The Australian Prudential Regulation Authority (APRA) today announced it has accepted an enforceable undertaking from former HIH Insurance Ltd chairman Geoffrey Cohen.
Mr Cohen was a non-executive director and chairman of the board of HIH and its predecessors from January 1992 until the company’s collapse in March 2001. He was also at times a member of HIH’s investment committee and audit committee, and chairman of the latter from August 1999 to February 2001.
Mr Cohen has agreed not to work in the Australian insurance industry until 2015. This enforceable undertaking replaces a previous 2005 disqualification by APRA of Mr Cohen.
Following investigations arising from the findings of the HIH Royal Commission, APRA disqualified Mr Cohen under section 25A of the Insurance Act 1973 from being or acting as a director or senior manager of a general insurer.
Mr Cohen sought review of APRA’s decision in the Administrative Appeals Tribunal. That review was deferred pending the hearing of criminal proceedings brought against Mr Cohen for breach of the Corporations Act 2001. Those proceedings were withdrawn by the Director of Public Prosecutions late last year.
Mr Cohen has since acknowledged APRA’s concerns that led to his initial disqualification and agreed not to work in the Australian insurance industry for 10 years from the date of his disqualification. APRA’s concerns included that Mr Cohen did not competently and diligently carry out his duties and responsibilities in relation to:
- the conduct of meetings and other procedural matters within his responsibility;
- the identification and management of potential conflicts between his personal interests and his responsibilities as chairman of the board and a director of HIH;
- taking all reasonable steps in relation to the concerns raised in Ernst & Young’s report of December 2000 about HIH’s solvency;
- the Allianz transaction and the financial viability and consequences of proceeding with the joint venture arrangement;
- responding appropriately to issues of the legality of the Pacific Eagles Equities transaction; and
- not ensuring that Rodney Adler and Ray Williams (who had an interest in the outcome of the decision) were not present when the decision of the investment committee to invest in Business Thinking Systems was ratified by the HIH Board.
Mr Cohen has accepted that with the benefit of hindsight and what has since transpired, he should have acted differently in relation to a number of the matters. He regrets the consequences that arose.
APRA Deputy Chairman Ross Jones said that the enforceable undertaking was an appropriate resolution to the ongoing dispute between Mr Cohen and APRA.
‘This outcome continues to achieve APRA’s objective of protecting policyholders by removing the person from the industry and gaining admissions without the need for protracted litigation,’ he said.
The enforceable undertaking can be viewed on the APRA website, click here for more details.
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding approximately $3.4 trillion in assets for 21 million Australian depositors, policyholders and superannuation fund members.