Thursday, 29 January 2009

Lehman's old CEO repeating history

News.com.au is reporting that the ex CEO of liquidated Wall Street investment bank Lehman Brothers, Richard Fuld, has sold his US$13.3M home to his wife for just US$100 in late 2008, just after the bank folded.



And he doesn't think anyone will notice?



The feeling of deja vu related to what happened in Australia in 2001. At that time Jodee Rich and Brad Keeling were the joint managing directors of One Tel Limited. At about the time that One Tel went belly up, Jodee Rich transferred his interest in his harbourside mansion to his wife pursuant to a binding financial agreement, thereby removing it from the claw back provisions under the Bankruptcy Act.



ASIC was not amused, taking both the Rich's to the Family Court in a vain attempt to set aside the binding financial agreement.



One of the features of the marriage of the Rich's was that it had not broken down.



Following the case, amendments were passed to the Family Law Act, requiring amongst other things that the significant parts of binding financial agreements were not of any force or effect until the marriage had broken down and that one of the parties had signed a separation declaration to that effect- eg section 90DA.



Changes were also made to the section allowing agreements to be set aside- section 90K - to allow someone who might become a creditor of a party to apply to the court to set aside the agreement.



It has been suggested that following these changes, Jodee Rich and his wife did not proceed with the agreement.



And one final word about One Tel : whatever it's other faults, I found One Tel to be the most responsive of the telco's when served with subpoenas, and the most likely to return phone calls.

No comments: