The former chief executive of an ASX-listed diamond exploration company has been arrested in Sydney for allegedly misleading the Australian Securities Exchange.
Alexandre Alexander, the former chief executive of Kimberley Diamonds, has been charged with four offences relating to false and misleading statements under the Corporations Act.
Each offence carries a maximum penalty of five years in jail along with a $34,000 fine.
Sign up for SmartCompany newsletter.
Free to your inbox every weekday
The behaviour is alleged to have occurred between October 2013 and March 2014 in Kimberley Diamond’s future earnings forecasts.
The Commonwealth Director of Public Prosecutions alleges statements to the ASX that were authorised by Alexander were false and misleading because they failed to disclose the company’s earnings forecast assumed a 30% increase in the value of its rare yellow diamonds due to a confidential deal with Tiffany & Co.
Alexander was arrested by the Australian Federal Police at Sydney airport yesterday morning while returning from a trip overseas.
The former chief executive appeared at Sydney’s Central Local Court via video link later the same day.
Alexander was granted bail subject to strict restrictions, including surrendering his passport to the Australian Securities and Investments Commission.
The matter was adjourned and is due to be back in court in November.
Kimberley Diamonds is an Australian-based company with assets in Botswana and Spain.
Its largest diamond-producing mine is located in Ellendale in Western Australia and is the world’s main source of rare yellow diamonds.
Ursula Hogben, principal and general counsel at law firm LegalVision, told SmartCompany making forward-looking statements is one of the riskiest things a company can do.
“The ASX continuous disclosure rules permit a company to keep a deal confidential, in certain circumstances including while it is still uncertain,” Hogben says.
“That’s commercially sensible and the ASX listing rules allow that. But you have to set out the facts your forward-looking statements are based on. That would be the correct path of balancing confidentiality on the one hand and giving the market proper information on the other.”
Hogben says it is crucial for business owners to check their financial statements very carefully with their chief financial officer and accountant to understand what they are based on and set out the reasoning behind any assumptions.
SmartCompany contacted Kimberley Diamonds but did not receive a response prior to publication.