By James Atkinson
Bryan Northcote, the former CEO of West Australian hotel chain Compass, this week pleaded guilty to three charges of breaching the Corporations Act, brought by the Australian Securities and Investments Commission (ASIC).
The charges follow an ASIC investigation into the activities of Northcote while he was CEO and executive director of Compass Hotel Group (CHGL).
CHGL floated on ASX in January 2008 and operated a West Australian hotel chain consisting of 12 hotels and taverns. CHGL went into receivership in March 2011 and its hotel assets were subsequently acquired by ALH Group.
Northcote, who was charged in September, pleaded guilty to one count of breaching his duty as a director between 9 October 2007 and 22 April 2008, by dishonestly withholding information from the CHGL board and using his position to gain a financial advantage.
ASIC alleged a company owned and controlled by Northcote, Yard House Australia and New Zealand Pty Ltd (YANZ), entered into a conjunctional agreement with a hotel broker whereby it would receive 50 per cent of all sales commissions paid by CHGL and vendors to the hotel broker for hotels purchased by CHGL. YANZ subsequently received $1.566 million in commissions.
Northcote also pleaded guilty to two counts of submitting documents to ASIC that were misleading by falsely claiming he had resigned from YANZ on 1 October 2007. ASIC deputy chairman Belinda Gibson said company directors and officers were critical gatekeepers in the management and oversight of listed companies.
"This case is an example of ASIC taking action when gatekeepers fail to act honestly," she said.
Northcote will appear in the Sydney District Court on 25 January 2013, when it is expected a sentence date will be set.
The Commonwealth Director of Public Prosecutions is prosecuting the matter.