- Bane Hunter, CEO of GetSwift, fined $2 million and barred from running companies for 15 years
- MD and co-founder Joel McDonald were fined $1 million and suspended for 12 years
- The company was fined $15 million
- Judge says the couple show no remorse or remorse
- GetSwift raised $104 million, 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 barred from any business management involvement for more than a decade. with Federal Court’s Michael Lee berating them as “representing the unacceptable face of startup capitalism”.
The bankrupt software company was also ordered to pay a $15 million fine the judgementdelivered on Thursday.
Corporate regulator ASIC took the company and its directors to court for deceptive and misleading conduct, with Judge Lee issuing a damning 868-page Federal Court ruling in November 2021 that outlined how the company violated the ASX’s continued disclosure laws 22 times.
The judge ruled in that liability judgment “what could be described as a public relations-driven approach to corporate disclosure on behalf of those who exercise power within the company, motivated by a desire to make regular announcements of successful contracting with a number of national and multinational corporate clients.”
Lee outlined a culture of bullying within GetSwift, and during the legal action there was no participation from Hunter and Macdonald – the latter appeared at an early case management hearing – as well as a lack of remorse and remorse.
“Mr Hunter was not only a bully, but someone who had a laser-like focus on making money for himself and Mr Macdonald. If it violated the law that regulates financial markets, or exposed GetSwift to third-party liability, it made little difference to him,” the judge said.
The verdict outlines a case where another executive who attempted to raise concerns was harassed, abused and then forced out of the company.
Lee described numerous failed attempts by those involved in the legal action to contact the duo, but noted that following his initial liability plea, Macdonald used his now-deleted Twitter account to refute the findings. The pair subsequently launched and waived an appeal against the findings.
In handing down the sentences of his verdict this week, Judge Lee Hunter described GetSwift’s executive chairman and CEO as “the main instigator of the misconduct” and banned him from managing companies for 15 years. The ban was longer than the 12 years ASIC sought for both founders.
“There is no basis for concluding except that Mr. Hunter is unrepentant and has no understanding of 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 running a company for 12 years.
“That Mr. Macdonald feels a ‘level of peace’ is not only cold comfort to those who have suffered a loss, but also reflects a disturbing and challenging lack of understanding of the magnitude and seriousness of the misconduct set out in excruciating detail in [2021’s] Liability judgment,” wrote Lee, calling him Bane’s “lieutenant.”
A third former executive, attorney Brett Ronald Eagle, was fined $75,000 and banned from running a company for two years. He is the only one who has remained in Australia and participated in the proceedings.
ASIC’s costs were also allocated to the company and the trio.
Absent from justice
GetSwift moved to the US in 2021 in the wake of the first Federal Court ruling and listed on Canada’s NEO exchange in January of that year.
Hunter and Macdonald remain abroad.
They would burn investor funds there, with the share price going from CDN $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 . At the same time, it placed its Australian subsidiary in the hands of liquidators.
By doing so, they broke a promise to another Federal Court judge when they moved, Judge Lee noted, and Bane and Macdonald could still face contempt of court proceedings.
Meanwhile, federal court judge Bernard Murphy last month approved a class action settlement against the company, describing it as “an unlucky day” for investors who will receive about 1 cent in the $1, and citing what’s happening at GetSwift happened an “outrageous episode in business misconduct” .
“A technology startup, primarily through its general manager Joel Macdonald and executive chairman and CEO, Bane Hunter, embarked on a systematic program to inflate the GetSwift share price, through overly positive and thus misleading announcements to the ASX,” Justice said Murphy.
In his Criminal verdict of 70 pages this week Judge Lee said: “neither Mr. Hunter nor Mr. Macdonald have shown the slightest degree of remorse or remorse, nor have they admitted to any inappropriate conduct. In addition, ASIC has not been able to investigate where all the money raised from investors has gone.”
He noted that after that 2021 ruling, the duo’s “carelessness” was “reflected in the fact that even at this late stage there were no changes to the composition of the board”.
Not only did the pair stay in their roles, Hunter pocketed $1,791,328 of which 46% was “performance related” and Macdonald $1,616,019 of which 51% of his pay was also “performance related”.
GetSwift posted operating losses in every year it existed.
Pumped and dumped
GetSwift was born in 2015 out of Liquorun, McDonald’s alcohol delivery startup. Within a year it was trading on the ASX at 20 cents a share, raising $5 million.
Within two years, her actions would lead the ASX to tighten its market disclosure requirements in 2018.
But at the time, GetSwift quickly became one of the hottest technology stocks in the country, thanks to a series of deal announcements with major companies such as Amazon, the Commonwealth Bank and Yum Brands.
After raising $24 million in June 2017, GetSwift shares rose 800% to $4.30 within six months amid a powerful PR-driven string of purported client gains, and the company raised $75 million from investors for $4 per share.
Within two months, the share price plummeted to 70 cents amid growing questions about the truth behind GetSwift’s deals.
It raised a total of $104 million from investors in two placements.
“It became a market darling because it took an illegitimate, public relations-driven approach to corporate disclosure, initiated and driven by those who wield power within the company,” Justice Lee wrote.
He noted that on August 22, 2018, following the initiation of an investigation by ASIC in February 2018, Get Swift Logistics transferred an additional $8.5 million to an offshore bank account owned by GetSwift, Inc., bringing the total amount transferred to $80 .5 million is coming.
“These transactions were not explained by any evidence before me,” Lee wrote.