Former Gunns chair John Gay cleared to direct companies

Former Gunns chairman John Gay. Photo: Peter MathewConvicted inside trader and former Gunns Ltd chief, John Gay, has won permission to direct companies again, eight months after he was disqualified.
Nanjing Night Net

Mr Gay, 70, was given leave in the Tasmanian Supreme Court to direct two companies – a trustee company, and the family trust’s sole asset – a $2.9 million turnover timber veneer business.

“Mr Gay is the driving force behind the veneer business,” Justice Robert Pearce said on Tuesday.  “There is no appreciable risk that he will reoffend.

“His management of the companies poses no risk to the public and to the interests of the shareholders, creditors and the 21 employees of the company.

“To the contrary, without the benefit of his experience, knowledge and expertise there is a prospect that their interests may be adversely affected.”

Mr Gay was fined $50,000 and banned from directing a company when he was convicted of selling 3.4 million Gunns shares in late 2009 while he had price sensitive information, in a sale that netted around $800,000.

Mr Gay pleaded guilty to the offence on the basis that he ought reasonably to have known that a management report in his possession showing a slump in company revenue was inside information.

Justice Pearce said the Commonwealth Director of Public Prosecutions intended to apply for a pecuniary penalty order against Gay under the Proceeds of Crime Act, but he was satisfied it was still appropriate to grant conditional leave.

“I would readily accept that Mr Gay was, until the commission of this offence, a person with an unblemished record and of good general character,” he said.

“Living in this State I cannot help but be aware that, prior to his resignation as executive chairman, his management of Gunns Ltd was controversial. Those controversies are of a commercial, policy or political nature, and are not relevant to the questions this court is required to determine.”

Justice Pearce said that Gay’s offence was serious, but it did not involve dishonest or deliberate conduct, and he had suffered public condemnation and loss of reputation.

“Although I am satisfied that the risk of future corporate misconduct is very low it would be prudent to impose a condition that Mr Gay is not sole director of either company,” he said.

The judge said that while there was no evidence Mr Gay had any immediate intention to participate in the management of any other companies, private or public, it remained a possibility for a person with his business skills and experience.

Mr Gay was not in court for the decision.

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