Wellington Capital PIF/Octaviar (MFS) PIF

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

The Owls - I was just about to ask the same questions as you. It seems to me - as an amateur - that the CA submissions could be affected, but I guess that we have to be patient (again) and leave it to the experts. Meanwhile, WC give me no cause for confidence and any distribution in the near future seems unlikely.

John Walker from IMF has promptly responded to my query in relation to concerns being raised as to what potential impact ASIC's action will have on the CA. His response below:: Hopefully this will clarify our concerns, Seamisty

'I am trying to get a mail out update happening this week. It will address ASIC’s action.'

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

Duped, I share some of your cynicism, but we can now see that the Deed Of Arrangement saga was probably more designed to forestall ASIC action than to compensate creditors. As soon as McMurdo cancelled the DOA's and Delloittes were removed and Bently's installed ASIC could start moving.

I have another question that I have been looking for an answer on the ASIC website: Whatever the amount of compensation we get out of the ASIC action, is it paid directly to investors or does it go to the PIF fund? In many of ASIC's other cases the companies have been or are being liquidated and it seems that shareholders and investors share the compensation directly.

So, is ASIC doing this in the name of PIF or individual investors? I really would not want to see WC get control of our compensation (particularly as WC commenced an action and never proceeded with it - instead wasting our money on pursuing the ridiculous DOA's) as I have better and safer avenues to invest any compensation I receive.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

FINALLY!!!::http://www.nsxa.com.au/ftp/news/021722127.PDF
Glass Action Update
Mercedes Holdings Pty Ltd & Ors v KPMG & Ors - Federal Gourt Proceedings NSD324/2009
On26 June 2009, Wellington Capital Limited as responsible entity of the Premium Income Fund advised the
market that following negotiations with the Applicants' legal representative these proceedings have by
mutual agreement been discontinued against the former responsible entity of the Premium Income Fund with
no order as to costs.
This agreement was recorded in the attached agreement.
At the date of this release, the former responsible entity has not been discontinued as a Respondent in the
proceedings.
A hearing of the class action took place on Friday 30 October 2009 before Justice Perram in the Federal
Court in Sydney.
A Notice of Motion will be frled by the former responsible entity in accordance with the Court timetable
which was set out by Justice Perram on 30 October 2009. The Notice of Motion will seek to have the former
responsible entity (currently the Third Respondent) discontinued as a party to the class action.
The Notice of Motion to have the former responsible entity discontinued as a party to the class action will be
heard from 16 December2009.
Further announcements will be made as the proceedings progress.
For further information please contact:
Jenny Hutson
Chairperson
Wellington Capital Limited
as responsible entity of the Premium Income Fund
ACN 114 248 458 AFSL 291 562
Phone: 1300 854 885
Email:
#2

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Also on the NSX today::http://www.nsxa.com.au/ftp/news/021722128.PDF

ASIC Proceedings Update
Australian Securities and lnvestments Gommission v Michael King, Graig White, Guy Hutchings,
David Anderson, Marilyn Watts Octaviar Administration Pty Ltd (ln Liquidation) Octaviar Castle Pty
Ltd and the former responsible entity of the Premium lncome Fund
Reference is made to the release of 2 November 2009 made by Wellington Capital Limited as responsible
entity of the Premium Income Fund in relation to the proceedings commenced in Supreme Court of
Queensland by ASIC.
Annexed is a release made by the ASIC in relation to those proceedings.
Further announcements will be made as the proceedings progress.
For further information please contact:
Jenny Hutson
Chairperson
Wellington Capital Limited
as responsible entity of the Premium Income Fund
ACN 114 248 458 AFSL 291 562
Phone: 1300 854 885
Email:
ADVISORY
Australian Securities & Investments Commission (ASIC)
Monday 2 November 2009
^D09-214
ASIC COMMENCES CIVL PROCEEDINGS AGAINST FORMER
OFFICERS OF MFS GROUP
The Australian Securities and Investments Commission (ASIC) has commenced civil proceedings in
the Supreme Court of Queensland against three subsidiary companies of the formerly listed MFS Ltd
(now known as Octaviar Ltd (in Liquidation) and four former ofhcers and one manager of MFS
Investment Management Ltd.
The proceedings relate to the use of $ 147.5 million in funds of the Premium Income Fund (PIF), for
which MFS Investment Management Ltd ('MFSIM', now known as Managed Investments Ltd) was
the responsible entity at the relevant time.
In taking this action, ASIC is addressing the core obligations of a responsible entity and its directors
and officers to operate the fund with care and diligence, and in the best intelest of the fund's members.
The defendants in the matter are:
o Michael Christodoulou King of Canungra, Queensland, former Chief Executive Ofhcer
(CEO) and Director of MFS Ltd;
. Craig Robert White of Holland Park West, Queensland, former Deputy CEO (and for a short
period, CEO) and director of MFS Ltd and MFSIM;
. Guy Hutchings of Paddington, NSW, former CEO and director of MFSIM;
¡ David Mark Anderson of Robina, Queensland, former CFO and Company Secretary of MFS
Ltd;
. Marilyn Anne Watts of West Pennant Hills, NSW, former fund manager of MFSIM;
¡ Managed Investments Ltd (formerly known as MFSIM and Octaviar Investment
Management Ltd);
¡ Octaviar Administration Pty Ltd (formerly MFS Administration Pty Ltd) (In Liquidation);
and
o Octaviar Castle Pty Ltd (formerly MFS Castle Pty Ltd and MFS Investment Holdings No 17
Pty Ltd).
ASIC is seeking orders for declarations of contraventions, pecuniary penalties, compensation and
disqualifications from managing corporations.
A schedule ofallegations and orders sought in relation to each defendant is attached.
The transactions:
ASIC alleges that in November 2007, ofhcers of MFSIM caused PIF to transfer $130 million to MFS
Administration Pty Ltd so that MFS Administration could use those funds to pay financial obligations
of other MFS Ltd subsidiaries, including $103 million owed to Fortress Credit Corporation (Australia)
Pty Ltd by MFS Castle Pty Ltd.
ASIC also alleges that in December 2007, officers of MFSIM caused PIF to transfer S17.5 million to
MFS Pacific Finance Ltd, a New Zealand registered company (now known as OPI Pacific Finance Ltd
(Receivers and Managers Appointed)).
Page 1 of 1
ASIC further alleges that in about January 2008, officers and the fund manager of MFSIM created and
used false documents, relating to the use of the $147.5 million.
As a result of the funds being transferred, ASIC alleges that the PIF suffered a loss of $147.5 million.
Bacþround:
MFS Ltd was a publicly listed company with interests in financial services, travel and leisure and child
care businesses.
MFSIM was an unlisted public company and wholly owned subsidiary of MFS Ltd (now in
Liquidation). MFSIM was the responsible entity for six unlisted managed investment schemes,
including the PIF and the Maximum Yield Fund ('MYF'). MYF is also relevant to the current civil
penalty proceedings.
The PIF was an unlisted managed investment scheme which offered investments to retail and
wholesale investors through a Product Disclosure Statement.
Wellington Capital Ltd took over as responsible entity of the PIF in late 2008. PIF units have since
been listed on the National Stock Exchange.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

FINALLY!!!::http://www.nsxa.com.au/ftp/news/021722127.PDF
Glass Action Update
Mercedes Holdings Pty Ltd & Ors v KPMG & Ors - Federal Gourt Proceedings NSD324/2009
On26 June 2009, Wellington Capital Limited as responsible entity of the Premium Income Fund advised the market ...

Correct me if I'm wrong seamisty but this release doesn't imply that WC has removed it's support for the class action.

 

[Jadel]

Re: Octaviar MFS Premium Income Fund PIF

Too true. Had ASIC moved a year ago to establish the date of insolvency then all these wasteful court actions, that had all the 'law' 'firms' in a flap and caused so much "disruption", would likely have been unecessary. What a total and utter waste of time, money and Australia's intellectual capital.

ASIC shouldn't have left their duties to Deloitte. KPMG shouldn't have left their duties to their former employee King. When will these people learn that it's easier to just do the job you're paid to do.

I agree Duped, I can still clearly recall a comment made by Dreloitte after their investigation to the effect that they could find " no evidence of illegal activity" Of course they were being advised by Anderson . This demonstrates that there is something intrinsically wrong with a system that allows former directors of a failed company to participate in the investigation process initiated by liquidators.

 

[k.smith]

Re: Octaviar MFS Premium Income Fund PIF

Duped, I share some of your cynicism, but we can now see that the Deed Of Arrangement saga was probably more designed to forestall ASIC action than to compensate creditors. As soon as McMurdo cancelled the DOA's and Delloittes were removed and Bently's installed ASIC could start moving.

I have another question that I have been looking for an answer on the ASIC website: Whatever the amount of compensation we get out of the ASIC action, is it paid directly to investors or does it go to the PIF fund? In many of ASIC's other cases the companies have been or are being liquidated and it seems that shareholders and investors share the compensation directly.

So, is ASIC doing this in the name of PIF or individual investors? I really would not want to see WC get control of our compensation (particularly as WC commenced an action and never proceeded with it - instead wasting our money on pursuing the ridiculous DOA's) as I have better and safer avenues to invest any compensation I receive.

Marcom,
I seem to remember JH telling us at the Melbourne meeting that any recovery of the $147million would be shared by unitholders directly

 

[simgrund]

Re: Octaviar MFS Premium Income Fund PIF

Duped, I share some of your cynicism, but we can now see that the Deed Of Arrangement saga was probably more designed to forestall ASIC action than to compensate creditors. As soon as McMurdo cancelled the DOA's and Delloittes were removed and Bently's installed ASIC could start moving.

I have another question that I have been looking for an answer on the ASIC website: Whatever the amount of compensation we get out of the ASIC action, is it paid directly to investors or does it go to the PIF fund? In many of ASIC's other cases the companies have been or are being liquidated and it seems that shareholders and investors share the compensation directly.

So, is ASIC doing this in the name of PIF or individual investors? I really would not want to see WC get control of our compensation (particularly as WC commenced an action and never proceeded with it - instead wasting our money on pursuing the ridiculous DOA's) as I have better and safer avenues to invest any compensation I receive.

THESE ARE GOOD AND VALID QUESTIONS MARCOM,
IT IS OBVIOUS THAT THIS IS AN URGENT ISSUE FOR OUR ELECTED COMITTEE TO PRESENT TO OUR [CA] LAWYRS FOR CLARIFICATIONS. ASIC ACTIONS CAN RESULT IN FAIRLY RAPID RESOLUTION AS WAS SEEN IN THEIR WESTPOINT ACTION (over 61 cents in a dollar recovered for members)
JUST LIKE YOU, MANY OF US WOULD PREFER DIRECT DISTRIBUTION TO MEMBERS. AND UNLIKE WORKER'S INSURANCE COMPENSATIONS, WHERE DOLLAR AMOUNTS ARE REGULATED TO EQUAL THE MAXIMUM COMPENSATION ALLOWABLE, ACTION THROUGH CARNEYS/IMF IS NOT LIMITED BY ASIC ACTIONS FOR COMPENSATION.
THESE UNDERSTANDINGS NEED VERIFICATIONS NOW. ASIC CLEARLY SAYS IN ITS FILING OF PROCEEDINGS OF ALLEGED CONTRAVENTIONS OF THE ACT, THAT DIRECTORS MISUSED THE MONEY BELONGING TO PIF MEMBERS.
I DREAD THE THOUGHT OF THE RECOVERED FUNDS BEING POURED INTO NSX HOLDINGS. WE MUST PREVENT IT.
SO LET'S COMMENCE THIS VERY URGENT ACTION THROUGH EITHER OR BOTH OF OUR 2 COMMITTEES.
PLEASE SURFACE,

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Yep Jadel. But how deep did they look? Even with a heavy dousing of disclaimers ANY comments like that by Deloitte are reckless IMO. McMurdo said as much at para [34] of QSC09-283 "But it was one thing to say that the company may have been solvent as at that date. It was another to express the opinion that it was probably solvent."

Our institutions and business leaders need a large dosing up of humility and common sense so they don't get sick from their vested interests. Codification in statute is secondary and a poor substitute.

Below is much of what I posted on H0tC0pper on 23 Dec 08 (while this ASF thread was shut) about the Deloitte Dec08 report on OCV Ltd. Deloitte were all over the shop on the subject of solvency. Relying too much on Anderson's word perhaps? Pretty poor judgement call if they did? Then again, many seem to be losing their heads over the OCV mire. (I listened to my hack of a financial advisor didn't I.) My apologies if I've already posted it on this thread.

RE:Insolvency
The biggest EH!!! moment is half way down page 23 "we consider that as at 22 January 2008 OCV should have identified that it may have been BALANCE SHEET INSOLVENT [emphasis added]because ...".

Hang-on chiefs, para 3 of Sect1.1 says "We believe that the Company and the Group may have become insolvent during the period from 4 February 2008 to 4 June 2008".

So which is it then? Jan or Feb-Jun?

Do I need an accounting degree to understand 'balance sheet insolvency'?

Or is Deloitte's just throwing enough ambiguity in so they won't get injured in the OCV creditor crossfire?

Of course there's the main conclusion at page 2 "We have not identified sufficient evidence to date that would allow us to form a conclusive view as to when insolvent trading may have occurred or commenced". Soft!! [Back peddle]

Then at page 42 is this JACKPOT:

"Within the Fortress DOCA proposal is a condition that the Company not pursue a claim against Fortress or the Receivers. This should be considered in light of the following comments:
• Prior to 22 January 2008 Fortress held UNSECURED [emphasis added]guarantees from OCV for facilities provided to Octaviar related investments, Young Village Estates and OPI Pacific Investments
• On 22 January 2008 a deed was executed with the effect of CONVERTING [emphasis added]the aforementioned guarantees to a SECURED [emphasis added]position, under the Fortress facilities previously advanced to Octaviar Castle, incorporating OCV.
Creditors have asked us to investigate the circumstances surrounding that conversion."

"We have considered if the CONVERSION [emphasis added] could be regarded as a VOIDABLE TRANSACTION [emphasis added]. For that to be the case the relevant Octaviar companies or Group would have to been insolvent on 22 January 2008 when the document was executed. We consider that UNLIKELY [emphasis added] based on our findings to date." But that's not really what Deloitte's said on page 2 is it now - "not identified sufficient evidence to date that would allow us to form a conclusive view". And what about "BALANCE SHEET INSOLVENT" on page 23??

Because Deloitte's look like they dodged the issue [of insolvency] and are [maybe] inviting PTQ to go for it with e.g in bold on page 24: "The above investigations would be continued by a LIQUIDATOR TO ESTABLISH THE DATE [emphasis added] when the Group became insolvent, however, the Administrators preliminary view is that this may have occurred on 4 February 2008 but no later than 4 June 2008 [emphasis added]." But that conflicts with what Deloitte's said on page 2 and 'balance sheet insolvency' on page 23. And there's that magic word "preliminary". 7 occurances. My favourite is half way down page 25 under 9.2 Insolvency Trading: "our investigations have been extensive but PRELIMINARY [emphasis added]" and then 2 paras later "Based on the above PRELIMINARY [emphasis added]investigations outlined above, further investigations would be required by a LIQUIDATOR [emphasis added]."


RE Director Responsibility: (Love this bit)
One of my favourite sections is 9.2. (See also S1.1 paras 4-6, S1.2 para 2). Basically Deloitte's is saying that the laws in place to punish directors for insolvent trading are ineffectual. "Claims for insolvent trading are often difficult to prove and directors have a number of defences available to them." MFS Directors, at shareholders/creditors expense, appointed 333, Freehills and another law firm and hence are likely to "have a defense available to them". I.e. it will cost too much to get the money out of them - "assessment of a company’s solvency is complex and comes down to a question of fact in the circumstances which requires detailed examination"

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

... I have another question that I have been looking for an answer on the ASIC website: Whatever the amount of compensation we get out of the ASIC action, is it paid directly to investors or does it go to the PIF fund? In many of ASIC's other cases the companies have been or are being liquidated and it seems that shareholders and investors share the compensation directly....

IMO it would be very unfair if compensation from the ASIC action went to unitholders that bought into PIF at 6, 7, or even 14c and not to unitholders who had to sell on the NSX. Then again, under our regulatory and legal regime, I've seen stupider outcomes.

I'm a little disappointed by the size of compensation. ASIC are only seeking the actual amount. What about the interest we paid to RBS and then to the 10%/20% to the mystery lender? What about lost earnings? What about the colateral destruction to the rest of the fund in the scramble to liquify our better assets (IMO) to keep RBS off our backs and all the extra management fees/expenses/costs we unitholders had to pay to achieve this? BUt I guess that if we're not even likely to get the raw $ number back, then why bother complicating the proceedings.

 

[Cookie1]

Re: Octaviar MFS Premium Income Fund PIF

Quoting Duped's last post (I don't know how to do quotes, sorry.)

"IMO it would be very unfair if compensation from the ASIC action went to unitholders that bought into PIF at 6, 7, or even 14c and not to unitholders who had to sell on the NSX. Then again, under our regulatory and legal regime, I've seen stupider outcomes.

I'm a little disappointed by the size of compensation. ASIC are only seeking the actual amount. What about the interest we paid to RBS and then to the 10%/20% to the mystery lender? What about lost earnings? What about the colateral destruction to the rest of the fund in the scramble to liquify our better assets (IMO) to keep RBS off our backs and all the extra management fees/expenses/costs we unitholders had to pay to achieve this? BUt I guess that if we're not even likely to get the raw $ number back, then why bother complicating the proceedings."

I'm in total agreement with Duped but am also wondering what happened to the other $50 million of the $200 million loan from RBOS. I haven't seen any mention of it. ASIC should be going after compensation for all the damages/costs the PIF suffered; where will the money come from????

 

[Mary Lynch]

Re: Octaviar MFS Premium Income Fund PIF

My barrister son-in-law says that ASIC's action will probably impact positively on the class action, as they will provide proof of criminal activity, and anything already proven won't need to be proven again.

He says that the guilty directors will be fined and stripped of directorships etc...and if they can't pay the fine, goaled. The rest will be left up to th CA.

 

[Cookie1]

Re: Octaviar MFS Premium Income Fund PIF

This article by Adam Schwab appeared on "Crikey" 4 Feb 2008.

www.crikey.com.au/2008/02/04/kpmg-the-common-link-in-allco-and-mfs-fiascos/

"Monday, 4 February 2008
KPMG: the common link in Allco and MFS fiascos
Adam Schwab writes:

Of all the similarities between struggling financial companies Allco and MFS, one obvious link has so far escaped media attention: the role of auditor KPMG in the twin fiascos.

While MFS remains suspended (it lasted traded at 99 cents compared with a high of around $6.70 in June) and Allco continues to struggle (closing at $3.30 compared with a high of approximately $13.00 in March) the common ground between the two companies is that they were both audited by (and more importantly, paid significant non-audit fees to) KPMG.

Both of MFS’s company secretaries were previously employed by KPMG; David Anderson, chief financial officer of MFS, was previously a partner at KPMG in the finance area while Kim Kercher, MFS’s chief “governance” officer was previously a manager at KPMG.

The auditor signing off on MFS reports (which in light of recent announcements, don’t seem to be entirely accurate) was Mitch Craig (who is KPMG’s National Partner in Charge of Risk Advisory Services). According to MFS’s 2007 Annual Report, KPMG were paid $483,600 for audit services. However, the audit fees pale in comparison to the non-audit related services performed by KPMG. The firm was paid $771,098 for assurance, taxation and diligence services in 2007. KPMG also provided $665,600 in non-audit services to MFS satellite, MFS Diversified (KMPG also audited MFS Diversified until last year).

In the Sarbanes-Oxley era, this is a farcical situation, with KPMG collecting almost double as much from MFS for non-audit related services as they did for conducting the audit. As noted by The Guardian back in 2002:
Regardless of the individual integrity of those involved, this situation [of auditors performing non-audit related services] raises a serious conflict of interest.

Where an auditor is providing other services to a company it is auditing, it can hardly be said to be independent and it is less likely to be critical or do anything that might embarrass management.

Companies may hire or fire an auditor. Consequently, with future career prospects and income hanging in the balance, there is little incentive for an auditor to publicly expose improper behaviour or “creative” bookkeeping being used by the company they are auditing.

KPMG signed off on MFS’s financials on 20 August 2007. MFS shareholders paid KPMG handsomely to ensure that the financial information provided was true and fair. Based on recent announcements, and the sudden departure of executive Michael King, it seems that MFS shareholders didn’t get great value for money.

Across at David Coe’s Allco things seem similar. Allco’s auditor was also KPMG. During 2007, Allco paid KPMG a significant $3.1 million for audit fees (signing off on the report was Chris Whittingham). On top of that, Allco also handed KPMG a very tasty $2.96 million for other services, including financial due diligence and taxation services. Allco’s Annual Report noted that:

It is the Consolidated Entity’s policy to employ KMPG on assignments additional to its statutory duties where KPMG’s expertise and experience with the Consolidated Entity provides an efficient solution to [Allco’s] professional service needs.

This situation was meant to have stopped after Arthur Andersen’s infamous association with Enron. In 2001, Anderson was paid US$25 million for audit services and US$27 million for non-audit services. Many believe that Andersen’s willingness to turn a blind eye to the frauds occurring at Enron was partially caused by its willingness to retain non-audit revenue. Many Enron executives had previously worked at Arthur Andersen. Similarly, several key MFS executives were employed by KPMG.

Interestingly, the ratio of audit services to non-audit services paid by MFS to KPMG was even worse than Enron’s although its fate may very well be similar."

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

A huge thank you to all AG reps and members and others who did not relent in continual follow up and liaison with ASIC and supply of relevant information!!!

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Where will the money come from? Who knows, but Octaviar has $125 mill and Sunkids in its coffers. There has been so much money wasted by Deloittes, Korda Mentha, Wellington Investment Management LTD etc pursuing and investigating what??? No results after millions of investors funds wasted!!!

From day one of the collapse of MFS/OCV certain investors have been trying to get recognition to the fact that the PIF was PLUNDERED!!! I sincerely hope every single person in positions of authority that was contacted previously with our concerns that did nothing but fob us off or procrastinate as to how it was our own fault for being greedy etc now realise we had a LEGITIMATE reason to complain!!!! It appears we are finally being heard and our complaints acted on. I have kept every response (or lack of), and notes of relevant conversations, e mails etc. on record!!!! Not only will the brown undies be trotted out by those who failed to help, but the media may even be interested in reporting in favour of penalised investors, NOT inadequate fund managers who take their NSX listing obligations that seriously they don't or won't keep investors informed of relevant facts until prompted or former company directors who are not facing bankruptcy and want the truth exposed!!! In my opinion, this is just the begining of exposures and accountability concerning MFS/OCV. More to come I am sure!! Seamisty

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Media article from Crikey, don't think it has been posted. Seamisty

Wednesday, 2 September 2009
MFS directors get back on the gravy train
by Adam Schwab
More than 18 months after the collapse of MFS/Octaviar, former directors of the failed fund manager continue provide financial advice to clients of financial planning firm Avenue Capital Management.

Those directors and financial planners not only oversaw the billion-dollar collapse of MFS, but also recommended clients invest in the MFS Premium Income fund. PIF has frozen investor redemptions since January last year, leaving many investors to rely on social-security payments. Octaviar itself is being wound up, with liquidators of the failed group seeking to reclaim $150 million in alleged unfair preference payments, loans and investments.

Despite the collapse of MFS, Paul Manka, former chairman of MFS (Manka replaced Andrew Peacock as chairman, after serving as a director of the failed entity) and Michael Hiscock (also a former director of MFS) still appear to be employed by Avenue Capital Management as financial planners.

Hiscock had multiple links with MFS, serving as a director of MFS Living and Leisure (whose share price has subsequently dropped by almost 98%) and chairman of MFS Diversified (now GEO Property Group) which has seen its share price drop 85% and recently saw the value of its property portfolio slump by $15.3 million to $67.9 million. Manka also served as a director of MFS Diversified, MFS Living and Leisure and MFS itself.

Avenue’s website notes that the company was “built on a core philosophy of respect, honesty, integrity and professionalism, Avenue Capital Management provides quality investment and financial planning advice to a broad range of clients”.

One suspects clients of Manka and Hiscock who were advised to invest in the Premium Income Fund would dispute that description. As the Financial Review revealed in April last year, clients of Avenue Capital Management invested $51 million either directly or indirectly in PIF.

Investigations by Crikey revealed that while $51 million represented a reasonably small proportion of Avenue’s funds-under-management, it was a very sizeable proportion of the $754 million invested in PIF.

It remains remarkable that two financial planners who recommended that their clients invest in a company in which they had a clear personal interest and that subsequently collapsed (or in the case of MFS PIF, froze redemptions) are still able to provide financial advice.

It was reported in the Financial Review that 10,000 PIF investors (many of whom were clients of Avenue’s financial planning business) have “not received a cent since Wellington Capital [an advisory firm run by Jenny Hutson, a close associate of former MFS CEO, Chris Scott] took over last year”. PIF lost $39.3 million in 2008 when it was under the control of MFS, of which Manka and Hiscock were directors.

ASIC has not publicly announced whether it is pursing criminal or civil actions the directors of MFS/Octaviar or former executives, including, Michael King and Phillip Adams. An ASIC spokesperson told Crikey that it could not confirm or deny the existence of an investigation and would not comment on operational matter.

It is understood that litigation funder, IMF, is currently pursuing a class action against MFS regarding misleading representations.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Doesn't excuse the theft from PIF but King is threatening to come out swinging. The press report that he's going to reveal the real culprits for killing OCV. I speculated a couple of potential targets:

Fortress: It's not imposible that Fortress clearly saw OCV's weaknesses. Then swooped in pretenting to be the rescuer with a bucket load of cash. Meanwhile it took a massive short position and then squeezed OCV for its cash back (could they also have dyed the ether a bit with a little bashing) until the share price went kerplunk. From the limited reading of this hack I expect this won't shock the market, seems Fortress already has such a reputation. If so, then how reckless was it to get into bed with Fortress.

Krecklenberg: Following is the posting from a once only poster over at h0tc0pper. The poster picked a very annonymous and unmemorable name: 625402. Could it be King himself?

"Rolf I have heard was punted and certainly did not resign.

How he has escaped scrutiny and acountability for his trail of destruction for so long is beyond me…poor old M King has taken the whole rap for MFS when for the last 12 months it operated there was actually one other executive director....one R Krecklenberg the last accounts show..yes he was the silent one on the infamous conference call

For MFS shareholders the execution of Rolf obviously came about 2 years too late....…after all this was the man that paid $2.2billion for assets now perhaps worth NIL in todays’ market…that has got to be some sort of record in the history of Australian corporate incompetence and pissing shareholders money up against the wall……first MFS shareholders and now CVC shareholders the victims….M King at MFS went along with it but word has it was Rolf Krecklenberg who was out there spending other peoples money like a drunken sailor on over inflated assets. ...one of the greatest wood ducks coporate australia has seen……

The stella accounts lodged for 30 june 08 seem to reflect the stunning level of write downs required by CVC to get the business on the books at a reasonably defensible WDV. The operating business must be performing much better than that in Aust and NZ but who knows about all the overseas stuff...

But in the end rolfs departure is like the old saying….you can fool some of the people some of the time, etc etc

Good riddance Rolf……you almost got away with it....."

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

This government site explains what happens when a person is declared bankrupt.

http://www.itsa.gov.au/dir228/itsaweb.nsf/docindex/Bankruptcy->FAQ?OpenDocument#16

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Never forget that some believed and probably still think, to some degree, that we deserved what we got for being greedy: "because they were looking for higher gains". Perhaps even our Treasurer.

This legal action is not the only one ASIC needs to take. I was mislead. I didn't go out looking for schemes like PIF. I would never have crossed paths with such a scheme if it wasn't for my financial advisor's recommendations. I was and still am a cautious 'investor'. I would have had to go AGAINST my financial advisor's advice to avoid ending up in PIF. A registered advisor from the pack that is STILL being promoted on the ASIC website.

If you missed the discussion and you're interested, have a look at what Swan said on 13 March 2009 to a fellow PIF victim at the LSE. (PodCast is at http://www.lse.ac.uk/resources/podcasts/publicLecturesAndEvents.htm#generated-subheading1)

Question asked from the floor re Octaviar is at 36m33s. She is a unit trust investor, so probably a PIF investor. "... That sounds great for the toxic assets of banks. I'm glad that you - I'm an Australian citizen and an Australian tax payer - I'm glad that you said we're all in this together because I'm I've lost all of my money for the rest of my life in the failed Queensland unit trust MFS, that's your State, that was from January 08. And it was a result of the failure of the oversight authority ASIC and you take government, you take responsibility and I'd like to know what you're going to do about that. A forward looking Senate inquiry looking at future regulation is no good for people like me. I'm asking on behalf of ten thousand people, what are you going to do about it?"

Swan: "Well I think the people who invested in those schemes are right to be disillusioned and angry with what has happened to their money. They made an investment in a market linked investment proposal which didn't have the security that an investment in a APRA regulated institution would have because they were looking for higher returns and sadly the worst has happened. Naturally I think there will be implications that need to be studied for what this means in terms of organisations such as ASIC and the government is very accutely aware of that and we have recently as you have indicated, announced an inquiry principally into the events surrounding Storm but I think it goes to core of your question: How could the regulatory system allow or tolerate these sorts of activities by a number of people in market linked investment schemes? And I don't pretend to have the answer to that, that's what the inquiries will show us. But there is nothing the Australian Government can do for those people who unfortunately lost their money in those market linked schemes other than to try and learn the lessons of that experience and fix the regulatory system."

What is Swanny really saying? If it was just greedy us looking for higher returns then why does the regulatory system need to be looked into? Why the cost of a Joint Committee Inquiry? If you ask me, Canberra may slowly and reluctantly be realising it's completely out of touch with what is going on in the street? Completely out of touch with the risks they are exposing people like us to. KPMG, Deloitte, MFS - are all off the leash and are running wild, pushing boundaries without fear.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

This government site explains what happens when a person is declared bankrupt.

http://www.itsa.gov.au/dir228/itsaweb.nsf/docindex/Bankruptcy->FAQ?OpenDocument#16

Interesting. So all King needs to keep his polo property is make sure he's not bankrupted within 5 years after he transfered it to his farmhand? Any Trustee would not have grounds to void it after that. How long has it been?