The Australian Prudential Regulation Authority (APRA) today announced the disqualification of Paul Mario Abela from being or acting as a director or senior manager of a general insurer, non operating holding company or agent of a foreign general insurer.
Mr Abela held various positions in HIH from March 1994, including Tax Manager, and Group Tax Counsel. From late in 2000 he was General Manager - Tax, Legal and Compliance.
APRA found that Mr Abela was responsible for reviewing returns to APRA, for the period ending June 2000, by netting-off loans and receivables, and did not follow the requirements of the Insurance Act 1973.
If the APRA returns had not included netting-off of loans and receivables which reduced disclosed liabilities by $582.9 million, authorised insurers within the HIH group would have been disclosed as not meeting solvency requirements.
APRA also found that while Mr Abela was responsible for HIH's accounting for future income tax benefits in the 30 June 1999 and 2000 periods, he was aware of, but did not comply with, the requirements of AASB 1020 [Accounting for income tax (tax-effect accounting)] by, among other things, allowing the offsetting of future income tax benefit of one company against a provision for deferred income tax of another company within the same group.
Justice Owen, during the HIH Royal Commission, found that at 30 June 1999 future income tax benefit ought to have been reduced by $172.4 million and in 30 June 2000 no amount ought to have been booked for future income tax benefits and that consolidated net assets should have been reduced by $228.4 million.
APRA's Deputy Chairman, Mr Ross Jones, said that correct and accurate returns to APRA and strict adherence to accounting standards is critical for APRA's supervision of the financial sector.
"APRA's objective in making such a disqualification is to protect the interests of policy holders from those in the insurance industry who are not fit and proper," he said.
This brings to 23 the number of people disqualified by APRA in relation to the collapse of the HIH Insurance, although four of these are currently still on appeal at the Administrative Appeals Tribunal.
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 $2.2 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.
Media and industry inquiries only:
Stuart Snell, Head of Public Affairs
Australian Prudential Regulation Authority
Telephone: 02 9210 3384
Mobile: 0407 250 276
All other inquiries:
APRA Contact Centre
1300 131 060
