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One.Tel founder gets 10-year ban
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australian entrepreneur Brad Keeling, the co-founder of failed phone company One.Tel, has been banned for 10 years from being a company director. Keeling is also liable to pay compensation of up to Aust. $92 million ($55 million) to the liquidator of One.Tel, which collapsed in May 2001 with debts of at least $300 million. Australia's corporate regulator, the Australian Securities and Investments Commission (ASIC), announced Friday that a New South Wales Supreme Court judge had approved ASIC's agreement with Keeling. Under that agreement, first announced on March 13, Keeling has also agreed to pay ASIC's costs of $750,000 and is unable to be involved in the management of any corporation for 10 years. In 1995 Keeling and another high-flying entrepreneur, Jodee Rich, co-founded One.Tel, which at one stage in its short but spectacular life was the fourth largest phone service provider in Australia by subscriber numbers. Its directors included James Packer and Lachlan Murdoch, the sons of media tycoons Kerry Packer and Rupert Murdoch. One.Tel's demise angered and embarrassed James Packer and Lachlan Murdoch who claimed they had been "profoundly misled" about the true state of the company's finances. Their two companies, Publishing and Broadcasting Ltd (PBL) and News Ltd, between them invested about $460 million in One.Tel's development and held a stake of 41 percent. Both Packer and Murdoch later gave evidence at an examination into One.Tel's state of affairs. Civil actionASIC began civil action in late 2001 against Keeling, Rich, former One.Tel chairman John Greaves and former finance director Mark Silbermann, alleging they breached their duties as company officers. While the four initially said they would defend the action, Keeling agreed this month to cooperate with ASIC, prompting an angry response from Rich and Silbermann that it would affect their defence. The order by Mr Justice Bryson approving the agreement means ASIC will continue proceedings against the remaining three defendants. ASIC claims that all four defendants are jointly and severally liable for the $92 million in compensation it is seeking. ASIC said Friday the orders did not affect any other defendant in the proceedings. ASIC chairman David Knott said Keeling had taken responsibility for his actions, and had "expressed his contrition and regret for what he acknowledges was a serious failure to discharge a number of his core responsibilities as a director." Knott said that because of Keeling's cooperation, ASIC agreed to support a submission to the court that the length of the ban against him should be reduced. "The ban of 10 years is a significant punishment, which we regard as completely appropriate in the circumstances", he said. Late last month, another judge, Mr Justice Austin, rejected an application by former One.Tel chairman Greaves for the dismissal of proceedings against him.
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