Wellington Capital PIF/Octaviar (MFS) PIF

Re: Octaviar MFS Premium Income Fund PIF

Was sent the following article out of the SMH from another unhappy PIF investor who asked me to post it on the forum. Seamisty
Australia lags on investor rightsCLANCY YEATES
September 10, 2009
SMALL investors' rights are better protected in countries such as Botswana, Romania, Ghana and Georgia than they are in Australia.

That is the finding of a World Bank study which ranked Australian laws and regulations on investor protection at 57th in the world, lagging behind many commercial backwaters.

The report gave high marks to Australia's disclosure regime and shareholders' ability to sue a company, but it found laws on director liability were unusually weak. Overall, the Doing Business 2010 report ranked Australia the ninth-best place to conduct business of 183 economies, based on an assessment of 11 aspects of running a business here.

To gauge investor protection, the study examined laws on related-party transactions - where companies enter into deals with entities that have a close relationship to the company, such as firms owned by directors.

Australia's disclosure rules in this field were strong, and shareholders had access to a large pool of evidence if they chose to lodge a class action, it said. But the legal system was weak at holding directors liable for related-party transactions.

''If the transaction is not fraudulent, then there is very little recourse to hold the director liable,'' said the lead author of the report, Sylvia Solf.

The report comes after several collapses have thrown the spotlight on related-party transactions. The failed finance company Octaviar (formerly MFS Limited) faces a potential litigation claim from IMF Australia, which has alleged MFS failed to disclose related-party transactions associated with its Premium Income Fund.

Administrators of the collapsed Allco Finance Group have also queried several related-party dealings, including a $50 million loan made to an investment vehicle owned by Allco directors and senior management.

The managing director of IMF, John Walker, said there were few precedents when suing directors over related-party transactions, and the directors' capacity to pay damages was uncertain.

However, the poor result on investor protection is unlikely to deter investment in Australia on its own. Official figures show the stock of foreign investment increased 83 per cent between 2002 and 2007, mostly from Britain and the US.

Re: Octaviar MFS Premium Income Fund PIF

I would suggest that if any posters on this thread personally know any of the members of the Investor Advisory Committee;

Mr Chris Mangan,

Ms Bronwyn Andrejic, or,

Ms Alana Woodford,

to request them to contribute to this thread under their own names. At the moment we are all separate voices crying in the wilderness. We need a focal point for our worries, if we are ever going to influence JH, and this forum would give us this opportunity.

Re: Octaviar MFS Premium Income Fund PIF

seamisty said:

Welcome back JohnH. I am sure there would be many prepared to sign statuatory declarations re the waiving of exit fees. Does anyone know if that discussion was ever recorded or documented?
Selciper who counted the votes, WC or Computershare? I think Breaker was chasing up on that. Cheers, Seamisty

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I sent the following to Wellington on behalf of the PIF Action Group:

Regarding the IAC - would you please confirm:

* Who counted the votes and scrutinised the votes for veracity - was it WC staff or Computershare or Perpetual or other?
waiting the answer

Breaker

Re: Octaviar MFS Premium Income Fund PIF

This article by Alan Schwab appeared in Crikey in May 08.

http://www.crikey.com.au/2008/05/19/plus-ca-change-conflicts-continue-at-octaviar/

Re: Octaviar MFS Premium Income Fund PIF

Typo., sorry! ADAM Schwab.

Re: Octaviar MFS Premium Income Fund PIF

selciper said:

This article by Alan Schwab appeared in Crikey in May 08.

http://www.crikey.com.au/2008/05/19/plus-ca-change-conflicts-continue-at-octaviar/

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Selciper, that is a really interesting article and I don't know how I have missed it it my constant research!!!

This is a list of who signed off on the WC PIF aquisition deal::

Freehills, Korda Mentha, Minter Ellison, McCullough Robertson and Jenny Hutson as well as 6 OCV directors.

Was the PIF offered to any one else? All will be revealed eventually, the PIF is under constant scrutiny and gone are the days of concealing 'related party transactions , golden handshakes, mates rates, etc'. A lot of PIF investors are far more vigilant, not so trusting and not prepared to be as complacent as they once were. They want the transparency they were promised and will explore all avenues to achieve it. Regards, Seamisty

Re: Octaviar MFS Premium Income Fund PIF

Selciper, a timely repost of this important article.

Just think about it - if Octaviar was insolvent in November 2007 when the RBS loan misappropriation occurred as McMurdo suspects (remember the email quoted from Fortress "we don't know how they got the $100M ") then all transactions from that date are voidable. That includes the "sale" of PIF to Wellington and investigating the circumstances of the selection of Wellington.

The liquidators will have to follow McMurdo's judgement and investigate the "missing" $5.05m from OIM accounts as well as the $3M for operations, as voidable transactions.

I am not sure how the liquidators will "unscramble the egg" of the web of voidable transactions involved in the Octaviar liquidation - by either seizing assets or suing for compensation or both.

But it seems that as soon as the potential for the removal of Deloitt and the appointment of another liquidator arose, JH reneged on the class action arrangement. (Jh was quoted as saying the PIF sale was cleared by Delloitt - now they have been removed under circumstances of "conflict"). Now the whole episode will be scrutinised. Well you can not give one group unfettered access to your documents and the expect to reject the liquidators requests for the same. She has bunkered down and that's why the noticeable lack of transparency. Remember that Wellington Investment Management is still listed as a respondent to our class action - looks like we will be suing them so don't expect much communication.

The whole issue of the misappropriation of the RBS loan funds begs another question - if JH knew that the the funds had been illegally misappropriated at June 2008 (as evidenced by lodging of the Court action) why on earth did she continue to pay the RBS loan out - PIF would be in much better financial shape now with $100M in the kitty! Seamisty, it looks like further actions against RBS and Wellington Capital for the class action.

Now that McMurdo has decided that the PTQ's costs in each case are paid by the Octaviar windup, I am sure that they will continue to legally pursue aspects of the Octaviar liquidation via the court.

As the new liquidators start their investigations, just watch the legal actions start!

Re: Octaviar MFS Premium Income Fund PIF

Selciper, just another thought on the Adam Schwab article - is it that the business community in Brisbane/Gold Coast is so small that everyone has to do business with each other? Is this the reason for such a high level of conflicts? .....LOL

Re: Octaviar MFS Premium Income Fund PIF

marcom said:

Selciper, just another thought on the Adam Schwab article - is it that the business community in Brisbane/Gold Coast is so small that everyone has to do business with each other? Is this the reason for such a high level of conflicts? .....LOL

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ASIC should set up an office on the Gold Coast so they don't have to drive down from Brisbane for a cool lunchtime drink with the managers. City Pacific's old office was in Queen Street, not too far from ASIC.

If ASIC have already done it, then they're still no use to us, just streets ahead.

Re: Octaviar MFS Premium Income Fund PIF

Adam Schwab's article interesting!!!! I find the adjective more to be foul and sickening.

I can't believe there are such conniving ruthless corporate thieves in this world getting away with masquerading as "clever". It's just common, low-life grand theft. Not to mention that thy are pathological (no conscience) liars and cheats. I would prefer to associate with house breakers than these covert thugs.

Is there any chance that we can see them sent to gaol?

Re: Octaviar MFS Premium Income Fund PIF

Foul and sickening works for me too Mary!! (Among other expressions not permitted here!) Every dog has their day, and I feel that day of reckoning for all involved is rapidly approaching. Sure finding it hard to trust anyone these days. Seamisty

Re: Octaviar MFS Premium Income Fund PIF

marcom said:

Selciper, just another thought on the Adam Schwab article - is it that the business community in Brisbane/Gold Coast is so small that everyone has to do business with each other? Is this the reason for such a high level of conflicts? .....LOL

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More of a case of 'birds of a feather, flock together' Marcom, or is 'if you hang out with dogs, you catch fleas' more appropiate? What ever, I am sure IMF will be on to anything that can be used in the CA to cement our case. Seamisty

Re: Octaviar MFS Premium Income Fund PIF

Is there any chance that we can see them sent to gaol?[/QUOTE said:

Yes Mary, there is now.

Under the DOA scenario with Deloitts/Fortress I think much of the dirt would have been swept under the carpet legally. Hence the desperate and costly legal efforts to force a DOA and then frustrate the appointment of an independent liquidator.

Now with the appointment of an independent Liquidator, a relatively large amount of cash in the Octaviar kitty with which to investigate, plus the guidance of a recent Supreme Court judgement and continuing legal pressure from the PTQ, I think we will finally see some justice done.

The key issue is the insolvency date - if that is November 07 or later- then all the Octaviar directors are personally liable for insolvent trading (if they can not summon a credible defence), and for any breaches of the Act they could face criminal and civil prosecutions by ASIC and others. ASIC's history is that it will wait until it has a firm liquidators report with evidence of breaches before it hands a brief to the DPP for action. By this stage (and it could be some time) ASIC is on firm ground legally and has not had to commit a great deal of funds to the exercise. I think it could be fairly described as "user pays regulation".

If all goes well then some of the miscreants may find themselves in goal, others will be much less financially solid after paying hefty fines and the rather large legal bills that usually follow such actions, while some may be banned from holding lucrative directorships in the future.

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Re: Octaviar MFS Premium Income Fund PIF

Yet another visit to the past...


http://www.crikey.com.au/2008/01/31/comments-corrections-clarifications-and-cckups/

Re: Octaviar MFS Premium Income Fund PIF

marcom said:

Selciper, a timely repost of this important article.

Just think about it - if Octaviar was insolvent in November 2007 when the RBS loan misappropriation occurred as McMurdo suspects (remember the email quoted from Fortress "we don't know how they got the $100M ") then all transactions from that date are voidable. That includes the "sale" of PIF to Wellington and investigating the circumstances of the selection of Wellington.

The liquidators will have to follow McMurdo's judgement and investigate the "missing" $5.05m from OIM accounts as well as the $3M for operations, as voidable transactions.

I am not sure how the liquidators will "unscramble the egg" of the web of voidable transactions involved in the Octaviar liquidation - by either seizing assets or suing for compensation or both.

But it seems that as soon as the potential for the removal of Deloitt and the appointment of another liquidator arose, JH reneged on the class action arrangement. (Jh was quoted as saying the PIF sale was cleared by Delloitt - now they have been removed under circumstances of "conflict"). Now the whole episode will be scrutinised. Well you can not give one group unfettered access to your documents and the expect to reject the liquidators requests for the same. She has bunkered down and that's why the noticeable lack of transparency. Remember that Wellington Investment Management is still listed as a respondent to our class action - looks like we will be suing them so don't expect much communication.

The whole issue of the misappropriation of the RBS loan funds begs another question - if JH knew that the the funds had been illegally misappropriated at June 2008 (as evidenced by lodging of the Court action) why on earth did she continue to pay the RBS loan out - PIF would be in much better financial shape now with $100M in the kitty! Seamisty, it looks like further actions against RBS and Wellington Capital for the class action.

Now that McMurdo has decided that the PTQ's costs in each case are paid by the Octaviar windup, I am sure that they will continue to legally pursue aspects of the Octaviar liquidation via the court.

As the new liquidators start their investigations, just watch the legal actions start!

Click to expand...

Marcom i think this might just bring a smile to a lot of people who have very patiently stood by each other (generally) in this forum and elsewhere, i know this, in the short term means nothing but it does have potential to erupt ,and maybe ,just maybe we will see the right people bought to task a bit quicker.
by the way i am sorry to here the Great Dame is not well, if anybody contacts him please give him my regards, Flatback

Re: Octaviar MFS Premium Income Fund PIF

seamisty said:

More of a case of 'birds of a feather, flock together' Marcom, or is 'if you hang out with dogs, you catch fleas' more appropiate? What ever, I am sure IMF will be on to anything that can be used in the CA to cement our case. Seamisty

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Too true. And the contagion spread to our Federal government too. ASIC, ACCC etc are now itching from the fleas from their association with the industry. Sociopathic Taibbi squids everywhere.

Another great example is the press. (more like a 'press gang' than journalism) Did you read the Financial Review and Fairfax (The Age) reporting of McMurdo's decision against Deloitte last week? No mention what so ever by either of the basics of the decision that Deloitte erred which led them to be conflicted. Instead the Fin Review was more interested in reporting, from memory, a side show featuring OPI and PIF. Incidentally - does anyone have a copy of that AFR article from Sept 10 (page 44) - 'Court Replaces Deloitte at Octaviar'. It's like Deloitte are some kind of holy cow now - like the ratings agencies and the 'masters of the universe' were.

Re: Octaviar MFS Premium Income Fund PIF

Hmmm. Interesting marcom.

My understanding is that a transaction wouldn't be voidable if it doesn't unfairly disadvantage one group or advantage another. Please correct me if I'm wrong

So if PIF now keeps writing everything down and doesn't return to profit (i.e. pay WC) for a long long long time then WC would seem (to lay me) to have a strong argument that WC haven't been advantaged. I.e. it could be in WC's interest to keep profitability down. Or to hold back on the 3c distribution to hold off paying WC. Hmmm. Smells a be conflicketty to me. Am I wrong?

Re: Octaviar MFS Premium Income Fund PIF

Duped, I think the disadvantage accrues to Octaviar as a valuable asset has been disposed of for no consideration. Eventually PIF will pay the 3c and WC will start accruing fees into the future, regardless of whether we see any further distributions they will benefit - and thats what the liquidator will want to get some value for.

Further disadvantage flows from the potential preference payments - ie $5.05M and $3M paid by Octaviar Administration to Wellington.

Re: Octaviar MFS Premium Income Fund PIF

marcom said:

Duped, I think the disadvantage accrues to Octaviar as a valuable asset has been disposed of for no consideration. Eventually PIF will pay the 3c and WC will start accruing fees into the future, regardless of whether we see any further distributions they will benefit - and thats what the liquidator will want to get some value for.

Further disadvantage flows from the potential preference payments - ie $5.05M and $3M paid by Octaviar Administration to Wellington.

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Thanks marcom. With WC under threat now I fear big write downs of PIF's assets. I mean, none of the 11 properties have sold yet have they? Seems to be an opportunity for WC to diminish the value of the fund's assets to help defend any allegation of preference payments. Who's watching WC's performance? ASIC? Bwahahaha!!! ROFL!

Aside from that wild allegation, how will the new OCV liquidators account for value WC have added e.g. through amending the PIF constitution? Without which PIF would be in the hands of liquidators by now and the value in the RE would now be gone wouldn't it? If WC could argue that they materially improved the value of the RE and received no consideration for say two years (if the 3c distribution proceeds in a year from now) then wouldn't the liquidator be a bit hard pressed arguing the RE was worth a lot?

Say OIM was still in charge of PIF when Deloitte took over. What would Deloitte have done with the RE? Auctioned it off at the height of the market disruption? What would Deloitte have valued the RE at given that there was less than 6 months till all those redemptions were due. With such a small time frame - isn't that a fire sale.

Would OIM have managed the fund better than WC did?

If OCV kept the RE (OIM) then wouldn't it have incurred those costs anyway? Weren't the only options for OIM to fire sales PIF's assets to pay for the ongoing management OR stump up its own cash. If OIM tried to fire sale they could have been voted out post haste and the value of the RE would be gone. My lay view is that the value of OIM was already smashed (If it ever really existed in the first place. How do you value a ponzi scheme?). Seems far more likely the RE at the time was a liability. Maybe that's wishful thinking but I'm very concerned that WC might be motivated to diminish the value of the PIF to strengthen their defence.

All Q's that come to my mind.

Re: Octaviar MFS Premium Income Fund PIF

Sydney Morning Herald 15/9/09 http://www.smh.com.au/business/king-cuts-a-deal-with-creditors-20090914-fnus.html

King cuts a deal with creditors
CBD
September 15, 2009
Roped in...Michael King has creditors who appreciate polo. <i>Illustration</i>: John Shakespeare.

Roped in...Michael King has creditors who appreciate polo. Illustration: John Shakespeare.

Scott Rochfort just needs to cut down on financially engineered doughnuts.

MFS LIMITED'S founder and polo enthusiast, Michael King, has dodged bankruptcy after striking a deal with his creditors for more than $130 million of debts.

Last month King's creditors quietly agreed to a two-year ''personal insolvency agreement'' with the founder of the financial group, which collapsed last year owing more than $1 billion.

The former MFS chief and his co-founder, Philip Adams, still owe $127.2 million on margin loans they took over their now worthless 13 per cent stake in the company, once worth more than $440 million.

King is now locked into an agreement that will require him to make undisclosed payments to his creditors.

Good luck. According to documents filed to the insolvency trustee, King's assets include a laptop and iPod music player (worth a collective $800) and some watches and a wedding ring worth $2000. The former BRW rich lister also had $60.26 in a Commonwealth Bank account and minus $23,442.51 in another account.

One asset not included in the filing was a patch of turf King purchased inland from the Gold Coast for more than $6 million, which is now his polo farm, Elysian Fields.

Given the polo field is held in trust on behalf of King, it would have been out of reach of creditors had the MFS founder been declared bankrupt.

But under the deal struck with creditors last month, the farm has been included. The trustee of the agreement, the Grant Thornton partner Nick Mellos, declined to provide details, noting more information would have been publicly available had King been declared bankrupt. But he stressed creditors could expect to get more out of King through the deal than if he had been declared bankrupt.

In his original filing to the bankruptcy trustee in April King noted he had flogged his Mercedes Benz to a used car dealer on the Gold Coast for $43,000. There was $231,000 from shares, including a small holding in Fone Zone, and $150,000 for his half share of a holiday house at Mount Hotham that was jointly owned by a Kate Manka.

It is unclear if it is the same Kate Manka that is married to the former MFS chairman Paul Manka.

King's (and Adams's) creditors include the Westpac-owned BT Financial ($41 million) and St George ($26 million), NAB ($22 million), CBA ($12.6 million), Lift Capital ($13.7 million), Macquarie ($7.5 million), Adelaide Bank ($4.4 million) and the Tax Office ($15,293).
Numbers man

After the insolvency agreement, a raft of companies owned by King, such as Black Teak Pty Ltd and Elysian Fields Canungra Hotel Pty Ltd, adopted their company numbers (ACNs) as their new names. At least King's Canungra Property and Subdivisions' catchy new name, ACN 097 679 788, is better than its original name, Bradmat Sunshine Coast Weed Control Pty Ltd.

King has been replaced as the sole director of all of his business interests by the Gold Coast private eye Michael Featherstone, who was a little cagey to CBD about his new role.

''I'm not trying to be rude, I just don't have any comment,'' he said. He failed to say whether the name changes could relate to King wanting a more reclusive lifestyle. A former policeman, Featherstone now runs a private investigation and ''risk management'' business and recently authored the book, Bullet Proof Your Business.
Pay up or else

Phil Adams, who moved to Dubai in 2007, remains elusive.

Let's hope he keeps up with his bill payments over there. The United Arab Emirates still has debtor prisons for people unable to pay their dues.