Court finds former ABC Learning director not guilty in a blow to ASIC

One of the executive directors of ABC Learning Centres was found not guilty of criminal charges of breaching his directors’ duties yesterday, signalling an end to part of the Australian Securities and Investment Commission’s long-running investigation.


The former chief executive of Australia and New Zealand operations for the childcare centre, Martin Vincent Kemp of Daisy Hill, Queensland, was found not guilty after a four-week trial in the Brisbane District Court.

Kemp was found not guilty of one count of breaching section 184(2) and one count of breaching section 184 (1) of the Corporations Act 2001.

The charges were brought in early 2011 following an ASIC investigation, commenced in November 2008, when ABC Learning was placed into external administration.

The matter was prosecuted by the Commonwealth Director of Public Prosecutions.

Eddy Groves started ABC Learning in 1988 and built a childcare empire that at its peak was worth $2.5 billion, involved 2000 childcare centres and spanned Australia, the United States and Britain.

However, in 2008, the underperformance of the Australian operations and the company’s $1.6 billion debt began to cause problems for Groves, who lost the bulk of this shareholding – once valued at more than $300 million – in a margin call.

Shortly after the collapse, ASIC and the company’s liquidators began investigating ABC’s affairs, unearthing claims of poor disclosure, related-party transactions and mismanagement.

The case revolves around Kemp’s sale of his three centres and land to ABC Learning in a $3 million-plus deal on January 11, 2008.

Groves is facing similar charges and will stand trial later this year.

Andrew Wheeler, partner at PwC Legal, told SmartCompany the court’s finding was a blow to ASIC.

“There’s no doubt ASIC would be unhappy, given that it has poured time and effort into this,” he says.


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