The founder of a discredited fuel pill technology company in Perth, who became "personally enriched" by the sale of shares, has been banned from managing companies for 20 years.
Former New Zealand businessman Tim Johnston's company Firepower collapsed in 2008, leaving 1208 investors more than $A100 million out of pocket.
In the Federal Court today, Justice John Gilmour ruled that Johnston would be banned from managing any company for 20 years.
He also ruled that Johnston's investment manager and sole director of Axis International, Quentin Ward, would be banned from managing any company for six years.
Firepower was wound up by the Federal Court in August 2008, after touting a New Zealand-made "super pill" for petrol tanks that it said would reduce fuel consumption by up to 20 percent.
Firepower claimed the pills reduced fuel consumption and harmful emissions. The Sydney Morning Herald reported that the Firepower fuel-saving pill was actually a New Zealand product called the Power Pill FE-3, sold on the Internet at $NZ29.90 for a pack of 10 as a "combustion catalyst and fuel conditioner".
Earlier this year, the Federal Court declared Ward and Axis International had contravened the Corporations Act several times by distributing application forms for an offer for the sale of shares in Firepower BVI.
The court also found Green Triton and Firepower Investments contravened the Corporations Act several times by making offers for the sale of shares in Firepower BVI.
At the time, Johnston was an officer of Green Triton and Firepower Investments.
The Australian Securities and Investments Commission (ASIC) applied for disqualification against the men based on the breaches of the act.
Handing down the judgment against Ward on Thursday, Justice Gilmour said while the need for personal deterrence was low, the need for general deterrence was a major factor.
"The contraventions by Mr Ward were the result of his carelessness. There is no real question of personal enrichment," he said.
Justice Gilmour said the fact that Ward had made some repayments meant there was a "tangible expression of remorse" for his actions.
"Indeed he and his associates suffered significant personal loss to the extent of their investment in Firepower BVI shares," he said.
"I do not consider that it has been demonstrated that Mr Ward has a predisposition to this kind of conduct or that there is any real likelihood that such conduct will be repeated."
Justice Gilmour said the 15-year ban sought by ASIC was "excessive and unwarranted" and deemed six years to be more appropriate for the 62-year-old.
In his judgment on Johnston, Justice Gilmour said the contraventions were much more serious.
"Whilst there is no evidence of actual dishonesty on his part, I am satisfied that Mr Johnston was aware of the need for disclosure requirements under the act to be met and that he knowingly disregarded these," he said.
"He was, to a significant extent, personally enriched as a result of the share sales.
"Mr Johnston should be excluded for a very long period of time from having access to or control over shareholders' investments and the interests of creditors within a corporate structure."
Justice Gilmour said the 20-year ban sought by ASIC was appropriate for Johnston.
ASIC chairman Greg Medcraft said the case highlighted the importance of investors having all the information they needed to reasonably make an informed decision about a company.
"Where this does not occur, as a result of the failings of gatekeepers like directors and advisers, then ASIC will not hesitate to act," he said.
"We will continue to hold gatekeepers accountable to ensure investors are confident and informed."
