The liquidator of HIH believes criminal charges will arise out of the royal commission and that some people could be jailed. Speaking on Channel Nine’s Business Sunday, Tony McGrath said he would be seeking to lay charges against auditors, actuaries, advisers, directors and other third parties that allegedly played a role in Australia’s largest corporate collapse.

Asked whether criminal charges will be laid as well, he said it is “highly possible”.

“That’s certainly a role that ASIC have focused on but I think that there’ll be a whole range of issues that the royal commission will report on, and I suspect yes, we will see follow-up action from ASIC and others.”

Mr McGrath said it is also a possibility that people involved could be jailed. “I don’t think it’s up to me to say who needs to go to jail but yes, I suspect that ASIC, in fulfilling their role with the [Director of Public Prosecutions] will fulfil that role with vigour and I suspect that an outcome could be that people do go to jail over this.”

Describing the whole situation as “an almighty mess”, Mr McGrath said it is a sad outcome for creditors. “It’s the issue of what can happen when you let a company go on for far too long,” he said. “Here is an example of a company, or a group of companies, that probably went on for two or three years or longer beyond the point that they were insolvent and the consequences of that are quite, quite tragic.”

Mr McGrath said the estimate of HIH losses, which will be updated next year, is about $3.5 billion to $5.3 billion. But he does not believe creditors will get anywhere near the full amount. He said the context for what they will recover is set by the highest payout ever made by an audit firm in this country: $150 million.

“History tells you that no, we won’t recover anywhere near three or four billion dollars, it’ll be much, much smaller than that but only time will tell.”

As for when creditors will receive money, he expects cash to start moving next year or early in 2004. He estimated that unsecured creditors will get 10-25 cents in the dollar, “but that’s a very broad estimate”.

Mr McGrath has already filed court proceedings against the Federal Government, APRA, auditor Arthur Andersen and HIH’s actuary David Slee. Despite the Federal Government being a key creditor, Mr McGrath said they have “genuine claims” against it.