ASIC Faces Hurdles in Rex Deception Probe

Four former directors of Rex Airlines are pushing back against allegations of misleading investors, raising concerns that ASIC’s legal action might be undermined by the airline’s lack of full cooperation in handing over key documents.

The Australian Securities and Investments Commission (ASIC) is pursuing penalties against the former Rex board members, accusing them of claiming the company was on track for a 2023 operating profit, even though internal financial information showed otherwise. Instead, Rex posted a $31.7 million loss and entered administration in mid-2024, with more than $500 million in debt.

Rex is now under administration, with EY seeking a buyer to keep its regional services going, while the federal government signals willingness to purchase the airline if no private buyer is found. In the meantime, ASIC’s case continues in the New South Wales Supreme Court, where the directors have denied wrongdoing and invoked “penalty privilege”, a legal right allowing them to withhold potentially self-incriminating information.

Despite efforts to collect all necessary documents before filing the case, ASIC says gaps remain in Rex’s compliance. Three directors have agreed to cooperate with discovery requests, but the former executive chairman has not, creating further delays. The court has scheduled a full day to hear arguments over whether discovery orders should proceed.

The broader implications could reach beyond legal penalties. If ASIC secures a successful ruling, it seeks to ban the accused directors from managing future corporations, which could reset board accountability standards. However, without complete document access, any resolution remains uncertain and could drag on.

Source: The Australian, AustralianAviation.