- GetSwift CEO Bane Hunter fined $2m, banned from managing companies for 15 years
- MD and cofounder Joel Macdonald fined $1m, banned for 12 years
- Company fined $15m
- Judge says pair show no contrition or remorse
- GetSwift raised $104m, investors receive 1c in $1 in class action
The founders of former ASX-listed logistics tech startup GetSwift, Bane Hunter and Joel Macdonald, have been fined $2 million and $1 million respectively, and banned from involvement in managing companies for more than a decade, with a Federal Court judge berating them as “representing the unacceptable face of startup capitalism”.
The failed software company was also ordered to pay a $15 million penalty in the judgment, handed down on Thursday.
Corporate regulator ASIC took the business and its directors to court for deceptive and misleading conduct in 2019, with Justice Michael Lee handing down a damning 868-page Federal Court judgment in November 2021 that outlined how the company broke the ASX’s continuous disclosure laws 22 times.
The judge found in that liability verdict “what might be described as a public-relations-driven approach to corporate disclosure on behalf of those wielding power within the company, motivated by a desire to make regular announcements of successful entry into agreements with a number of national and multinational enterprise clients.”
Lee outlined a culture of bullying within GetSwift, and during the legal action, no participation from Hunter and Macdonald – the latter appeared at an early case management hearing – as well as a lack of remorse and contrition.
“Mr Hunter was not only a bully, but also someone who had a laser-like focus on making money for himself and Mr Macdonald. If that involved breaking the law regulating financial markets, or exposing GetSwift to third party liability, that was of little concern to him,” the judge said.
The judgment outlines how another director, a former Qantas executive, who attempted to raise concerns, was harassed, abused and then forced from the business.
Lee detailed numerous failed attempts by those involved in the legal action to contact the duo, but noted that following his initial liability ruling that Macdonald used his now- deleted Twitter account to rebut the findings. The pair subsequently launched then abandoned an appeal against the judgment.
In handing down the penalties from his verdict this week, Justice Lee described Hunter, GetSwift’s executive chair and CEO as “principal instigator of the wrongdoing” and banned him from managing corporations for 15 years. The ban was longer than the 12 years ASIC sought for both founders.
“There is no basis to conclude other than Mr Hunter is unrepentant and lacks any insight into his conduct. He should not be in charge of the affairs of a company. A long period of disqualification is necessary,” Lee said.
Macdonald, a former Melbourne Demons AFL player, and GetSwift’s MD, was banned from managing a corporation for 12 years.
“That Mr Macdonald feels a ‘level of peace’ is not only cold comfort to those that have suffered loss, but also reflects a troubling and defiant lack of insight into the scale and seriousness of the wrongdoing set out in excruciating detail in [2021’s] Liability Judgment,” Lee wrote, calling him Bane’s “lieutenant”.
“Level of peace” is a reference to a tweet from Macdonald in November 2021 where he said he was “Very disappointed with yesterday’s outcome” following Justice Lee’s liability ruling, and would “probably need a beer or two to dust this all off. We will be back.”
A third former director, solicitor Brett Ronald Eagle, was fined $75,000 and banned from managing a company for two years. He is the only one who remained in Australia and took part in proceedings.
ASIC’s costs were also awarded against the company and the trio.
Absent from justice
GetSwift announced to the ASX in September 2020 that it planned to re-domicile in the US, and did so in 2021, listing on Canada’s NEO exchange in January of that year.
Hunter and Macdonald remain overseas.
They would go on to torch investor funds there, with the share price going from CAD$2.05 to $0.07 cents when the shares were suspended 19 months later in July 2022 after the company filed for Chapter 11 bankruptcy in the US. The business has a market cap of CAD$2.155 million at that point.
At the same time, it placed its Australian subsidiary in the hands of liquidators.
In doing so, they broke an undertaking to another Federal Court judge when relocating, Justice Lee noted, and Bane and Macdonald may yet face contempt of court proceedings.
Meanwhile, Federal Court judge Bernard Murphy approved a class action settlement against the company last month describing it as “an unhappy day” for investors who will receive around 1 cent in the $1, calling what happened at GetSwift a “scandalous episode in corporate misconduct”.
“An early-stage tech company, primarily through its managing director Joel Macdonald and executive chairman and CEO, Bane Hunter, embarked on a systematic program of pumping up the GetSwift share price, through overly positive and thus misleading announcements to the ASX,” Justice Murphy said.
Justice Lee detailed in his 2021 judgment how GetSwift would make ASX announcements about landing major clients, but they were only trialling, or contemplating a trial, of the GetSwift platform and the agreements, when announced, were not ongoing or revenue generating. A
One involved CBA, another Amazon, and the Court has heard that legal representatives from both companies counselled against the planned market announcements. The CBA announcement was said to be worth $9 billion, but that was based on five years when the contract was for two.
The ASX suspended GetSwift shares following the Amazon announcement because it was too vague. Amazon reportedly prohibited any announcement as a condition in the deal. The Court found the announcements were misleading and the company had breached its continuous disclosure obligations.
Hunter was “knowingly involved” in 16 of 22 continuous disclosure breaches and 29 instances of misleading and deceptive conduct. For Macdonald it was 20 of the 22 disclosures and 33 instances of misleading and deceptive conduct. Both men breached their director’s duties.
GetSwift Inc went on to sell its software-as-a-service assets in October 2022 as part of its Chapter 11 bankruptcy proceedings for US$5.3 million, including US$1m in liabilities, in October last year. The business now operates under the same brand out of Denver, Colorado.
In his 70-page penalty judgment this week, Justice Lee said: “neither Mr Hunter nor Mr Macdonald have shown the slightest degree of remorse or contrition, nor have they made any acknowledgment they behaved improperly. Additionally, ASIC has been unable to explore where all the money raised from investors went.”
He noted that following that 2021 ruling the “insouciance” of the duo “was reflected in the fact that there were no changes to the composition of the board even at this late stage”.
The pair not only remained in their roles, Hunter pocketed $1,791,328, of which 46% was “performance related” and Macdonald, $1,616,019, with 51% of his remuneration also “performance related”.
GetSwift produced operating losses in every year it existed.
Pumped and plunged
GetSwift emerged in 2015 out of McDonald’s alcohol delivery startup Liquorun. Within a year it listed on the ASX at 20 cents a share, raising $5 million.
Within two years its actions would lead to the ASX to tighten its market disclosure requirements in 2018.
But at the time, GetSwift quickly became one of the country’s hottest tech stocks, thanks to a series of announcements of deals with major corporations such as Amazon, the Commonwealth Bank and Yum Brands.
Having raised $24 million in June 2017, GetSwift shares popped by 800% to $4.30 within six months amid a vigorous PR-driven series of supposed customers wins, and the company raised $75 million from investors at $4 a share.
Within two months the share price plunged to 70 cents amid growing questions about the truth behind GetSwift’s deals.
The business raised a total of $104 million from investors in two placements.
“It became a market darling because it adopted an unlawful public-relations-driven approach to corporate disclosure instigated and driven by those wielding power within the company,” Justice Lee wrote.
He noted that on 22 August 2018, following the commencement of an investigation by ASIC in February 2018, Get Swift Logistics transferred an additional $8.5 million to an offshore bank account held by GetSwift, Inc., bringing the total funds transferred to $80.5 million.
“These transactions were unexplained by any evidence before me,” Lee wrote.