Embattled mining company Griffin Coal is facing criminal prosecution following a referral from the Australian Securities and Investments Commission over alleged failures to meet financial reporting and officeholder requirements.
ASIC has alleged the company, headquartered in Bermuda, failed to meet its legal obligations to have at least one director residing in Australia, from September 2018 to December 2021, and further failed to lodge annual reports for its financial years 2018 to 2021.
According to ASIC, the matter was heard last Friday in the Perth Magistrates Court, and was adjourned until May 20.
Under the Corporations Act, failure to lodge financial reports carries the maximum penalties of $126,000 for offences committed before 2019, and $252,000 for offences committed after 2019. Breach of the officeholder requirements carries a maximum penalty of $42,000.
The charges, prosecuted by the Commonwealth Director of Public Prosecutions were foreshadowed last year, when the company was charged with failing to lodge two annual financial reports with the corporate regulator.
The company, which has experienced severe financial difficulties since 2017, was ordered by a Federal Court judge in October last year to pay $5.1 million to liquidators of collapsed mining company Carna Group for allegedly breaching a contractual term not to trade while insolvent.
Carna Group was hired by Griffin, then owned by Indian conglomerate Lanco Group, to conduct mining services at its coal mine in Collie, Western Australia. Under a contract entered into in January 2014, Carna’s services included the employment of 358 personnel at the mine.
When Griffin defaulted on the agreement in November 2014, Carna successfully applied to the WA Supreme Court for a declaration by Justice Rene Le Miere that if Carna terminated each staff member’s employment, Griffin was liable for the resulting redundancy pay.
After Carna went into liquidation in June 2015, it commenced proceedings in the Federal Court against Griffin as well as its president, Raj Kumar Roy, and company secretary and chief financial officer James Riordan. It sought compensation for misleading and deceptive conduct and breach of contract, having settled its consumer law claim with Griffin.
Carna claimed it was financially stable before its contract with Griffin but was placed into liquidation in June 2015. Justice McKerracher said it was “inevitable” that Griffin’s alleged failures to pay Carna played a role in the company’s demise.
Lanco acquired Griffin for $740 million in March 2011, a process overseen by KordaMentha. As the debts piled up, eventually reaching a reported total of $900 million, Lanco sued KordaMentha and the Griffin administrators in the WA Supreme Court, alleging misleading and deceptive conduct and seeking $700 million in damages. That case reached a confidential settlement in January 2018.
CORRECTION: The original version of this article inadvertently referred to Mladen Ninkov, which was an error. Mr Ninkov is the Chairman of the unrelated company Griffin Mining Limited, and is not in any way associated with Griffin Coal. Lawyerly does not suggest that Mr Ninkov has or had any involvement in the matters the subject of the article, and Lawyerly unreservedly apologises to Mr Ninkov.
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