Legal advice plays down prospect of AMP bosses going to jail

Senior lawyers have played down the prospect of AMP executives or directors going to jail.

AMP head of advice Anthony ‘Jack’ Regan leaves the royal commission on Tuesday. Picture: AAP

Senior lawyers have played down the prospect of AMP executives or directors going to jail for making false or misleading statements to the corporate watchdog over the fees-for-no-service scandal.

“You never find a perfect smoking gun in this kind of case; all you find is ambiguity,” a partner at a major law firm said yesterday.

The penalty in the Corporations Act for making a false statement is a penalty of up to $42,000 and a maximum of five years’ jail, or both.

However, the statement has to be false “in a material particular”; that is, more than just innocuous.

The financial services royal commission heard this week that AMP charged advisory fees to clients without providing the associated service, such as an annual review of their investment strategies. Under cross-examination, senior AMP executive Jack Regan, who was sent in to clean up the advice mess in January last year, admitted the company had misled the Australian Securities & Investments Commission on at least 20 occasions in the regulator’s ongoing investigation.

Mr Regan said in his witness statement that four AMP executives, including his predecessor, had been identified as having responsibility for the company’s main interactions with ASIC.

Scott Morrison intervened in the unfolding scandal on Wednesday, saying it was “deeply distressing” that AMP had charged clients without providing a service and had admitted making false statement to ASIC.

Yesterday, in his public commentary on the issue, AMP chief executive Craig Meller said in a note to the group’s advisers that the practice of charging fees for no service was “not appropriate”.

“We stopped this ... in 2016 and have taken action to prevent it recurring,” Mr Meller said.

“However, the way we reported it to the regulator before it was stopped was misleading.”

The AMP chief said 15,712 customers had been affected from 2009 to 2016, and $4.7 million in compensation had been paid.

Even if criminal charges were laid, one lawyer questioned how the people targeted could get a fair trial after the Treasurer’s intervention. He also noted that any charges would have to be proven beyond reasonable doubt.

Then there was the likely issue of different levels of culpability, and the facts were never as clear as initially presented.

Lawyers yesterday pointed to the fallout from the AWB case, where no one went to jail after it emerged the wheat exporter had made $300 million in payments to the Iraqi government, against sanctions imposed after the Gulf War. The payments were made through transport fees when the company sold wheat to Iraq under the UN’s oil-for-food program.

Former chairman Trevor Flugge was fined $50,000 and banned from managing a company for five years for failing to inquire about the payments, chief executive Andrew Lindberg was fined $100,000 and disqualified from managing a corporation for two years and 35 days, and chief financial officer Paul Ingleby was fined $40,000 and disqualified for 15 months.