first case management hearing will be held on September 07, 2023.
“Directors and officers must comply with their obligations, particularly when it comes to conflicts of interest,” Court said.
In its latest corporate plan, ASIC vowed to take further enforcement action to protect consumers and small businesses.
