Justice Austin of the Supreme Court of New South
Wales has found that Messrs Vines, Robertson and Fox breached their
duties during the course of AMP’s 1998–99 takeover bid for GIO
Australia and further found Mr Fox to have breached his duty to act
honestly. (ASIC Media release. Judgment not yet online)

ASIC sued the 3 managers under the Corporations Act civil penalty provisions.

Specifically, Justice Austin found that:

• Mr
  Vines breached his duty as a director of GIO Insurance and as an
  executive officer of GIO Australia to act with reasonable care and
  diligence on eleven occasions, including failing to ensure the due
  diligence committee was properly informed and the Part B statement
  remained correct, especially in light of the effect of claims flowing
  from Hurricane Georges on the GIO Re profit forecast and doubts about
  the efficacy of a financial reinsurance agreement with America Re.
• Mr
  Robertson breached his duty as an executive director of GIO Insurance
  and an executive officer of GIO Australia to act with reasonable care
  and diligence on ten occasions including failing to inform GIO
  Australia, GIO Insurance, their auditors or the due diligence committee
  about the true potential effect of claims flowing from Hurricane
  Georges on the profit forecast contained in the Part B statement;
• Mr
  Fox breached his duty as an executive director of GIO Insurance and an
  executive officer of GIO Australia to act with reasonable care and
  diligence on seven occasions including failing to ensure the auditors
  were properly informed; and
• Mr Fox
  breached his duty to act honestly on two occasions in relation to an
  uncommercial financial reinsurance agreement entered into by GIO Re
  with American Re which was not in the best interests of GIO Re and in
  writing a side letter to American Re offering to take back a major
  share of the defined event risk.

Justice
Austin found that these failures ultimately led to false and misleading
information being published in the Part B Statement.

ASIC’s case focused on the conduct of the three former directors of GIO Insurance regarding two broad areas:

• the
  formulation and methodology used to maintain an $80 million profit
  forecast for GIO Re in response to the takeover offer from AMP, and
• entering
  into a financial reinsurance agreement with American Re, which
  allegedly purported to protect the $80 million profit forecast.