A director of a beauty franchise chain has been jailed for breaching his duties as a director, and for making false statements.

Ali Hammoud of Ella Rouge Beauty International had pleaded guilty to misusing his position and misappropriating $2.6m just before the business went into liquidation, and will serve 12 months of a two year prison sentence. Hammoud will then be released on the condition of good behaviour for two years.

SmartCompany reports the sentencing follows a previous case considered by the Companies Auditors and Liquidators Disciplinary Board which saw the joint liquidator of ERB International, William James Hamilton, suspended for six months for his conduct, which included entering into a deed of settlement without discovering the level of debt in the business.

It was the investigation of this case that uncovered Hammoud’s conduct.

The Australian Securities and Investments Commission issued a statement from commissioner John Price.

“Directors have a duty to act honestly and with integrity and in the best interests of the company,” he said.

Since the issue came to light, all ERB creditors have been paid.