More than two years after the corporate watchdog announced multiple charges against businesswoman Jenny Hutson, she is now set to stand trial at the Queensland District Court in Brisbane.
Following a committal hearing before the Brisbane Magistrates' Court, the former G8 Education (ASX: GEM) chair will face 29 charges on a date that is yet to be fixed.
It is a matter that has already involved Hutson's sidekick Mary-Anne Greaves, formerly of Wellington Capital, pleading guilty to giving false or misleading information.
This decision helped Greaves avoid a jail sentence, while another of Hutson's former board members David Burke has been charged with five counts of giving false and misleading information under oath.
But those cases were just trailers ahead of the feature that is to come, revolving around a messy M&A process that took place half a decade ago.
When Gold Coast-based G8 Education (ASX: GEM) made a $162 million scrip-based takeover bid for Affinity Education Group in July 2015, three companies with links to the bidder were about to make acquisitions of their own.
JB Super, owned by Jenny Hutson's sister Jane, purchased close to 100,000 Affinity shares just three days after the takeover bid was announced.
By association this in itself could not have taken G8's interest in Affinity above the 20 per cent limit required under s606 of the Corporations Act, but larger share purchases that followed caught Affinity's attention.
Specifically, in the same month Brisbane-based Taxonomy and Tasmania-based West Bridge Holdings acquired a combined 21.8 million shares in Affinity - worth around $10 million - before G8 had even lodged its bidder's statement.
Shortly after that bid was launched, G8 switched its offer from stock to cash and raised it by around 10 cents, lifting the final bid to $183 million.
But Affinity made a unanimous recommendation to reject the offer on the morning of 24 August. This was followed by the news that acceptances of G8's scrip bid had made it a substantial holder in Affinity, lifting its stake to 24.48 per cent.
That afternoon a wet blanket was thrown over G8's plans, with Affinity announcing it had entered into a conditional heads of agreement with Anchorage Capital Partners through a $208.3 million offer.
The events that followed would lead Affinity to involve the Takeovers Panel to force these three companies to divest their holdings, prompting an investigation by the Australian Investments and Securities Commission (ASIC) into the behaviour and activities of key players involved.
Despite the financially superior offer from Anchorage, G8 issued another substantial holder notice buoyed by an acceptance notice for its scrip bid with regards to a further 97,500 shares, taking its total shareholding to 24.55 per cent.
This acceptance came on 28 August - two days after Affinity had sought a declaration of unacceptable circumstances from the Takeovers Panel.
ASIC's digging eventually culminated in a raft of charges brought against Jenny Hutson in April 2018, including two counts of attempting to pervert the course of justice under the Crimes Act, which carries a maximum prison sentence of 10 years.
Among the charges ASIC alleges Hutson used $928,500 of G8 Education funds to acquire shares in ANZ Bank for Crossborder Investments Pty Ltd, in which she is a director.
Hutson is also accused of allegedly giving false information and attempting to mislead ASIC as part of its investigation, while there are also charges relating to her involvement in West Bridge's acquisition of Affinity shares.
Hutson has been charged with the following:
- one charge of dishonestly failing to exercise her powers and discharge her duties as a director under section 184(1) of the Corporations Act (maximum sentence of imprisonment of five years);
- two charges of dishonest use of her position as a director under section 184(2) of the Corporations Act (maximum sentence of imprisonment of five years);
- nine charges of authorising the giving of false or misleading information to an operator of a financial market (maximum sentence of imprisonment of 5 years);
- two charges of attempting to pervert the course of justice under section 43 of the Crimes Act (maximum sentence of imprisonment of ten years); and
- 15 charges of giving false or misleading information under section 64 of the ASIC Act (maximum sentence of imprisonment of two years).
In terms of connections between the entities concerned, in 2015 the Takeovers Panel claimed West Bridge's acquisition of Affinity shares was not properly explained, and established its director Nigel Elias had business connections with Hutson.
"We infer that West Bridge acquired its Affinity shares in connection with an agreement, arrangement or understanding it had with G8 in relation to the scrip bid," the panel said.
"West Bridge also submitted that its investment in Affinity represented "less than 1/3" of Mr Elias's investment interests. This is still a substantial investment (indeed $8 million) and it is unusual in our experience for any company even a private investment company like West Bridge to have no documentation in relation to such an acquisition.
"We find it an unlikely coincidence that West Bridge used the same intermediary as Taxonomy and G8 for its purchases of Affinity shares, and the same law firm to manage the payment for the shares as Taxonomy."
In its declaration brought before the Takeovers Panel, Affinity claimed it Taxonomy and JB Super accepted the scrip bid on the first day it was open, even though it was "economically and commercially irrational to do so".
"At no time until we put our preliminary findings to the parties did Taxonomy provide an explanation for accepting the scrip bid on the first day the offers were open," the panel said.
"In our opinion, based on our experience, Taxonomy's actions were inconsistent with its commercial interests."
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