Former ABC Learning CFO James Black cops 18 month sentence but will spend it out of jail

UPDATED: Former top accountant at ABC Learning cops 18-month sentence — but will spend it out of jail — after providing $46m in misleading information.

Brisbane Supreme Court Commercial List James Black exABC Learning Center CFO leaves court after sentence Photographer Philip Norrish NO BY LINE

THE former chief financial officer of collapsed childcare giant ABC Learning Centres has copped an 18-month sentence — but will spend it out of jail — after pleading guilty to providing $46 million worth of misleading information.

The District Court conviction against James Black marks the sole courtroom sentence linked to Brisbane-based ABC, a former stockmarket darling, which went bust in November 2008.

But it was only handed down after the court was temporarily closed to the public to hear arguments about sentencing, which separate legal sources say points to Black cooperating with investigations.

Further, the role of former ABC chief executive officer Eddy Groves, who has previously maintained his innocence, was also raised in court. District Court Judge Anthony Rafter told Black “the offence was committed on the instructions of (Mr Groves). You were not the architect of the offence.”

The charge against Black came after an Australian Securities and Investments Commission probe.

It surrounded material provided to ABC’s auditors. The auditors had been looking at ABC’s 2006 purchase of childcare chains, Busy Bees in the UK and La Petite in the US.

The court heard that the false information amounted to a way for a company associated with ABC to be able to receive money from the childcare giant, and then pay it back to ABC. That work had actually been done by other organisations.

ABC had 2300 centres in four nations.

Black had signed false engagement letters which meant the associated company got $46 million from ABC, the court heard.

“If those payments hadn’t been made or couldn’t be justified, the accounting books of ABC would have looked very different,” said Alan MacSporran, QC, for the prosecution.

Black, dressed in a dark suit and a black and white patterned shirt, and sporting a light beard, was represented by several lawyers. He had faced a maximum sentence of five years and a fine of $22,000.

District Court Judge Anthony Rafter sentenced Black to 18 months imprisonment but he was released on a good behaviour bond immediately. He noted issues such as Black’s contrition and willingness early on to plead guilty.

But Justice Rafter said Black had occupied a position of trust and investors were relying on him working with integrity. “You failed miserably,” Justice Rafter said.

The prosecution said factors affecting Black’s sentence should include his rehabilitation prospects. Black’s lawyers also maintained he had rehabilitated. It was not alleged Black had personally gained financially from the deal.

Defence lawyer Tim Game, SC, had also told the court that the involved transactions going on around Black and “there were people on both sides of the transaction ... directing”.

In the fallout of the collapse, ASIC had tried prosecuting several top executives including former head of Australian operations Martin Kemp and Mr Groves. Mr Kemp was acquitted while a charge against Mr Groves, a charismatic businessman known for his love of Ferraris, was dropped. Mr Groves had earlier pleaded not guilty.

Eddy Groves in 2013

Black was ABC’s CFO from 2006 until early in 2008, and had been associated with the childcare giant for almost 20 years. ABC’s 2007 annual report showed he was paid $786,000 that year.

He has since worked at Queensland mining richlister Chris Wallin’s QCoal.

Both Black, via his solicitor, and ASIC have declined to answer questions about whether he was providing assistance. ASIC has also declined to comment on whether investigations into ABC, which collapsed with creditors claiming $2.7 billion, have ceased.

But because the court was closed during some submissions into Black’s sentencing, legal sources have speculated that Black is assisting with some ongoing operations.

The only other person to receive any form of punishment was one former ABC auditor, Simon Green. He copped a five-year ban from acting as an auditor under an enforceable undertaking revealed by ASIC in 2012.

Australian Shareholders’ Association chairman Ian Curry said of Black’s punishment: “We’re pleased that there is a sentence, even if it’s not custodial.”

The sentence sent a message to professionals, Mr Curry said. “They have to comply with the law,” he said.

But Mr Curry lamented that only one person has got a “light” sentence following the costly collapse of ABC.

Another person whose business was caught up in ABC’s collapse was less impressed.

“To see somebody in the thick of it effectively receive a slap on the wrist (is) pretty insulting,” he said.

The mud on one’s reputation was hardly a deterrent, he said, while a colleague added of the sentence: “What a joke”.

Black declined to comment outside court.