Month: December 2011

A senior procurement officer with Sydney Water, in charge of vetting contracts and assessing conflicts of interest, is under investigation after she was found guilty of professional misconduct as a lawyer.

Harinee Thurairajah, who was also working as a private solicitor, was publicly reprimanded and fined $5000 after a prosecution by the Legal Services Commissioner this month.

The Administrative Decisions Tribunal also ruled her behaviour had been dishonest.

”We found that the respondent was frequently evasive in oral evidence, gave inconsistent evidence and at times lied. She was an unreliable witness” the tribunal found.

Ms Thurairajah was found to have obstructed and misled an investigator with the Office of the Legal Services Commissioner seeking to carry out an audit on her Pitt Street practice.

Ms Thurairajah, 38, is no stranger to cases involving misleading evidence. In 2003, her father was found guilty of swearing an affidavit which misled or attempted to mislead the Supreme Court.

She had represented her father in the ADT proceedings in which he was found guilty of professional misconduct in a case involving a will. Thambipillai Thambithurai Thurairajah, now aged 84, was also publicly reprimanded and fined.

Her own troubles started when, in April 2009, the Legal Services Commissioner sent her a letter seeking information regarding complaints by two clients, but she failed to respond.

In May, a second letter threatened an audit if she failed to reply. She did not respond and the city office of her legal firm, Thurai Rajah Lawyers, was closed. Ms Thurairajah put off appointments and went on sick leave from Sydney Water for pain in her right hand from August to December of that year.

She resumed full-time work in June 2010 and the audit of her practice was finally carried out in September 2010, nearly 1½ years after the initial contact. The judgment does not mention what the audit found or what her clients had complained about.

The Commissioner had initially sought to have Ms Thurairajah struck off the roll of solicitors, but withdrew the request during the hearing.

In another case in the Supreme Court, her mortgage provider recounted that she did not return calls. Company records also note that mail from the Australian Securities and Investments Commission to the city address of her legal firm were returned last year.

Ms Thurairajah has been working for Sydney Water since April 2008 and has been listed as the primary contact for several Sydney Water tenders.

The Sydney Water managing director, Kevin Young, said the organisation would conduct an internal investigation.

“Until this process is complete, we are unable to comment” Mr Young said.

(Sourced from SMH, G Jacobsen, 28/12/2011)

Twitter user is being sued by his former employer for $US340,000 for taking his 17,000 followers with him when he changed jobs.

How much is a tweet worth? And how much does a Twitter follower cost?

In base economic terms, the value of individual Twitter updates seems to be negligible; after all, what is a Twitter post but a few bits of data sent caroming through the internet? But in a world where social media’s influence can mean the difference between a lucrative sale and another fruitless cold call, social media accounts at companies have taken on added significance.

The question is: Can a company cash in on, and claim ownership of, an employee’s social media account, and if so, what does that mean for workers who are increasingly posting to Twitter, Facebook and Google Plus during work hours?

A lawsuit filed in July could provide some answers.

In October 2010, Noah Kravitz, a writer who lives in Oakland, California, quit his job at a popular mobile phone site, Phonedog.com, after nearly four years. The site has two parts – an e-commerce wing, which sells phones, and a blog.

While at the company, Kravitz, 38, began writing on Twitter under the name Phonedog-Noah, and over time, had amassed 17,000 followers. When he left, he said, PhoneDog told him he could keep his Twitter account in exchange for posting occasionally.

The company asked him to “tweet on their behalf from time to time and I said sure, as we were parting on good terms” Kravitz said by telephone.

And so he began writing as NoahKravitz, keeping all his followers under that new handle. But eight months after Kravitz left the company, PhoneDog sued, saying the Twitter list was a customer list, and seeking damages of $US2.50 a month per follower for eight months, for a total of $US340,000.

PhoneDog Media declined to comment for this article except for this statement: “The costs and resources invested by PhoneDog Media into growing its followers, fans and general brand awareness through social media are substantial and are considered property of PhoneDog Media LLC. We intend to aggressively protect our customer lists and confidential information, intellectual property, trademark and brands.”

Kravitz said the lawsuit, filed in the U.S. District Court in the Northern District of California, was in retaliation for his claim to 15 per cent of the site’s gross advertising revenue because of his position as a vested partner, as well as back pay related to his position as a video reviewer and blogger for the site.

The lawsuit, though, could have broader ramifications than its effect on Kravitz and the company.

“This will establish precedent in the online world, as it relates to ownership of social media accounts” said Henry J. Cittone, a lawyer in New York who litigates intellectual property disputes. “We’ve actually been waiting to see such a case as many of our clients are concerned about the ownership of social media accounts vis-a-vis their branding.”

Cittone added that a particularly important wrinkle is what value the court might set on the worth of one Twitter follower to a media company, saying the price set could affect future cases involving ownership of social media.

“It all hinges on why the account was opened” he said. “If it was to communicate with PhoneDog’s customers or build up new customers or prospects, then the account was opened on behalf of PhoneDog, not Mr. Kravitz. An added complexity is that PhoneDog contends Mr. Kravitz was just a contractor in the related partnership/employment case, thus weakening their trade secrets case, unless they can show he was contracted to create the feed.”

These situations are likely to arise more often as social media tools like Twitter, Google Plus and Facebook continue to become a way for company representatives and customer service employees to interact with fans and irate customers.

JetBlue, for example, often answers customer queries via Twitter, although its official policy is to not respond to “formal complaints” on Twitter.

Other issues may arise when companies hire popular Twitter users partly because of their social media presence. For example, Samsung Electronics hired the outspoken blogger Philip Berne to review phones for the company internally.

Berne uses his personal Twitter account but often posts explicitly about Samsung products and his opinions on the phones he has tested. He cleared his Twitter account with the Samsung public relations department, he said, and he owns it.

“Their stance was that I am entitled to have and express an opinion, but I am not a Samsung representative, and I should make it clear that any opinions are my own and not those of my employer” Berne said. In general, social media experts advise companies to tread with caution when it comes to account ownership.

Sree Sreenivasan, a professor at the Columbia Journalism School and the author of Sree’s Social Media Guide, said smart companies let social media blossom where it may.

“It’s a terrible thing to say you have to leave your Twitter followers behind,” he said, talking specifically about media companies that may employ popular Twitter writers. “It sends a terrible signal to reporters and journalists who care about this, and this will make it less attractive to recruit the next round of people.”

He said that many industries had policies that required sales staff to leave their Rolodexes behind, but that these policies were as relevant to social media as Rolodexes are to the modern office. After all, social media accounts are, almost by definition, personal.

He also said that the average Twitter account had less clout than many might think.

“The value of the individual users is very hard to quantify,” he said. “It’s dangerous to overestimate the value of an account to an organization and underestimate what it means for an individual.”

Kravitz said he was confused.

“They’re suing me for over a quarter of a million dollars,” he said. “From where I’m sitting I held up my end of the bargain.”

(Sourced from The New York Times, 28/11/12)

HIS grandfather built the Sydney Harbour Bridge, but John Gordon Bradfield will probably be remembered less fondly – at least by about 100 of his former clients who were left out of pocket when the solicitor’s practice folded three years ago.

The Dural solicitor is believed to have run a Ponzi-style investment scheme, which collapsed in late 2008 owing investors at least $24 million.

Three years on, his trustee in bankruptcy, Ian Struthers, is still trying to piece together the money trail.

But his attempts to find out where the money went hit a stumbling block after a court found that Jean Sayer, the receiver appointed to Mr Bradfield’s legal practice, was prevented by law from revealing information to the trustee.

Earlier this year the Federal Magistrates court ruled Ms Sayer did not have to hand over documents or give evidence in an examination after she argued she was prohibited by the Legal Profession Act from disclosing more than 13 volumes of information.

Mr Struthers had argued co-operation was in the public interest as it would prevent a waste of creditors’ funds. He also argued she had access to documents which were relevant to his task.

The court registrar ruled in Ms Sayer’s favour, finding that the Legal Profession Act prohibited her from disclosing information she had obtained in her capacity as receiver at the scheduled bankruptcy examination.

The registrar said the basis for the ruling was “a possibly technical” one.

”It is very unfortunate that in the interest of the creditors and investors the trustee could not have access to material about the business of the bankrupt…” the court said

Investors who gave money to Mr Bradfield before October 2005, may also be entitled to payments from the Law Society’s Fidelity Fund.

In October, Mr Struthers asked the head of the Law Society of NSW, Stuart Westgarth, to review the matter, but his letter also went unanswered.

Mr Westgarth yesterday told the Herald the receiver was independent to the society, but said she was under legal obligations not to disclose the material.

He said the Law Society believed the Bradfield case was ”extremely serious”.

Mr Westgarth said 80 per cent of claims on the fidelity fund had been finalised, but the receiver was waiting further documentation about the remaining claims.

The head of the NSW Police fraud squad, Col Dyson, said a police investigation was continuing. He said police had ”no issues with the cooperation received from the Law Society or any person acting on behalf of the Law Society”.

(Sourced from SMH, Geesche Jacobsen, 22/12/11)

FRESH concerns have emerged over the State Government’s ability to vet staff after revelations that a third public servant with a criminal history has been discovered this year.

Just days after revealing a man who allegedly embezzled $16 million from Queensland Health had a criminal history in New Zealand, The Courier-Mail has learnt that Corrective Services has hired a prison guard convicted of drug and weapon offences.

The guard was handed a job because a person ticked a wrong box during the check process.

Jennifer Dann was employed full-time by Queensland Corrective Services in July and worked at the Brisbane and Woodford correctional centres.

Dann was sacked three months later but only after concerns from an outsider were raised that a woman with her criminal history would be allowed to guard prisoners.

This follows a blunder in March when a Croatian man on Interpol’s most wanted list was discovered working as a state government security guard after 18 months patrolling the executive building and courts.

The Government does not undertake its own criminal checks, rather it sends names of applicants to the Queensland Police Service, which runs them through the national criminal database Crimtrac. The information is returned to the departments for their assessment.

According to court records, Dann has a conviction recorded at Caboolture Magistrates Court in 2000 for possession of a dangerous drug and weapon as well as secure storage of a weapon.

Acting Corrective Services Commissioner Marlene Morrison acknowledged the error and said the check did pick up her history and her job application was rejected. However, an administrative error resulted in Dann’s employment after she sought a review.

Ms Morrison said Dann worked full-time at Brisbane Correctional Centre and Woodfood Correctional Centre for three months but was sacked the day after they found out.

“A review of the criminal history checking established that an administration officer mistakenly ticked the incorrect box on a form” she said.

Ms Morrison said there was no evidence of impropriety during Dann’s tenure, but did not say if other people with criminal histories had been employed as prison guards.

In similar circumstances, the Department of Public Works only became aware of the past of security guard Marino Katalinic, 36, after he held his job for 18 months.

He was sacked on May 31 this year after he was found guilty of impersonating a police officer and The Courier-Mail revealed he was wanted by Croatian authorities over drug and theft convictions from 2004.

Responding to the Government’s failure to pick up on Morehu-Barlow’s criminal history, Police and Corrective Services Minister Neil Roberts this week acknowledged flaws with the system.

The three cases raise serious questions about the State Government’s handling of employees’ criminal checks.

The latest revelations come as three senior health managers were stood down on full pay by Queensland Health yesterday pending an investigation into the failure to detect the illegal transfer of millions of dollars.

But the decision sparked fresh calls for Health Minister Geoff Wilson to be sacked as the Opposition insisted the Bligh Government had a long record of blaming only bureaucrats.

Police have charged Brisbane socialite and Health purchasing officer Joel Morehu-Barlow with one count of defrauding the department of $11 million.

An investigation last year cleared him of any wrongdoing despite a detailed complaint, while payments of $4 million to a trading entity set up by Morehu-Barlow are outlined in the department’s annual reports.

(Courier Mail, Alison Sandy and Steven Wardill, 15/12/2011)

WHILE accused fraudster Joel Morehu-Barlow sits in a solitary jail cell at Wacol prison an entertainment package worth nearly $100,000 is en route from Europe for him.

Only days before the accused fraudster became the state’s most-wanted man and was eventually charged with defrauding $11 million, he was having the time of his life, enjoying a lavish spending spree.

The 36-year-old purchased an opulent $5.65 million River House in the new Pietra development at Moray St, New Farm, and paid for it in full.

But the spending didn’t stop there – his extravagant lifestyle was just beginning.

Court documents reveal Morehu-Barlow went on to purchase items including a top-of-the-range 2.15m 3D TV described as one of “the most expensive sets ever produced”.

He purchased the TV and associated accessories for $95,070 from Bang and Olufsen’s Fortitude Valley store. But little did he know the exclusive entertainment package which was sent from Denmark was due to arrive in Australia when he would behind bars.

The goods will be seized once they arrive in Australia.

During his short-lived spree he also purchased a luxury Mercedes-Benz and two top-of-the-range jet skis.

He also bought an elaborate, grey, 2009 Mercedes-Benz C63 AMG sedan for $135,214.

He then went on to buy two Sea-Doo jet skis at Brisbane Jet Skis at Zillmere on Brisbane’s northside.

One was a luxury performance model and the other a sports model, together costing more $42,000.

But he had little time to use his new plush toys, he would be arrested by police only eight days after he bought them. Documents show the self-proclaimed Tahitian prince was known by various names including Hohepa Morehu-Barlow, Joel Barlow, Joseph Barlow and Joel Hikairo Morehu-Barlow.

In the documents it reveals he held eight bank accounts with more than $1.5 million in them and another account in his company’s name which had a healthy balance of $2.91 million.

He also owned another two luxury cars – a grey, 2009 Mercedes-Benz C63 AMG sedan and a 2004, silver BMW 530i sedan.

Morehu-Barlow was also interested in music and art and had a selection of paintings and a baby grand piano.

(The Courier-Mail, Sophie Elsworth, 16/12/2011)

Ponzi operator Simon Finnigan, who defrauded investors of $1.96 million while he lived the life of an apparent millionaire businessman, has been sentenced to 10 years jail in what the sentencing judge said was one of the toughest terms imposed for a Ponzi scheme offence.

Some of the investors sitting in the NSW District Court wept with relief as Judge Michael Finnane told Finnigan he was sentencing him to 10 years jail, with a six-year non parole period.

Judge Finnane said the requirement to protect the community sometimes called for a longer sentence.

‘‘I think this is called for in this case because I see not the slightest evidence (Finnigan) has any appreciation of all the damage and destruction he has caused.”

Finnigan sat impassive as the judge said the sentence ”may seem to be one of the toughest ever imposed”.

Finnigan was not licensed as a financial planner, nor did his many companies – most noteably Financial Partners Pty Ltd – have any financial licenses.

He promised Financial Partners Pty Ltd would invest in shares, derivatives, property and in one case – Biotech Solutions Pty Ltd – a revolutionary water product that when listed on the stock exchange would produce huge windfall gains. He gave personal guarantees, and promised up to 15 per cent return.

Instead the money went on paying his personal credit card expenses, for overseas travel, the running costs of his business, and on interest to earlier investors. He pleaded guilty to nine charges spanning 2001 to 2007.

BusinessDay has confirmed with other investors that the extent of losses is much larger than the $1.96 million Finnigan was charged with and pleaded guilty to.

Finnigan was taken into custody in court. Justice Finnane said he would recommend to custodial authorities that Finnigan be assessed for entry to a minimum security prison.

Sourced from: http://www.smh.com.au/business/conman-gets-long-jail-sentence-20111216-1oyf1.html#ixzz1gfqsdXsJ, Leonie Lamont, December 16, 2011

LAW firm Maurice Blackburn will file class actions against the other big banks for charging exorbitant customer fees after the partial success in a court case against ANZ.

Maurice Blackburn will bring the actions against Commonwealth Bank of Australia, Westpac, National Australia Bank and Citibank, head of class actions Andrew Watson said in a media conference today.

The Federal Court, in a ruling earlier this month, found that late fees charged on credit cards could be characterised as a penalty and may be legally unenforceable.

Maurice Blackburn said the proceeding against the other four banks would be issued in the Federal Court in Melbourne on behalf of 150,000 customers, for claims worth almost $200 million.

“These class actions are about bringing fairness to tens of thousands of Australians, from mums and dads to small business owners who have all been hit with exorbitant fees from the major banks,” Mr Watson said.

The cases would allege that fees imposed upon customers for overdrawn accounts, late payments, honour and dishonour charges do not reflect the actual cost to the bank, Mr Watson said.

The law firm’s managing director of financial redress James Middleweek said Citibank was continuing to charge a monthly $40 overlimit fee and a weekly $10 late fee.

The actions were being funded by litigation funder IMF (Australia) Ltd on a no win no fee basis, Maurice Blackburn said.

Sourced from: http://www.news.com.au/business/maurice-blackburn-to-sue-commonwealth-bank-nab-westpac-and-citibank/story-e6frfm1i-1226223852062#ixzz1gfSYBXMw. Photo courtesy of the Courier Mail.

Rajina Subramaniam defrauded her employer of $45 million.

THE diamonds and sapphires were stored under her desk and never worn, the four multimillion-dollar beachside apartments left unattended.

And when detectives finally came to arrest the Sydney mother Rijina Rita Subramaniam for defrauding her employer of $45 million, not one of the luxury items she had bought with the money was among her personal possessions.

In one of the largest cases of fraud by a woman in NSW history, Subramaniam repeatedly siphoned off tens of thousands of dollars from ING Australia, where she was an accountant for more than a decade.

The 41-year-old from Castle Hill spent the money on seven prestige properties – including four units on Bondi Beach’s exclusive Campbell Parade – 600 pieces of designer jewellery, and 200 perfume and make-up items. But then she never touched them.

Yesterday the Downing Centre District Court was told that Subramaniam was motivated, not by greed, but by a desire for revenge over the allegedly abusive sexual relationship she was having with a workmate, and an overwhelming need for positive affirmation.

Subramaniam’s sentencing hearing heard that she had extremely poor self-esteem, due in part to the sexual abuse she allegedly experienced as a child at the hands of her grandfather and two uncles.

After getting involved with a colleague at ING, she came to perceive the relationship as abusive but continued to see the man for years. This alleged abuse and the feeling that her supervisors were bullying her led to a desire for revenge and to ”get back at the system and others within the system”.

According to Dr Stephen Allnutt, who was called as a witness for the defence, the flip-side of these feelings was a powerful desire for recognition and empowerment, desires that were fulfilled by spending money.

Judge Michael Finnane said that Subramaniam appeared to gain satisfaction from ”being applauded by [shop] assistants [who said] ‘how wonderful you’ve come back to us again, a wealthy woman like you and a woman of such discrimination and taste … we’ll only show you the very good stuff because you’re someone very special”’.

So grateful was she for the warmth and attention, Subramaniam gave one shop assistant $1.3 million to buy a house.

Subramaniam’s lawyer, Tim Game, SC, said Subramaniam should not be jailed because she would not be able to get the psychological care she needed.

Judge Finnane will hand down his sentence in February.

Sourced from: http://www.smh.com.au/nsw/womans-quest-for-selfesteem-and-revenge-cost-boss-45m-20111215-1owya.html#ixzz1gfN8sApi, Paul Bibby Courts, 16/12/2011. Image courtesy of stuff.co.nz

Police have arrested the man accused of embezzling $16 million from the Queensland government.

The manager of the finance division at Queensland Health’s Community Services Branch allegedly siphoned the millions from Queensland Health into private accounts over the past three years.

Police Minister Neil Roberts told ABC News Breakfast Hohepa Morehu-Barlow, also known as Joel Barlow, was arrested this morning when he tried to enter a New Farm unit.

“In the early hours of this morning, a little after 3.30am I understand, the alleged offender presented himself and tried to get into a unit and they were able to apprehend him,” Mr Roberts said.

“The individual has been taken into custody and is undergoing questioning.”

Queensland Premier Anna Bligh this morning welcomed news of the arrest, praising police for “getting their man“.

However, she said it was not the end of the matter and the government was working to close any loopholes that allowed $5 million to be taken from public purse over the past three years and $11 million in the past fortnight.

“This is just the beginning” she said. “It is unacceptable that this could happen and we are working to close any loopholes that exist“.

Police have not laid any charges against Mr Barlow yet.

Officers were yesterday investigating leads that members of the public had provided to Crime Stoppers.

Mr Barlow had just a small window of opportunity to give police the slip on Thursday afternoon, when the alleged theft first came to light.

Police raided his luxury $5.65 million riverside apartment in New Farm on Thursday evening, but there was no sign of the man who led a lavish lifestyle in Brisbane’s high-society and claimed to be a Tahitian prince.

It’s understood investigators may have missed the public servant by a matter of minutes.

Yesterday Ms Bligh said she was confident the state could recover the stolen money.

She confirmed $12 million of Mr Barlow’s assets had been seized by police and would be held during legal proceedings against him.

She admitted the checks and balances that should have prevented the alleged fraud had clearly failed, but she stopped short of saying whether heads would roll.

“I’m having all of that investigated by external forensic auditors and if there are people who have failed in their duty, then action will be taken against them” she said.

Senior government and Queensland Health officers, including the auditor-general, met with the Crime and Misconduct Commission on Saturday.

They were trying to piece together how the alleged fraud occurred and what lessons could be learned to prevent it happening again.

Ms Bligh dismissed allegations that Queensland Health had ignored an auditor-general’s report earlier this year that found public sector agencies were failing to maintain basic financial controls.

Queensland Health had implemented every single recommendation made in the report, she said.

“There has been no specific recommendation or commentary in relation to the financial processes within this part of Queensland Health,” she said.

Ms Bligh also dismissed the suggestion that the alleged fraud highlighted problems within Queensland Health, which was still reeling from the payroll bungle of 18 months ago.

Meanwhile, Mr Barlow’s New Zealand family said it was not aware of the allegations but intended to stand by him.

“He’s a naughty boy if he’s done that, but he’s still my whanau [family],” Mr Barlow’s aunt Josie Boldy told New Zealand’s Sunday News.

Source: http://www.brisbanetimes.com.au/queensland/alleged-queensland-health-fraudster-arrested-20111212-1oq27.html#ixzz1gGoCj8EL and AAP. Image Courtesy of The Australian.

IT WAS one of those chairman-to-chairman type of meetings when Peter Mansell, well known in Perth business, met David Smith, chairman of the emerging uranium miner Bannerman Resources.

Mansell was about to be officially anointed as the new chairman and head of iron ore business for Hanlong mining, the resource arm of the privately held Chinese conglomerate, Sichuan Hanlong.

Mansell recalled that he had been instructed by either Steven Hui Xiao, Hanlong’s managing director, or its vice-president, Calvin Zhu, to meet Smith and discuss Hanlong’s interest in a 100 per cent takeover of Bannerman.

Little did Mansell expect that Hanlong’s manoeuvrings for Bannerman, and the iron ore company Sundance Resources, would see him unwittingly thrust into a forensic investigation by the corporate regulator on alleged insider trading in securities and derivatives by Xiao, Zhu, Hanlong’s trading manager, Fan Zhang, and their wives.

So far, the Australian Securities and Investments Commission says it has identified 16 Australian and offshore trading accounts associated with the three men and their partners, reaping more than $3 million in suspect profits.

The glimpse into the inner workings of Hanlong was contained in documents tendered in the New South Wales Supreme Court this week, as ASIC revealed it would take six months to complete its complex and record-rich investigations.

While Mansell was otherwise engaged in the Bannerman negotiations, he recounted to ASIC that either Xiao, or Zhu, had told him Hanlong was talking to the trustees of the estate of a mining magnate, Ken Talbot, to acquire the Talbot group’s 16 per cent stake in Sundance Resources.

Talbot’s death in a plane crash while inspecting Sundance’s Mbalam iron ore project in Africa in June last year had put his empire into play, and Hanlong, with its ambitions to become one of the top five iron ore producers in the world, saw the Talbot holding as a fit.

It acquired the Talbot stake in March, and made a formal takeover offer for Sundance in July.

The Sundance board has since recommended that its shareholders accept Hanlong’s $1.65 billion takeover. While Hanlong has stood down the executives, uncertainty over the ASIC investigation continues to delay a decision by the Foreign Exchange Review Board about the takeover.

Next week, the regulator returns to court to make out its case for a travel ban on Xiao’s wife, Xike Hu, whom it considers a flight risk. Xiao, a Chinese national, is himself in breach of a court order and has failed to return to Australia after what should have been a brief visit to China.

The 37-year-old told his solicitor that because of high blood pressure was advised not to make the long flight to Australia.

Xiao’s solicitor, John Mitchell, rang ASIC late on November 28, alerting it to the situation. ASICs inquiries the next day to Australian Customs and Border Protection elicited the answer that existing court orders did not specifically stop Xike Hu from ”leaving or attempting to leave” Australia.

Hu had already agreed to court orders to surrender her passport to her lawyer, and is believed to be at the couple’s home in Sydney with her two young children. While ASIC seeks to hold Hu hostage until Xiao’s return, it has also amassed information that it says points to her role in the suspect trading.

And it intends to question her again, and this time impel her to answer questions about her husband’s activities following the High Court decision on November 30, which found there was no common law privilege against spousal incrimination in Australia.

In earlier examinations with investigators, Xiao and Hu both refused to answer 48 questions on spousal privilege grounds. The ASIC specialist in charge of the case, Colin Luxford, said in an affidavit that during an examination of Hu in early October, she said she did not know what a contract for difference was, she had not heard of Bannerman before the ASIC investigation, and she had never worked for Hanlong, though she still received a wage from the company.

But ASIC says that it has identified an IG Markets trading account in Hu’s name, in which Bannerman and Sundance contracts for difference were traded just before Hanlong’s respective takeover bids were announced to the market.

The announcement pushed the shares up 25 per cent, and the trades produced $736,000 profit.

Luxford said IG Markets had phone recordings of 20 calls by a Mandarin-speaking woman who identified herself as Ms Hu, regarding the movement of funds, and the placements of orders between March and July 2011.

ASIC had also identified a foreign exchange account held by Hu, in which $1.127 million was transferred just after the announcements into five bank accounts in China – one held by her husband, Xiao, and the rest by Caixia Xiao, her sister-in-law. Some of those funds transferred were the profits from the suspect trading, Luxford said.

ASIC has also turned its attention to Calvin Zhu, an Australian citizen. Court documents reveal that trading manager Fan Zhang said he went to a Commonwealth Bank at the request of Zhu and opened both a CFD, and trading account, under the name Wingatta.

He ”followed whatever Mr Zhu told him to do”, and passed the account’s internet password to Zhu. The Wingatta account generated profit of $1.2 million.

Zhu and Xiao have told ASIC that many of the transactions were nominee trading for Hanlong. One new offshore account associated with Xiao, Gold Pattern International Trading Account, made a combined profit $1.05 million, and Xiao has claimed Gold Pattern was a nominee of Hanlong Resources Hong Kong.

Peter Mansell told ASIC he had no knowledge of any company nominee strategy, and ASIC notes there was no record of this in any of the Hanlong accounts.

But the nominee claim by Xiao and Zhu has put ASIC on notice that some provisions of the Corporations Act – section 1043(i) and 1043(j), which exempts companies and officers from coming under the insider-trading umbrella in certain circumstances – will indeed have its day in court.

Republished from SMH: http://www.smh.com.au/business/insider-trading-investigation-traps-unwitting-20111208-1ol93.html#ixzz1fzIRDiMj – 9 December 2011