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Tuesday, 3 May 1994
Page: 82


Senator O'CHEE (7.07 p.m.) —On 27 November 1993, Mr Raymond Gildare, Mr Michael Lavarch, and Mr John Dawkins were appointed directors of Freehill Hollingdale and Page Holdings Pty Ltd, or so one might believe from the documents filed with the Australian Securities Commission. The documents were, in fact, quite totally and utterly incorrect. They were filed by Mr Gildare to highlight a glaring flaw in our corporations legislation and in the forms that the ASC requires people to fill in when there is a change of directorship of a company.

  That flaw is that a form 304 is filed along with the minutes of the meeting at which the directors were appointed to the company. Of course, Mr Gildare was not a director; he was not the chairman of Freehill Hollingdale and Page Holdings Pty Ltd, Mr Michael Lavarch had not filed a consent and Mr John Dawkins had not filed a consent; but one does not have to show those consents to file the form. It would be possible for me to appoint Senator Jones or Senator Collins to be a director of any company provided I file the necessary form and a document which purports to be a set of minutes of a meeting of directors which says that they produced a consent.

  There was a reason why Mr Gildare did this, and that is because Mr Gildare has been the victim of a similar situation. Unlike the case of Mr Lavarch and Mr Dawkins where the purported change of directorship was immediately rectified by the Australian Securities Commission, Mr Gildare has suffered for a number of years now because he is just an ordinary Australian. Except in one respect: Mr Gildare was the inventor of a solar airconditioning system, the patent to which is very valuable.

  The problem was that in 1988 Mr Gildare and his father were appointed directors of a company which was to be a joint venture company. Mr Gildare had invented this particular solar airconditioning system. He had been approached by an American gentleman called Mr Rad who proposed a joint venture. The whole plan was that Mr Rad would put up the money, Mr Gildare would put up the patents, they would do the necessary research and development and everybody would make a lot of money. Except that is not quite how it worked out.

  The firm of solicitors working for Mr Rad filed the necessary documents to make Mr William Patrick Gildare, Mr Raymond William Gildare and Mr Donald McClaverty directors of a company called Sanvel Pty Ltd. However, unbeknownst to them, the company did not end up with the only assets, which were, of course, the patents; it ended up with all the liabilities. The patents ended up elsewhere. They ended up in the possession of Mr Rad, who did not cough up the money. At the time the meeting is purported to have taken place, both William Patrick Gildare and Raymond Patrick Gildare, I understand, had not produced consents to act as directors. But, of course, all they had to do was file the appropriate documents and say that they did.

  To cut a long story short, the company ended up with no assets and a lot of liabilities. It spent some considerable time trading whilst insolvent, during which period Mr Gildare was a director and was, therefore, technically liable and may have committed an offence under the Companies Code and now the Corporations Law.

  The company eventually went into liquidation. Mr Gildare has spent a considerable amount of time and money obtaining a judgment in the United States against Mr Babak Farin Rad and a company called Raythorn Ltd, which, I understand, is an Isle of Man company. That judgment results from the fraudulent activities in relation to Sanvel and the defrauding of Mr Gildare and two Australian companies—Trend Research Ltd and Motive Holdings Pty Ltd—of patents and rights in relation to those patents.

  A judgment was issued by the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida, on 2 September 1990 in the amount of $3.25 million. In spite of that, Mr Gildare has not seen a cent. He has coughed up a lot of money and he cannot get anybody to act because, it seems, the Australian Securities Commission takes the view that there is absolutely nothing that constitutes an offence which it might have to pursue.

  I have a letter here from the commission dated 11 December 1992 to Mr Gildare which I will seek leave to table in a moment. I have the documents which purport to be minutes of a meeting of directors held on the ninth floor of Australia Place, 15-17 William Street, Perth, Western Australia, on 27 June 1988. I will seek leave to table that document in a moment. I have a letter from Dr Carmen Lawrence, when she was Premier, to Mr Gildare, indicating that the matter could not be followed up by the Western Australian police as Mr Rad was not a director of an Australian company, nor resident in Australia. I have the judgment and I have a letter from Mr Tuckwell of Messrs Boyd Partners, chartered accountants in Victoria, who is the liquidator of Sanvel Pty Ltd. He notes in the report made to the Australian Securities Commission some two pages of possible offences that need to be followed up.

  Quite clearly, the Australian Securities Commission, the Federal Police or the Western Australian police have a responsibility to follow up these matters. I will be writing very shortly to the Western Australian police suggesting that they too have a responsibility in this matter. I do not think the advice offered by the then Premier—that because Mr Rad was not resident in Australia nor a director of any other Australian companies, he is not responsible for any criminal acts—is correct.

  I believe that the test of territoriality is somewhat different from that and that it is merely sufficient to show that Mr Rad participated in a scheme, the effect of which was to defraud Mr Gildare and the two Australian companies of their patent rights. Very clearly, something needs to be done. It is quite insufficient that one body shuffles the matter on to another body, which shuffles the matter on to another body.

  The only body which has expressed some real interest to date in following the matter up is the Australian Federal Police, but the AFP cannot follow the matter up unless it gets a direction to do so. Therein lies the rub. The only people who are really interested in following this matter, in bringing Mr Rad and those involved in the fraud to justice, are prevented because they do not have the power. Those who do have the power display no interest in exercising their power for their good exercise of judgment. At that point, I seek leave for these documents as described to be tabled.

  Leave granted.