Former director of Western Australian based Hallmark Gold NL David Muir pleaded guilty yesterday in the District Court of Western Australia on seven charges of making improper use of his position.
The charges arose out of an investigation by the Australian Securities and Investments Commission.
Mr Muir was charged in relation to a directors meeting of Hallmark in October 1998 when a number of resolutions were made. Mr Muir, who resides in the ACT, was a director of Hallmark at the time.
ASIC alleged that the prime purpose of the resolutions was to remove cash from Hallmark for the benefit of third parties known to Mr Muir. Entities controlled by associates of David Muir, and that benefited from the transactions, included Davis Samuel Pty Ltd, Kamanga Holdings Pty Ltd, Qancorp Pty Ltd and CTC Resources NL entities.
An ASIC investigation found that, as a result of the resolutions:
- Hallmark executed a retainer agreement with consultants, Davis Samuel Pty Ltd, for $350,000 a year for three years;
- Hallmark purchased 8.2 million Kanowna Lights NL options for $656,000;
- Hallmark purchased 3.6 million Kanowna shares for $720,000; and
- Hallmark entered into a contract with Kanowna to exercise the Kanowna options for $1,640,000.
Hallmark purchased the Kanowna options at a premium of over 300 per cent and the Kanowa shares at a premium of over 100 per cent. The Kanowna Lights NL shares were purchased for 20 cents each when they were trading on the ASX for 9.5 cents each. The Kanowna Lights NL options were purchased for 8 cents each when they were trading for 1.9 cents each.
The owner of the Kanowna shares was CTC Resources NL, and the owner of the Kanowna options were companies connected to the partners of Davis Samuel Pty Ltd.
ASIC further alleged that the agreement entered into with Davis Samuel Pty Ltd was to the detriment of Hallmark.
Mr Muir was remanded in custody for sentencing on 26 July 2006. The matter was prosecuted by the Commonwealth Director of Public Prosecutions.
Background
Mr Muir's co-directors, Mr William Forge and Mr Peter Clarke, were found guilty in March 2004 on charges of making improper use of their positions as company directors.
