Li was a director of a large Australian public company called Almost Isatan Ltd. It specialized in upmarket retail (with departments of fashion, kitchenware, cosmetics and decor). Li had an MBA from Harvard and was appointed director specifically because of his business acumen. Li's fellow directors included Ping, who was appointed because she had many years of experience as a buyer for department stores, although she did not have extensive formal business qualifications.

Acknowledging a downturn in profits due to the internet shopping onslaught, the board of directors of Almost Isatan Ltd held a meeting to discuss the future of the company. Li was insistent that the company should change directions and go 'down market' so that merchandise at the store would be more affordable. Ping, on the other hand, pointed to a lack of evidence that such a strategy would work. Ping insisted that the evidence showed profit losses in all sectors of retail (both up market and budget) such that restructuring was a better option. According to Ping, there was much wastage in the management of Almost Isatan that could be dealt with to improve the viability of the business.

The remaining board members sought advice as to which director they should follow (Li or Ping). The advisor suggests they should adopt Li' s reasoning because he had an MBA from Harvard. Consequently, the board follows Li's advice and, over the coming year, the strategy proves unsuccessful. Early on in that twelve month trading period, Ping warned that losses were mounting up despite the change in direction in the company and that the board should reconsider the restructure option. But the remaining board members insisted that they had sought financial advice at the start of the year and they should stick with that advice.

Feeling the stress of the situation, Li went on holiday to Dallas, Texas, where he enjoyed shopping at upmarket kitchen retailer, Williams Sonoma - which was enjoying flourishing business conditions because it restructured instead of going down market. Li did not reveal this information to the board of Almost Isatan on his return to Australia. Instead, he sarted an upmarket kitchen retail business.

On making a stunning loss, some Almost Isatan board members seek your advice as to potential breaches of directors' duties by Ping, Li or any other members of the board. In answering, state any further evidence you would seek. Also note the types of remedies that are usually available for breach of duty. If you found that a small group of minority shareholders had always distrusted Li and had made statements at an AGM to the effect that "Li is a twit" - would you be able to establish further legal actions against either Li or the company?