Wellington Capital PIF/Octaviar (MFS) PIF

[seamisty]

http://www.smh.com.au/business/business-welcomes-exec-pay-outcome-20100416-skie.html

'SHAREHOLDERS will be able to claw back bonuses paid to executives who benefited from muddied accounts, under a surprise proposal from the federal government announced yesterday.

Under the reform, some of Australia's highest-profile corporate casualties - Eddy Groves of ABC Learning, David Coe of Allco and Michael King of MFS - may have been liable to lose bonuses paid to them during the boom years that preceded global financial crisis.

The government yesterday released its response to a Productivity Commission inquiry into executive pay, agreeing with the rump of its proposals and adding on the clawback mechanism, which had not been suggested by the commission.

The Financial Services Minister, Chris Bowen, acknowledged recouping money from executives would be difficult. But he said there appeared to be an anomaly in the law that left shareholders with no capacity to recoup bonuses if they were paid because of errors in financial accounts.

''That hasn't been a big issue in Australia, I have to say in fairness, but it has been an issue … elsewhere around the world and I think it is prudent that we make sure the law is robust as possible,'' Mr Bowen told the ABC.'



I remember reading Michael King was paid a cash bonus of $1.6 million in 2007.

Seamisty

 

[marcom]

A very interesting article in to day's SMH about Harry Markopolos the mathematical genius who tried to warn the world about Bernie Madoff and the biggest fraud in history. http://www.smh.com.au/business/the-man-who-figured-it-out-20100416-skis.html

Based on Markopolos exploits exposing various fraud cases he says:

''Usually the perpetrators of the frauds that I'm working on are typically in the CEO-level suite, it's the [chief executive officer], the [chief financial officer], the general counsel that are the ones that are corrupt. This is where fraud is part of a company's business model.''

Sound familiar!!!!

 

[seamisty]

Just thought I would recap on a few early MFS media articles when Jenny Hutson was Chris Scotts advisor:::

http://www.heraldsun.com.au/busines.../story-e6frfh4f-1111115742954?from=public_rss

MFS fighting a mutiny
Anthony Marx From: Herald Sun March 08, 2008 12:00AM

Extracted from articles::::::

Ms Hutson accused MFS of lacking transparency by refusing to release the notice of meeting which has been sent out this week to about 18,500 shareholders.

Sources close to MFS have questioned whether Mr Scott controls 42 million shares as claimed but Ms Hutson said the holding was spread among extended family and so no substantial shareholder notice needed to be lodged.

She denied that any of the stock was subject to margin calls and hosed down speculation that she was angling to become MFS chief executive if Mr Scott succeeded in getting elected to the board.

Approx 4 weeks later:::

http://www.brisbanetimes.com.au/articles/2008/04/02/1206850948547.html

Margin call threat to MFS shares
Stuart Washington | April 2, 2008 - 7:33AM


SHAREHOLDERS in the beleaguered financial services firm MFS, now known as Octaviar, face the disruption of margin calls over up to 17 per cent of the company's shares when the entity finally resumes trading.

Yesterday Octaviar released details of margin loans over the holdings of a director who was appointed last week, Chris Scott, saying he had a loan over 17.2 million shares, or a 3.6 per cent stake in the company. Mr Scott holds another 5.2 million shares in Octaviar.




Seamisty

 

[mellifuous]

A very interesting article in to day's SMH about Harry Markopolos the mathematical genius who tried to warn the world about Bernie Madoff and the biggest fraud in history. http://www.smh.com.au/business/the-man-who-figured-it-out-20100416-skis.html

Based on Markopolos exploits exposing various fraud cases he says:

''Usually the perpetrators of the frauds that I'm working on are typically in the CEO-level suite, it's the [chief executive officer], the [chief financial officer], the general counsel that are the ones that are corrupt. This is where fraud is part of a company's business model.''

Sound familiar!!!!

It's not always fraud, in so many cases it's simply self-interest.

Here's my view on MIrvac Aqua's 'New Strategy' if anyone has any interest:-

http://www.moneymagik.com/hif_alternatives.php

This fund and the balmain (MMT) Mortgage Trust are of interest to me because of balmain's JV with trilogy as manager of the PFMF.

I just wonder how they do the things they do:-
http://www.moneymagik.com/balmain_experience.php

Seamisty, thanks for the update on ASIC's new powers - let's hope they use them.
..

 

[selciper]

The SMH article about Madoff and Markopolos reminds me of the unsatisfactory ABC TV interview ASIC's Tony D"Aloisio gave to a rather tame Alan Kohler last weekend. The ASIC chief looks like he could do with a lot of help from Mr Markopolos.

 

[seamisty]

A bit more recapping from former articles, this one a 7.30 report:::
http://www.abc.net.au/7.30/content/2007/s2186788.htm
JENNY HUTSON, WELLINGTON CAPITAL: It is about bringing the general on the field of battle, who in this instance, is Andrew Peacock to account.


The board, led by Andrew Peacock, has to take responsibility for that. The market was shocked. We've got a board that's appointed an administrator as its corporate adviser that's selling assets at significantly less than what they cost.

Andrew Peacock needs to be held accountable for the financial performance of MFS in these circumstances. And it is for that reason that Chris and other shareholders have requisitioned a meeting to put five new directors onto the MFS board.

Unfortunately, Andrew Peacock is not willing, ready and able to step aside as chair of MFS and that's the point of difference. We think that it is in the best interests of shareholders for him to step aside and let those who want to drive the company forward take control


With people whose lives have truly been destroyed in a financial sense by the plight of MFS, is something that is just extraordinary. This is about ordinary Australians, who believed what they read, who put trust and faith in the board and there's an enormous human cost.

::::

Well those ordinary Australians who put their trust and faith in WELLINGTON CAPITAL LTD who believed not only what they read, but what they were told at investor forums by JH are actually worse off and it appears Andrew Peacock is not wholly to blame for the demise of MFS/OCV. Did he actually have any idea as to the extent of what was going on under his well paid nose or was he just another pawn used to lure unsuspecting investors? I wonder why JH isolated him as a scapegoat for the downfall of MFS? ::::::

The truth will prevail, bring on the forensic accountants!!!

I can only hope that the ABC 7.30 report are willing to do a follow up after Bentley's have finished their public examinations. It appears some previous outspoken MFS/OCV media journalists are reluctant to follow up on the proceedings where current evidence is being revealed.

I also understand that ASIC and Carney lawyers are following the case closely as they should be IMO. The evidence coming to light can only strengthen our Class Action and contribute to ASIC's team data base working on our combined complaints.

Patience is the key (unfortunately not something we are all endowed with !!!)
Cheers, Seamisty

 

[Duped]

A very interesting article in to day's SMH about Harry Markopolos the mathematical genius who tried to warn the world about Bernie Madoff and the biggest fraud in history. http://www.smh.com.au/business/the-man-who-figured-it-out-20100416-skis.html

Based on Markopolos exploits exposing various fraud cases he says:

''Usually the perpetrators of the frauds that I'm working on are typically in the CEO-level suite, it's the [chief executive officer], the [chief financial officer], the general counsel that are the ones that are corrupt. This is where fraud is part of a company's business model.''

Sound familiar!!!!

The fish rots from the head down.

Seamisty, RE Peacock. The following Mayne video about him said it all for me. See MFS Fiasco March 28 2008 at http://video.maynereport.com/

"If I ever wrote a book it would occupy a chapter" Good grief.

 

[seamisty]

Thanks Duped, I found this link a bit easier to use. Seamisty

http://www.maynereport.com/articles/2008/07/04-1136-6694.html
MFS Fiasco March 28 2008

 

[selciper]

Here's another article from 2008. It's from the Australian dated 5 September. It contains some memorable Hutson quotes.

http://www.theaustralian.com.au/bus...-of-onerous-deal/story-e6frg8zx-1111117395793

PS Anybody know the actual date when the public examinations resume?

 

[marcom]

selciper, I saw a reference in one of the articles last week that the examinations resume on 27 April. I thought that Bentley's had the week booked with David Kennedy & Kim Kercher to be grilled - maybe Kennedy's evidence opened up more lines of inquiry so they finished early and put off Kercher until next week.

Just from the brief reports of what emerged was the prospect of an even earlier insolvency date of June 2007 when MFS did not have sufficient funds to pay a shareholder dividend, missing funds of $130M and $138M (I bet these went to Dubai), evidence that the Chairman played a closer role in MFS management than previously stated leading to greater exposure to regulatory action, Kercher effectively operated under duress in approving loans/transactions/payments, and evidence that proper and legal systems, procedures and chain of responsibility were recklessly abandoned in MFS's case. God only knows what else Kennedy said in evidence, but it was more than appears that it Bentley's had expected.

 

[seamisty]

Here's another article from 2008. It's from the Australian dated 5 September. It contains some memorable Hutson quotes.

http://www.theaustralian.com.au/bus...-of-onerous-deal/story-e6frg8zx-1111117395793

PS Anybody know the actual date when the public examinations resume?

Thanks selciper, According to one media article I read they resume April 27th. Cheers, Seamisty

http://www.businessspectator.com.au...t-recall-sign-offs-4HCRG?opendocument&src=rss
'
The examination before senior deputy registrar Andrew Musgrave was due to resume on April 27.'

 

[Duped]

We have whistle blower legislation in this country don't we. Kercher could have blown the whistle years ago and saved us unsecured creditors a lot of time and money. There are times in your life when the action you take defines who you are. From this scant evidence it looks like Kercher failed us.

 

[marcom]

Duped, you are right. The fact that Kercher did not advise ASIC is a breach of the Corporations Act.

Why did the MFS staff buy shares when they knew the ship was sinking? Putting their savings, super and even homes at risk -we were lied to but what made them do it if they had inside knowledge?

 

[seamisty]

Duped, you are right. The fact that Kercher did not advise ASIC is a breach of the Corporations Act.

Why did the MFS staff buy shares when they knew the ship was sinking? Putting their savings, super and even homes at risk -we were lied to but what made them do it if they had inside knowledge?

Maybe they thought the sale of the overpriced Stella would pull them out of the manure?


Maybe it was only the 'heirachy' who alledgedley fiddled with the books who were really in the know? It all happened so fast, I was tempted to buy MFS shares myself at the time after being reassured by MFS staff that all was still well!! A bit like the WC hotline staff, repeating what they are told by their superiors, not actually knowing if the information is correct or not, just doing their job.

I'm glad I didn't and had previously sold all my MFS shares. Shame some of the proceeds went into the PIF! I see todays one trade on the NSX of 72,490 units went through at 0.071 cents. Confidence in WC not exactly reflected in the price.
Seamisty

 

[selciper]

Seamisty and Marcom - Thanks for providing the date of the next hearing. There should be some interesting evidence to read about during that week.

 

[Cookie1]

It really annoys me that neither the Gold Coast Bulletin (don't they like reporting bad things about Gold Coast companies?) nor the Australian Financial Review are reporting on Bentley's hearings. I went to the library today and looked through all AFR's from last week and there's lots of photos and articles about Eddie Groves and ABC Learning and not one word about MFS/Octaviar. I guess ABC Learning is a higher profile case in some eyes but certainly the damage to MFS/PIF investors and creditors is just as great and just as important and the hearings deserve to be covered.

 

[Cookie1]

From the Herald Sun today:
http://www.heraldsun.com.au/busines...-korda-called-up/story-e6frfh4f-1225855841806

Octaviar adviser Mark Korda called up

Ben Butler From: Herald Sun April 20, 2010 10:26AM

HIGH-PROFILE insolvency practitioner Mark Korda is to be grilled under oath about his activities as a consultant to property company Octaviar in lead-up to the company's collapse.

Mr Korda, who is a director of Collingwood Football Club, is among nine people summonsed by the NSW Supreme Court last week for examination over the failure of Octaviar, formerly known as MFS, which went into administration in September 2008 owing creditors $2.5 billion.

The move, revealed in a letter sent to Octaviar creditors on Friday by liquidators Bentleys Corporate Recovery, comes on top of the ongoing examinations of five company executives. But in a sign Bentleys is widening its investigation into Octaviar beyond company employees, it has now asked Mr Korda and two other advisers to the company to give evidence.

Also summonsed are Mitch Craig, an audit partner at Octaviar's accountants KPMG, and lawyer Philip Hoser, formerly with Octaviar's lawyers Freehills.

No allegations have been made against the advisers.

Mr Korda and Freehills declined to comment, while Mr Hoser and KPMG did not return calls.

Mr Korda's insolvency firm KordaMentha advised Octaviar in late 2007, as it struggled to survive.

Under examination in the NSW Supreme Court last week, former Octaviar chief operating officer David Kennedy said the company's chief executive, Craig White, told him a controversial $130 million loan from a related fund had been approved by Mr Korda.

Mr Kennedy also said he was not aware of any potential conflict of interest in having KPMG as auditor when chief financial officer David Anderson, company secretary Kim Kercher and internal auditor Nigel Fitzgerald had all worked for KPMG.

Mr White, Ms Kercher, Mr Andersen and founder Michael King have already been called to give evidence.

The new company directors called to give evidence in Friday's letter to creditors are former directors Barry Cronin, Rolf Krecklenberg, Paul Manka and Geoff Williams.

Also to be examined are Mr Fitzgerald, the internal audit manager, and Guy Hutchings, who was chief executive of subsidiary MFS Investment Management.

The latest set of examinations are set to take place in June.

 

[marcom]

Here is some background on internal auditor Nigel Fitzgerald:
Octaviar staff seeks severance pay

* Fiona Cameron
* From: The Australian
* August 09, 2008 12:00AM

AN Octaviar executive sacked in June has filed a court action seeking $54,353 severance pay from the besieged funds manager.

Nigel Fitzgerald, an internal audit manager for Octaviar until he was retrenched, was kept on staff for nearly six months after the fortunes of the once high-flying tourism and property conglomerate hit the wall in January.

But Octaviar shortchanged him when it laid him off two months ago, according to the statement of claim Mr Fitzgerald has lodged in the District Court of Queensland, alleging breach of contract.

The claim joins a long list of court matters where creditors are seeking a combined total of hundreds of millions of dollars from Octaviar companies.

Mr Fitzgerald started work with Octaviar in August last year on a $260,442 package, made up of $247,313 base salary and $13,129 of superannuation.

He was made redundant on June 8, and filed his claim on July 31.

Octaviar, previously known as MFS Ltd, collapsed in January after it tried to stage a $550 million capital raising.

The company technically is still alive, but only with the support of its lenders. Since January, chairman Andrew Peacock and the majority of the board have resigned, as have most of the executive team.

Only a skeleton staff remains in the Gold Coast offices after the closure of the Melbourne and Sydney operations.

Mr Fitzgerald asserts in his statement of claim that on or around February 11, his employment contract was varied by verbal agreement, and a written variation signed by Octaviar on February 19.

Under the revised contract, Octaviar agreed to provide Mr Fitzgerald with six months' notice of termination or payment in lieu "at the defendant's discretion", according to the claim.

Octaviar gave Mr Fitzgerald two weeks' notice of his redundancy and the equivalent of 14 weeks' pay, "leaving a shortfall of 10 weeks' pay", the claim states.

In addition, according to the claim, Octaviar had miscalculated, setting the payments Mr Fitzgerald did receive on his base salary rather than on his total package.

Mr Fitzgerald said yesterday it was "a relatively straightforward issue".

"I'm obviously disappointed I've got to go through this to get them to pay me, but there's nothing I can do about it other than to proceed the way I am," he said.

Octaviar company secretary David Anderson last night said the matter would be decided by the court and he declined to comment further.

Octaviar's biggest creditor, the Public Trustee of Queensland, has a wind-up claim against the company listed for hearing in the Queensland Supreme Court next month. But the PTQ, representing noteholders owed $351 million, may not proceed with the action and is seeking a noteholders' vote on the issue.

Other Octaviar creditors include OPI Pacific Finance ($246 million), the Australian Taxation Office ($100 million) and Challenger Managed Investments ($100 million).

 

[marcom]

Just waiting for this examination:

Public Trustee of Qld turns to Wellington Capital

* Anthony Marx
* From: The Courier-Mail
* May 11, 2009 12:00AM

THE Brisbane merchant bank run by lawyer Jenny Hutson faces allegations it snared the valuable management rights to a $755 million fund for nothing.

The claim about Ms Hutson's firm Wellington Capital is included in Brisbane Supreme Court documents filed by the Public Trustee of Queensland, which is seeking the wind-up of two remaining entities in the failed Octaviar finance and tourism group.

The Public Trustee claims only a liquidator can properly "investigate the disposal of the responsible entity for the (Octaviar) Premium Income Fund to Wellington Capital for no real consideration".

The document alleges Ms Hutson's close professional ties to former Octaviar executive director Chris Scott allowed them to work out a complicated payment scheme that effectively transferred ownership of PIF's oversight company to Wellington for free in June.

The document notes Wellington became the responsible entity for PIF two months ago.

Ms Hutson rejected the allegations, criticising them last week as "inaccurate and incomplete". "I take great offence at what the Public Trustee is doing," she said.

Ms Hutson stressed Octaviar's administrators at accounting firm Deloitte had examined the sale of Octaviar Investment Management to Wellington and had concluded that the transaction was completed on "commercial terms".


(Comment: Yes that's the same Delloitte's who Justice McMurdo removed from the Octaviar administration for conflict of interest, and whose bill for the remainder of their work has been rejected by the Octaviar creditors committee which includes WC.)

Mr Scott lashed out at the Public Trustee, saying that Wellington's intervention had saved the fund from the appointment of bank receivers.

Ms Hutson has blamed the economic downturn for the scrapping of a 3 ¢ dividend promised late last year to the 10,387 investors in PIF, which trades on the National Stock Exchange.

She said $120 million worth of assets had already been sold and the upcoming auction of 10 properties could net $150 million, allowing her to start making distribution payments.

Ms Hutson said $100 million debt had already been paid off and efforts were under way in court to recover another $203 million from Octaviar entities.

Gold Coast-based Octaviar collapsed last year with debts of $1.9 billion.

 

[marcom]

Here is the Bentley's Notice to creditors regarding the additional examinees: