ASIC pursues penalties against Quintis founder Frank Wilson

Vesna PoljakCompanies editor

Updated Jun 14, 2018 – 3.38pm, first published at 10.32am

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The Australian Securities and Investments Commission has begun a civil action against Quintis founder Frank Wilson, alleging the former boss of the sandalwood group knew a key supply contract had been terminated, but did not tell the Quintis board.

Its investigation into the Quintis fiasco, where shareholders lost all of their money, is ongoing.

Mr Wilson has always disputed he had knowledge of the loss of a contract to supply pharmaceutical grade Indian sandalwood oil to Nestle's Galderma for use in over-the-counter skincare products.

ASIC has begun a civil action against Quintis founder Frank Wilson. Philip Gostelow

When the termination of this deal was revealed in May 2017, Quintis shares began a downward spiral that concluded with the company entering administration in January 2018.

The admission was the second significant contract loss for the company since it was targeted by US short-seller Glaucus, which accused the former TFS in March 2017 of having ponzi-like aspects, and issued a zero-dollar price target on the stock.

In the course of its defence of Glaucus' accusations, Quintis issued a statement identifying its major customers for the first time, including noting the Galderma agreement as a 20-year contract.

'Misleading or deceptive'

ASIC alleges Mr Wilson – who resigned as managing director the night after that statement was issued – oversaw the release of information "that was misleading or deceptive".

"ASIC is alleging that by failing to disclose to the Quintis board of directors that key contracts with Nestle-owned Galderma (Galderma agreements) had been terminated, Mr Wilson did not discharge his duties to Quintis with the degree of care and diligence that a reasonable person in the position of managing director would exercise," the market regulator said in a statement on Thursday.

"ASIC alleges that Mr Wilson was aware that the Galderma agreements had been terminated in early 2017 but the Quintis board of directors did not become aware until May 9, 2017."

The market regulator is seeking that Mr Wilson be barred from managing an Australian company for a period of time, a declaration of contravention, and civil penalties. ASIC is not pursuing penalties against Quintis.

Three separate shareholder class actions have been filed in the Federal Court related to the collapse of the business, market disclosures and the preparation of Quintis' financial statements.

Mr Wilson commenced a defamation action in the Supreme Court of Western Australia in December 2017 against his former board members Julius Matthys, Dalton Gooding, John Groppoli, Michael Kay and Gillian Franklin accusing them of defaming him in ASX statements.

Vesna Poljak is the Companies editor. She was previously the Markets editor with a special interest in the investment industry, hedge funds and accounting. She is based in the Sydney newsroom. Connect with Vesna on Twitter. Email Vesna at vpoljak@afr.com