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Wellington Capital PIF/Octaviar (MFS) PIF

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WikiLeaks cables: RBS chairman said directors 'failed to live up to their duties'

http://www.guardian.co.uk/business/2010/dec/13/wikileaks-rbs-chairman-philip-hampton
* Business
* Royal Bank of Scotland

The US embassy cables
WikiLeaks cables: RBS chairman said directors 'failed to live up to their duties'
* Jill Treanor and Larry Elliott
* guardian.co.uk, Monday 13 December 2010 23.00 GMT

Sir Philip Hampton's reported claim of breach in 'fiduciary responsibilities' will raise pressure on FSA over RBS inquiry.

Lord Turner, chairman of the Financial Services Authority, is likely to come under pressure to reopen the regulator's probe into Royal Bank of Scotland after leaked US cables show the bank's new chairman Sir Philip Hampton said the former bank directors had failed to live up to their duties.

The private remarks by Hampton that directors had breached their "fiduciary responsibilities" are disclosed barely a week after the City regulator controversially shut its investigation into what went wrong at RBS.

The FSA's decision, revealed by the Guardian, was greeted with astonishment in the financial community and means no action will be taken against the bank or any of its former directors, including former chief executive Sir Fred Goodwin.

The cables sent from the US embassy in London, report that Hampton told a visiting delegation of politicians that one of the biggest mistakes made by the bank was its takeover of Dutch bank ABN Amro just as the credit crunch began in the autumn of 2007. This acquisition left the bank with a wafer-thin capital cushion and ultimately led to the £45bn taxpayer bailout of the bank in October 2008.

Lawyers said Hampton's reported remarks could be crucial for any shareholders trying to bring legal action for the losses they sustained on their shares during the £12bn cash call made on shareholders in the spring of 2008 – and should be of interest to the FSA.

Asked about the importance of a fiduciary responsibility, Simon Morris of law firm CMS Cameron McKenna said: "A fiduciary duty is about honesty. Shareholders give directors the power to run a company and a breach of that fiduciary duty is a reflection of a lapse in that honesty. A breach is also likely to be of interest to the FSA if it is an FSA regulated firm."

On 2 December the FSA said it could not find any director who had behaved with "a lack of integrity", nor had it found "a failure of governance on the part of the board."

The cable reports Hampton as acknowledging that RBS had made "several enormous mistakes".

"Top among them was its heavy exposure in the US subprime market and the bank's purchase of ABN Amro, which occurred at the height of the market and without RBS doing proper due diligence prior to the purchase. The board of directors never questioned this purchase, which Hampton termed a failure of their fiduciary responsibilities," the cable said....
 
Anger grows over FSA investigation into Royal Bank of Scotland

• Regulator will not take action against Sir Fred Goodwin
• PwC inquiry into Royal Bank of Scotland will not be published
• 'This just won't wash,' says Lib Dem Treasury spokesman
• Unite calls lack of disciplinary action 'an outrage'
* Jill Treanor
* guardian.co.uk, Thursday 2 December 2010 16.35 GMT

http://www.guardian.co.uk/business/2010/dec/02/rbs-bad-decisions-fsa-investigation

The Financial Services Authority is facing criticism tonight for closing its investigation into what went wrong at Royal Bank of Scotland without taking disciplinary action against any of the individuals involved, including the former chief executive Sir Fred Goodwin.

Amid questions about why the regulator had appointed external advisers from PricewaterhouseCoopers to conduct the 17-month review, unions accused the City regulator of being unable to "hold the sector to account".

Lord Oakeshott, a Liberal Democrat Treasury spokesman, was also tabling a question to demand a copy of the PwC review be placed in the parliamentary library after the City regulator said rules prevented it from making the report public. "This just won't wash," Oakeshott said.

The FSA blamed "bad" decisions rather than dishonesty for the events that led to the £45bn taxpayer bailout of the bank. The review by PwC – whose role as an auditor to a number of banks is being investigated by various regulatory bodies – analysed the events that led to RBS's takeover of the Dutch bank ABN Amro as the credit crunch was beginning in late 2007. PwC also looked at rights issues conducted by the bank in 2008, which are the subject of legal action by some shareholders who are concerned they were misled by the bank.

Rob MacGregor, national officer at the Unite union, described the conclusions as an outrage. "By failing to bring any formal charges against the RBS executives they have allowed some of the biggest villains of the financial crisis to go on enjoying their millionaire lifestyles whilst taxpayers experience cuts and staff face an insecure future," MacGregor said.....
 
Article in the Courier Mail today re Chris Scott:

http://www.couriermail.com.au/prope...holiday-rip-offs/story-e6frequ6-1225971130633

High-flyer fined $130k for holiday rip-offs

by Greg Stolz From: The Courier-Mail December 15, 2010 12:00AM


FINED and banned ... Executive director of Octaviar Chris Scott arriving at Southport Magistrate's Court. Picture: Paul Riley Source: The Courier-Mail
A GOLD Coast high-flyer has been fined a record $130,000 and banned for life from operating as a holiday letting agent after admitting to ripping off unit owners in one of the Glitter Strip's top resorts.

Chris Scott and his former company Driftcove were this week hit with fines and costs and compensation orders totalling more than $436,000 after a seven-year investigation by the Office of Fair Trading.

But the Unit Owners Association of Queensland has slammed the penalties as a "slap on the wrist".

It says thousands of charges against Mr Scott and Driftcove were dropped in a plea deal and claims unit owners are still being dudded by holiday apartment management companies charging inflated secret commissions.

Mr Scott, an ex-director of failed tourism and financial services giant Octaviar (formerly MFS), previously headed Driftcove which operates The Phoenician apartments at Broadbeach.

Criminal charges against Mr Scott, who is now involved in the childcare industry, were dropped last year.

In the Queensland Civil and Administrative Tribunal this week, he admitted to failing to ensure that Driftcove disclosed fees and charges to unit owners in the building on more than 2800 occasions.
 
Who was his adviser Cookie? Ms Jenny Hutson, chairwoman of S8? David Mark Anderson was a director. Here is an old related article from 2005::


http://archive.traveldaily.com.au/2006/May06/td250506.pdf
S8 under Qld investigation
S8 Limited is maintaining that
there is no substance in allegations
of excessive commissions being
charged to owners of a Gold Coast
apartment complex it manages.
Today’s Australian newspaper
quotes S8 chair Jenny Hutson
saying she wasn’t aware of a Qld
dept of fair trading probe into the
matter, but said she’s “more than
100% confident that there is
absolutely no issue.”
Owners of units in the Phoenician
resort at Broadbeach voted in Apr
to take legal action against S8 and a
subsidiary, claiming the firms took
30% commission through their
Gold Coast booking agency and a
further 12% via fully-owned
management firm Driftcove Pty Ltd.
Qld tourism minister Margaret
Keech has described the matter as
“very serious” in parliament butdidn’t comment further because it’s
still under investigation..
An earlier claim by unit owners to
Qld’s Body Corporate Commission
over the double-dipping allegations
has already been denied and S8
insisted it abides by all contractual
arrangements with unitholders.
 
selciper said:
Coolie's link to the Courier Mail story shows a large photo of Chris Scott.
Click to expand...
Looks like he is poking his tongue out and his dyed hair looks ridiculous!!! I hope prospective and existing G8 Education shareholders take the time to research G8 directors and management. Might not be the end of it either if he is found to have cut a preferential deal re management rights for the PIF with his previous S8 and current G8 adviser and chairperson Jenny Hutson. Might be a bit harder to empire build with credentials that includes 'admitting to ripping off unit owners'!!! People with these type of scruples should be completely banned for life from any involvement with companies, shareholders, investors etc. They appear untrustworthy and dishonest. Gold Coast Bulletin should be all over this news since they previously reported 'JENNY Hutson and Chris Scott as the formidable duo that built tourism empire S8'!!

Seamisty
 
I wonder how many secret commissions the liquidator will find in connection with Octaviar and PIF? BTW secret commissions are illegal under the Federal Trade Practices Act -Wonder why the criminal charges were droped? Plea bargaining only seems to benefit the guilty.
 
selciper said:
Gold Coast Bulletin re Chris Scott.

http://www.goldcoast.com.au/article/2010/12/15/276795_gold-coast-business.html
Click to expand...

Nick Nichols states " Mr Scott declined to comment on the matter yesterday, but it is believed the judgment will have no bearing on his current business interests".

Who believes this Nick? Who can you atribute to these generalities? Just more apologetic sopping PR from this self serving "Business Editor". Face it Nick, another of your white shoe brigade mates has disgrased the good name of the Gold Coast!
 
From http://www.earlylearningservices.co... 2010 _approved by ASIC 21 04 2010_.pdf'Chris is a ‘hands on’ manager. His operational, analytical and strategic skills were critical in the selection
of potential acquisitions which met the criteria to ensure the profitable expansion of the S8 Group.' HA HA At least we know what some of the 'hands on skills' entailed which contributed to to the profitable expansion of S8!! Seamisty
 
http://money.ninemsn.com.au/article.aspx?id=8183653

Octaviar due diligence 'ad hoc': analyst
15/12/2010 3:17:04 PM
A finance analyst for a major creditor of collapsed Gold Coast property group Octaviar has revealed the "ad hoc" nature of due diligence on the account.

Fortress Credit's Mark Kwei on Wednesday told an inquiry into the collapse that he alone did the due diligence work on Octaviar's loans.

The investigation is trying to get to the bottom of when Octaviar, formerly known as MFS, became insolvent.

The group collapsed in 2008 after being placed into voluntary administration. It owed Fortress Credit about $150 million and about $2 billion in total.

Mr Kwei said he was given no specific training on due diligence when he joined Fortress in 2006.

"We apply our (professional) training to the circumstances," he told the inquiry in Brisbane.

"It wasn't prescriptive."

Mr Kwei said he received feedback on his work on an "ad hoc basis", and that when he first looked into Octaviar's finances in 2006 he determined it was "a strong company".

Mr Kwei said he didn't ask where Octaviar got the money to repay Fortress $100 million in 2007, but later found out it was from Challenger Financial Group.

Liquidator Kylie Downes asked Mr Kwei whether he raised concerns that Octaviar was unable to repay its debts with his superior, Fortress chief executive David Kelleher.

He said he was not "that definitive" about the company's potential insolvency when shareholders were alerted to problems in January 2008.

He agreed with Ms Downes that Octaviar Limited drew money held by a separate company, Octaviar Administrated, like it would from a bank, but wouldn't say whether this was an unusual practice.

Octaviar reportedly still has about $140 million in cash.

The inquiry is due to hear from Mr Kelleher on Wednesday afternoon.
 

Very interesting Seamisty............... if you click on your link it goes nowhere, and if you go to http://www.earlylearningservices.com.au/about_us/board_of_directors/

.............. not a mention now of Scott or Hutson.
 
Has this been missed because I didnt see it posted...but could be old news?

http://www.goldcoast.com.au/article/2010/12/10/275891_gold-coast-business.html

"Iconic Surfers sale set to light a spark
Tracey McBean | December 10th, 2010

AN acquisitive Sydney funds manager is banking on gaining major upside in central Surfers Paradise after pouring more than $80 million into the precinct this year.

EG Funds Management yesterday confirmed it had outlaid about $40 million to buy the Circle on Cavill commercial complex.

The figure is well short of the $90 million that Octaviar, formerly MFS and now in liquidation, sought for the upmarket shopping and office precinct in 2008.

It is understood the 12,300sq m Circle precinct is about 75 per cent leased and pulls in an annual income of more than $3 million." continues...
 
https://www.aussiestockforums.com/forums/newreply.php?do=newreply&noquote=1&p=293392


Octaviar financiers unworried before fall Gabrielle Dunlevy
December 15, 2010 - 7:04PM

AAP

Major financiers of a collapsed Gold Coast property and financial group were not concerned about their client's solvency, even when the share price plunged by two-thirds.

Octaviar, formerly known as MFS, collapsed in 2008 owing about $2 billion to creditors including Fortress Credit.

Liquidators are trying to determine exactly when the company became insolvent.

Advertisement: Story continues below In a hearing in Brisbane on Wednesday, Fortress Credit's Mark Kwei said he alone did the due diligence on Octaviar.

When he first looked into its financial health in 2006, he determined it to be a "strong company".

In December 2007, Mr Kwei raised with his boss, Fortress chief executive officer David Kelleher, problems with one part of the Octaviar group.

Young Villages Estate, a retirement project, was performing below standard, he said.

"The comfort level we had with the underlying security was not as good as we thought it was," Mr Kwei said.

But it was not until MFS founder Michael King alerted shareholders to problems with a capital-raising proposal in January 2008 that Mr Kwei sought short-term cash flow projections from Octaviar.

"It appeared there was only just sufficient cash for it to meet its obligations over the (two-month) forecast period," he said.

Mr Kwei said he listened to the January 18 phone call and was worried that Mr King had not properly explained the company's financial position.

"I was concerned that statements that he made had been misinterpreted," he told the court, agreeing with liquidator Kylie Downes that Mr King had "glossed over" the money owed to Fortress.

The proposal saw the company's share price fall from $3.18 to 99 cents, but Mr Kwei said he still wasn't worried about Octaviar's ability to repay the loans.

"I believed they could," he said, claiming he hadn't thought about what had caused Octaviar's cash flow problems.

Mr Kwei told the court that on joining Fortress in 2006, he was given no formal guidelines on due diligence.

Feedback from Mr Kelleher was given only on an "ad hoc" basis, he said.

Mr Kelleher later confirmed this, saying his guidance on due diligence was informal, "depending on the transaction".

Mr Kelleher said it was "some months thereafter" in December 2007 that he became worried about Octaviar's capacity to repay its debts.

He will continue giving evidence on Thursday.

Former KPMG auditor Mitch Craig was on Wednesday due before a hearing in Sydney
 
Auditor quizzed over MFS accounts
Susannah Moran From: The Australian December 16, 2010 12:00AM

A FORMER partner at consultancy KPMG was quizzed yesterday over the firm's audit of the collapsed Gold Coast property group MFS.

Mitchell Craig, who no longer works at KPMG, was questioned about the 2006 and 2007 fiscal year accounts of Octaviar, the new name of MFS.

Liquidator Kate Bentley, of Bentleys Corporate Recovery, is trying to establish at what point Octaviar became insolvent. The group collapsed in early 2008, owing about $2.5 billion.

Mr Craig was questioned yesterday by Adam Bell SC over a share sale entered into on the last day of the 2007 financial year.

Mr Craig said he believed the purchaser of the shares was outside Octaviar.

Documents shown to Mr Craig revealed that the purchasers of the shares were either principals or entities associated with the MFS principals.

When asked if he was aware of this at the time of the 2007 audit, Mr Craig replied: "I don't know."

Mr Bell also asked Mr Craig about a number of loans and the property secured against those loans. Mr Bell outlined five loans that were all secured by the same property, but Mr Craig said he was not aware of this when auditing the 2007 accounts.

Public examinations were also held in Brisbane yesterday, where a finance analyst, Fortress Credit Corporation's Mark Kwei, gave evidence. Fortress was a major creditor of MFS and is owed about $150 million.

Mr Kwei said that he alone did the due diligence work on Octaviar's loans and was given no specific training on due diligence when he joined Fortress in 2006.

"We apply our (professional) training to the circumstances," he told the inquiry in Brisbane.

"It wasn't prescriptive."

Mr Kwei said he didn't ask where Octaviar got the money to repay Fortress $100m in 2007, but later found out it was from Challenger Financial Group.

Fortress chief executive David Kelleher will give evidence today.

http://www.theaustralian.com.au/bus...ver-mfs-accounts/story-e6frg8zx-1225971745447
 
Here is the link to the G8 Education site where hottie and scottie are listed as directors complete with a separate section detailing the sucesses of those directors who were with S8 - http://www.g8education.com/

G8 Education (ASX code GEM) has an obligation under the continuous disclosure rules to advise the market of anything that may effect the company's share price. I have checked the ASX site and G8 site for disclosure re Director Chris Scott's ban and fines - nothing yet.
 
Thanks for the link, Marcom. I was attracted to one of the points in the G8 mission statement."To nurture and develop children’s minds, social skills and confidence in a safe and stimulating environment."
 
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