ASIC nails Sigalla but pays a price

This week, a judgment in the NSW Supreme Court found Sigalla, who was replaced at TZ by the celebrity entrepreneur Mark Bouris, had breached a court order that required him to fully disclose all of his financial transactions.

Left out were the details of a bank account and the credit cards used for various services.

"I am also satisfied beyond reasonable doubt that a further motive for Mr Sigalla's not disclosing the existence of the credit card was that he was concerned that ASIC was investigating the use of his credit cards to pay for the services of escorts and he did not want ASIC to know that the JPMorgan credit card had also been used in that way," Justice Richard White said in his judgment.

Justice White said Sigalla had been aware the financial regulator was "investigating the use of his credit cards to pay for the services provided by businesses called 'Premier Models' and 'Elite Escorts'."

Despite Sigalla's claims that the escort services had been used by a guest "who paid for them using his credit card and reimbursed him in cash", Justice White was not convinced. "I do not accept Mr Sigalla's denial. The fact that ASIC did not succeed in establishing a case to answer that the use of credit cards to pay for the services of escorts was a contravention of the court's orders, does not mean that there was no reason for Mr Sigalla to be concerned if ASIC became aware of the TLC Design transaction," he said in his judgment.

"I am satisfied beyond reasonable doubt that Mr Sigalla was concerned that ASIC might become aware of a further transaction of the kind which it had already indicated it was investigating."

RED IN THE FACE

Taking into account Sigalla being a "generous person of good character" and "the contempts proved in the present case are at the lower end of the scale", Justice White ordered the former TZ chairman to perform 120 hours of community service.

He also noted that Sigalla had "no monetary benefit or gain" from the contempts.

Sigalla's lawyers also had something to celebrate. And there was something for ASIC to be embarrassed about.

In a separate ruling, Justice White ordered ASIC pay 75 per cent of the now bankrupt Sigalla's court costs. This was partly a result of Sigalla being found guilty of nine of the original 45 contempt charges and ASIC's investigation being "conducted in an improper fashion".

"The proceedings in respect of some of the charges were brought without reasonable cause," Justice White said.

The contempts were made after ASIC sought an asset preservation order on Sigalla's private family business, into which the entrepreneur had allegedly misappropriated funds from TZ.

TZ, which under Bouris had originally launched a $7.5 million claim against Sigalla, settled with its former chairman for an undisclosed sum last September.

PARTING PAINS

Another day. Another few finance sector "retirements". Ord Minnett farewelled yesterday two of its more experienced hands, the institutional adviser Nestor Hinzack and the senior dealer who had served the firm for 21 years Philip Lindsay.

STRESS TEST

There are some things that are not so good for your health. Just ask the chief executive of the Macquarie Infrastructure Group toll-road offcast once nicknamed "Bad MIG".

Macquarie Atlas's Peter Trent noted yesterday how the refinancing of a ?3.8 billion finance facility on the group's part-owned French toll-road holding company was not as straightforward as one might assume.

"I am not sure we could have timed it any worse than what we did," Trent said about the refinancing on Eiffarie, which has a 99 per cent stake in France's APRR toll-road. "Doing a ?3.8 billion structurally subordinated holdco [holding company] refinancing in the middle of a European banking meltdown and overshadowed by the threat of a sovereign default crisis was not great timing on our part," he said.

After spending 18 months getting the refinancing across the line, Trent said he was "absolutely delighted" Macquarie Atlas did not need to go to its shareholders for "a single dollar of additional equity". "If you think it was a simple achievement given what was happening around us I can assure you it was extremely challenging and I think our health is slightly worse as a result of it," a clearly relieved Trent told the annual results briefing.

A FEE RIDE

The side effects of the Eiffarie refinancing thankfully did not affect the management fees paid by Macquarie Atlas to its manager, Macquarie Group.

The toll-road company, the silver doughnut's last remaining ASX-listed satellite, said the more than doubling in its operating costs to $206.7 million was largely a result of the increased management and performance fees. These fees rose from $22.9 million in 2010 to $64.5 million in last year. Quite a handsome annual stipend from a company with a market capitalisation of $775 million. The base fee is calculated as 2 per cent of the group's market value. The performance fee is based on how the share price performs compared with the index. For 2010-11, Macquarie Atlas generated $50.1 million in performance fees alone.

The impressive performance fees were no doubt helped when the performance of Macquarie Atlas was reset when it demerged from MIG at a distressed price.

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