Third HIH executive jailed for role in insurer's $32b collapse The A$5.3 billion ($32.36 billion) collapse of HIH Insurance has led to a third top executive being sentenced to prison, but whether Australia's markets are now safer for investors - as some claim - remains to be seen. Former HIH managing director Terry Cassidy was yesterday jailed for 10 months for his role in the 2001 collapse after pleading guilty to two charges of 'acting with reckless disregard' in making misleading statements and one charge of failing in his duties as a company director. Cassidy admitted to overstating the assets of an HIH unit that was A$111 million in the red and backdating securities documents. He joins two higher-profile colleagues jailed in the past month for their role in the country's biggest corporate failure. Company founder Ray Williams and director Rodney Adler were each sentenced to a maximum of 41/2 years and ordered to pay A$7 million in compensation. Williams' lawyer has said they would appeal. The Australian Securities and Investments Commission (Asic), shareholder groups and corporate ethicists welcomed the sentences and some say they herald an era of enhanced corporate governance. 'This is a step forward for the financial markets,' Australian Shareholders Association chief executive Stuart Wilson said. The association had previously lambasted the commission's 'reluctant' approach to pursuing corporate criminals. Other high-profile collapses, including OneTel in 2001, did not result in charges despite widespread allegations of malfeasance in the boardroom. Of the almost 100 complaints the commission received in 2003-04, only 5 per cent were investigated. Litigation was concluded in 220 cases and there were 28 convictions, more than half of them company officers and directors. An average of 25 convictions a year were made over the past six years. But the main outcome of the HIH scandal - besides the scorching of thousands of small investors - is whether the resulting backlash produced a real change in the balance of power between corporate enforcers and corporate cowboys or merely the appearance of one. Regulatory chief Jeffrey Lucy was quick to welcome the HIH sentences, saying: 'Asic, the courts and the community will not tolerate company directors who do not act honestly and in the best interests of shareholders.' In the wake of HIH's failure, the commission persuaded the government to raise the maximum jail sentence for giving misleading information from two to five years. The government also introduced new compliance regulations on disclosure and transparency, rules some business groups said would only generate more costs. 'The cost of the new requirements will be a lot more than was lost by HIH,' said a Business Council of Australia spokesman, adding the scandal had distorted perceptions of corporate Australia. Some corporate-governance advocates believe a new era has dawned, with the authorities not only talking tough but acting tough too. 'These are landmark sentences over HIH,' said a leading corporate lawyer. 'Many of us were thinking that the sentences would be suspended because they were such well-connected people. 'Part of it is political because the public is pressuring the government, which wants the regulators to act. But, any way you look at it, I think there has been a shift here.'