From the following link:
http://www.theage.com.au/business/examination-switches-to-former-mfs-director-20100801-111im.html
Examination switches to former MFS director
COLIN KRUGER
August 2, 2010
THE public examination of the collapse of the Gold Coast financier MFS continues this morning. A former non-executive director, Barry Cronin, is due to appear before the Supreme Court to help explain what went wrong at the company which collapsed in September 2008 with external debts totalling $2.5 billion.
Counsel acting for MFS liquidators, led by Kate Barnett from Bentleys Corporate Recovery, have said the company, now known as Octaviar, may have been insolvent well before its collapse.
To date, the examination has heard how documents were backdated, hundreds of millions of dollars moved between different companies in the group, and how dividends were paid out of non-existent profits.
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But these were not the only issues to raise eyebrows.
Last month the court was told how in March 2008, Louise Edwards, the head of corporate advisory at MFS, recommended that the board pay Grant Samuel $9.5 million rather than the $5.2 million it was contractually obliged to pay.
The corporate adviser had been involved in the sale of a majority stake in the MFS travel business Stella - a role that it was meant to share with another firm - and the board ultimately recommended the $9.5 million payment at a board meeting in March 2008.
The MFS chief financial officer, David Anderson, was asked at the examination if Ms Edwards established a business relationship later that year with the Grant Samuel advisers involved in the sale.
''I understand that Louise was, or is now, involved in … an advisory business. And I have understood that Grant Samuel may play some role in it itself,'' he told the court.
When asked if this had been disclosed when the increased fee was discussed, Mr Anderson said he understood the business relationship was entered into after she left MFS.
Unlike the previous leg of the examination, which focused exclusively on Mr Anderson, Mr Cronin will be joined this week by MFS's internal auditor, Nigel Fitzgerald, and the former chief of MFS Investment Management, Guy Hutchings.
MFS Investment Management was the subsidiary which acted as responsible entity for the $780 million Premium Income Fund. The fund was allegedly milked to shore up MFS in the period before its collapse.
It was sold to Wellington Capital - the income fund's current responsible entity - not long after Wellington Capital was appointed to act as an adviser to the MFS board.
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