Former Vocus chairman Vaughan Bowen has been found not guilty of insider trading after a trial
How did one of Melbourne’s most popular restaurants find itself at the centre of an insider trading criminal trial?
One of Melbourne’s most popular restaurants, Lucy Liu, unintentionally became a place of interest in a criminal trial that was finally put to bed on Friday.
Five years after allegations were first made, a jury at Melbourne’s County Court has acquitted ex-Vocus chairman Vaughan Bowen of two counts of insider trading.
They deliberated for about five days after hearing five weeks of evidence, and had to decide whether he was tipped off about a failed takeover before offloading his shares for $25m.
All 12 members of the jury found him not guilty.
Mr Bowen’s lawyer, Alex Wolff of Baker McKenzie, said Mr Bowen always maintained his innocence.
“This has been an incredibly challenging time for Mr Bowen and his family, and they are looking forward to rebuilding their lives,” he said.
The jury rejected claims Mr Bowen made the trades after the telco’s former general counsel, Ashe-lee Jegathesan, learned a takeover deal from EQT had fallen through while they dined at the restaurant on June 4, 2019.
Ben Ihle, KC, for the prosecution told the jury that “no one piece (of evidence) on its own is going to prove this case”.
But Mr Bowen’s defence counsel, Neil Clelland, KC, rejected Mr Ihle’s analogy that the jury had all the pieces of a jigsaw they needed to convict.
“If (we consider) Mr Ihle’s jigsaw analogy … then we say you have been given very few of the pieces. There is a damn big hole in the middle of this and it’s all about Lucy Liu,” he said.
What happened at Lucy Liu?
The jury was told by Mr Ihle that at table 32 in Lucy Liu on June 4, 2019 (a Tuesday), entrees were ordered by the pair at 12.37pm.
Videos played to the jury showed the restaurant was noisy and, according to evidence given at the trial by executive chef and co-owner Zac Cribbes, Mondays and Tuesdays tended to be quieter than later in the week.
Mr Cribbes couldn’t say what music was playing five years ago, but “the evidence suggests it was not so loud that a business call could not be taken in the restaurant”, Mr Ihle said.
According to the restaurant’s records, the orders suggested the food was shared by two people, Mr Ihle said.
A bottle of wine was ordered at the start of Mr Bowen’s lunch with Ms Jegathesan and another – a pinot noir – was ordered at 1.28pm, Mr Ihle said.
“That order, we suggest, indicates there was an intention the lunch was going to continue,” he said.
The prosecution alleged Ms Jegathesan joined a Zoom call at 1.30pm with then Vocus CEO Kevin Russell, chairman Bob Mansfield and David Wiadrowski where it was alleged they discussed news that a proposal from EQT Infrastructure to acquire the fund in June 2019 would not go ahead.
What emerged from the meeting was a draft announcement to the ASX that the deal would not proceed, the court heard.
All three men gave evidence at the trial. None told the jury they recalled anything unusual about the meeting, but Mr Ihle said the “evidence suggests a business call did not need to be taken away from the table because of noise”.
The Zoom meeting concluded at 1.50pm, the jury were told, and six minutes later Mr Ihle said Mr Bowen told his broker to start selling his Vocus shares at a discount of $4.55 and $4.56, when earlier that day they were trading at $4.82 and $4.71.
Mr Bowen made about $25m and Mr Ihle said he sold “more shares than he ever sold”.
One day later, Vocus’s share price slumped to $3.37 after the market was informed about the withdrawal of the bid.
At 2.04pm, lunch was ordered, followed by hot drinks for two after 3pm, Mr Ihle said.
“The prosecution case is based on a combination of all of that evidence. All of those strands, all of those pieces interacting together,” he said.
“They all point in one direction, they all point to the possession of inside information at 1.56pm.”
Jury rejects prosecution case
The Australian Securities and Investments Commission first became aware of Mr Bowen’s trading a little over five years ago. ASIC initially brought the charges, but they were discharged following a contested committal hearing at the Melbourne Magistrates’ Court in December 2022.
The Commonwealth Director of Public Prosecutions then pursued the case and indicted Mr Bowen in May last year.
Mr Clelland, delivering his closing submissions in that trial, invited the jury to consider evidence was “missing” from the prosecution’s case.
“Let’s start with (the most) obvious missing piece of evidence,” he said.
“It has to be Ashe-lee Jegathesan. She was ever present in this trial and yet you never heard from her.
“Her name was mentioned more than 350 times during the course of the trial. She is somebody who has never been charged with anything arising out of 4 June.”
Mr Clelland also said ASIC failed to collect CCTV footage at the restaurant, and did not interview the waiter who served Mr Bowen and Ms Jegathesan.
He said expert evidence about the towers Mr Bowen’s Ms Jegathesan’s phone connected to was not precise enough to put their handsets in the same room, let alone together at Lucy Liu.
Ultimately, Mr Clelland told the jury it was not rational, in their view, to consider that Ms Jegathesan and Mr Bowen were in contact between 1.30pm and 1.56pm that day.
Finally, Mr Clelland gave a viable alternative to the jury, to explain why Mr Bowen made the trades.
He said Mr Bowen had already informed his broker he wanted to move on from Vocus, and said his client had started selling his shares from late 2018.
Around the time the EQT bid was announced, Mr Bowen had already sold more than three million shares in Vocus, Mr Clelland said.
The outcome in the trial could be a blow to ASIC, which announced recently plans to launch an insider trading busting unit.
And before a tearful hug was exchanged between Mr Bowen and his lawyer after his not guilty verdict, most in the courtroom erupted with laughter when judge Fiona Todd told the jury they could now dine at any of Melbourne’s fine restaurants, including Lucy Liu.