Former Compass Hotel Group (CHGL) chief executive Bryan Northcote has pled guilty to three charges brought by ASIC including that he dishonestly withheld information from the hotel board and used his position to gain a financial advantage.
CHGL floated on ASX on January 3 2008 and operated a West Australian hotel chain consisting of 12 hotels and taverns before being placed in receivership in March 2011 with debts of $100 million.
Its Perth property holdings included the Carine Glades Tavern, the Belmont Hotel and the Albion Hotel.
Yesterday, Bryan Raymond Northcote, pled guilty in the Downing Centre Local Court in Sydney to three charges of breaching the Corporations Act.
The charges follow an ASIC investigation into the activities of Northcote while he was CEO and executive director of CHGL.
Northcote pled guilty to one count of breaching his duty as a director between October 9 2007 and April 22 2008, by dishonestly withholding information from the CHGL board and using his position to gain a financial advantage.
ASIC also 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 pled guilty to two counts of submitting documents to ASIC which were misleading by falsely claiming he had resigned from YANZ on October 1 2007.
ASIC deputy chairman Belinda Gibson said company directors and officers were critical gatekeepers in the management and oversight of listed companies.
‘This case is an example of ASIC taking action when gatekeepers fail to act honestly,’ she said.
Northcote will appear in the Sydney District Court on January 25 when it is expected a sentence date will be set.
The Commonwealth Director of Public Prosecutions is prosecuting the matter.
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.