The charmed run before the courts enjoyed by John Gay, former chairperson of Tasmanian timber company Gunns, may soon be over.
Gunns became insolvent in 2012, owing investors more than $1 billion. The company had been in serious financial trouble since February 2010, when a director’s report detailing its falling revenue was made public.
Two months before the report was released, Gay used his inside knowledge of the company’s financial position to sell Gunns shares worth more than $3 million. He avoided what was thought at the time to be a loss of $800,000.
The maximum penalty for this offence is five years in jail or a $220,000 fine. The Tasmanian Supreme Court fined Gay $50,000 and prohibited him from running a company for five years. He avoided a prison sentence because the court took into account his ill-health.
But Gay was not too sick to run a business. He appealed the five-year ban in the Supreme Court and was successful in being allowed to run two family companies, one of which is an old growth rainforest mill at Somerset, near Burnie, in northern Tasmania.
The Australian Securities and Investment Commission (ASIC) had opposed Gay’s application so he went back to the Supreme Court to argue that ASIC should pay his legal costs.
Gay lost. He now faces further action by the Commonwealth Director of Public Prosecutions. A CDPP investigation has calculated that Gay’s insider trading made him more than $3 million. It will apply to the Supreme Court for restitution under the Proceeds of Crime Act.
The wheels of justice are said to grind slowly, but in Gay’s case they do, finally, seem to be in motion.