The chequered past of Kleenmaid is once again in the spotlight, with the company’s embattled former directors facing charges in court this week associated with the multimillion dollar collapse of the major appliance brand.
After first appearing in court almost two years ago, the case against the former directors of Kleenmaid is once again working its way through the legal system following an investigation by the Australian Securities and Investment Commission.
Brothers Andrew Young and Bradley Young, along with their former associate and Gary Armstrong, originally appeared in Maroochydore Magistrates Court in Queensland in February 2012, facing 58 criminal charges between them, including insolvent trading and defrauding Westpac bank of $13 million.
After receiving a series of short mentions and adjournments in the Magistrates Court, the case has been brought up once more for a 3-week committal hearing. Now in its second week, the committal hearing will determine whether there is enough evidence to commit the case to the District or Supreme Court for a full trial, though it will not determine the guilt of the directors.
The Sunshine Coast Daily reported that the company’s former accountant Robert Francis Drake appeared in court last week, the first to testify in proceedings that are expected to hear from more than 100 witnesses.
According to the local newspaper, Drake was “questioned about a number of emails dating back to 2007 that outlined concerns with the company’s finances”, including one email from July 2007 that listed company costs totalling in the order of $562,000 and cash flow of $440,000, resulting in “a shortfall of at least $122,000 per month”.
After the company went into administration in 2009, administrators at Deloitte found more than $76 million owing to Kleenmaid’s creditors. Deloitte claimed the company had traded while insolvent for more than two years and that Andrew Young had written off more than $400,000 worth of “boat expenses” on the company books. In 2009, Police were also called out to the company’s offices after it was discovered that the Young brothers had attempted to remove sensitive documents from the property.
A subsequent investigation by ASIC led to 18 charges each for the three directors, relating to insolvent trading with company debts “totalling more than $4 million and a $13 million fraud committed on Westpac Bank”.
The Young brothers also faced two additional charges each, after being accused of “withdrawing $330,000 from the company’s bank accounts two days before it went into voluntary administration”.
The committal hearing continues and is expected to extend into next week.