The NSW Court of Appeal today upheld Supreme Court findings from March last year that Rodney Adler and Ray Williams breached their duties as directors of HIH.

Both men were found to have breached their duties as directors under the Corporations Act in relation to a $10 million payment by HIH to Pacific Eagle Equities, a company of which Mr Adler was a director.

However, the Court of Appeal upheld Mr Adler’s appeal against the finding that he had breached section 83 of the Corporations Act [wrongly using information obtained as a company officer].

The court also upheld the bans, pecuniary penalties and compensation ordered against Mr Adler and Mr Williams, subject to a recalculation of the interest component of the compensation. The Court awarded costs of the appeal to the Australian Securities and Investments Commission (ASIC), which will be added to the estimated $600,000 costs payable to ASIC for the original court proceedings.

The court upheld the decision to ban Mr Adler from acting as a director of any company for 20 years, and Mr Williams for 10 years.

Mr Adler and Adler Corporation were each ordered to pay pecuniary penalties totalling $900,000, and Mr Williams was ordered to pay $250,000.

In addition, Messrs Adler and Williams were ordered to pay compensation of $7.9 million to HIH. The Court of Appeal has ordered that the interest component of that sum be recalculated.

ASIC Chairman David Knott said the Court’s decision to uphold the penalties ordered “confirms the seriousness of the breaches committed by the defendants. While the recalculated interest will result in a reduction to the compensation, the principal amount of $7,049,931 payable by Messrs Adler and Williams remains unchanged.”