Wellington Capital PIF/Octaviar (MFS) PIF
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Just typical of ASIC:
ASIC closes mortgage investigation: report
Published 3:34 AM, 30 Dec 2010 Last update 3:34 AM, 30 Dec 2010
http://www.businessspectator.com.au...-report-pd20101229-CLM64?OpenDocument&src=hp4
The Australian Securities and Investments Commission (ASIC) investigation into frozen mortgage funds has been put on hiatus due to a lack of funding, according to a report in The Australian.
The ASIC began investigating some $25 billion in mortgage funds after several hundred thousand investors complained they had lost access to the funds during the global financial crisis. Despite industry estimates that suggest $9 billion in funds remain frozen, the corporate watchdog has reduced what once was a dedicated task force to a watching brief over the mortgage industry.
The commission responded to a Senate question last week, saying the ASIC could escalate an investigation if need be but that there would be no active oversight of the funds, the report said.
In 2008 many mortgage funds froze their assets to protect stability, but preventing investors from withdrawing funds. Despite the ASIC's investigation, many investors remain unable to access their funds, the report said.
Here is the link to the story in the Australian http://www.businessspectator.com.au...-report-pd20101229-CLM64?OpenDocument&src=hp4
ASIC closes mortgage investigation: report
Published 3:34 AM, 30 Dec 2010 Last update 3:34 AM, 30 Dec 2010
http://www.businessspectator.com.au...-report-pd20101229-CLM64?OpenDocument&src=hp4
The Australian Securities and Investments Commission (ASIC) investigation into frozen mortgage funds has been put on hiatus due to a lack of funding, according to a report in The Australian.
The ASIC began investigating some $25 billion in mortgage funds after several hundred thousand investors complained they had lost access to the funds during the global financial crisis. Despite industry estimates that suggest $9 billion in funds remain frozen, the corporate watchdog has reduced what once was a dedicated task force to a watching brief over the mortgage industry.
The commission responded to a Senate question last week, saying the ASIC could escalate an investigation if need be but that there would be no active oversight of the funds, the report said.
In 2008 many mortgage funds froze their assets to protect stability, but preventing investors from withdrawing funds. Despite the ASIC's investigation, many investors remain unable to access their funds, the report said.
Here is the link to the story in the Australian http://www.businessspectator.com.au...-report-pd20101229-CLM64?OpenDocument&src=hp4
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Sorry wrong link to last post - http://www.theaustralian.com.au/bus...ic-shuts-up-shop/story-e6frgac6-1225978287129
http://www.theaustralian.com.au/bus...ic-shuts-up-shop/story-e6frgac6-1225978287129
''.....''....It will continue to monitor the frozen funds situation and can escalate its involvement if appropriate, but it is otherwise in wind-down. The taskforce was not provided a separate budget," it said.....''
Looks like we are on our own....imo, we are the sacrifice. It seems that the survival of the industry as a whole is more important than the lives of the investors (and their families!!!) that have been so badly affected. We don't even warrant a task-force budget!!!
from the article..
"...The wind-down of the taskforce comes despite investor advocates saying many people with money locked in mortgage funds faced financial difficulty....''
".....Late last year, ASIC put the scale of frozen funds at $17bn-$20bn. One year on, "most funds that froze during the global financial crisis are still frozen", the regulator said in its Senate committee response last week.
The internal ASIC taskforce, set up in August last year, was instrumental in framing the hardship provisions used to release capital to the most cash-strapped of fund investors. It also helped convince mortgage funds to make regular withdrawal offers and is finalising better disclosure standards for investors in mortgage and unlisted property schemes.....''
WOW...how much did the WCPIF pay out for hardship payments? (not much at all, from memory..) In other funds, liquidity "offers" were facilitated on the funds own website, at half the already heavily impaired unit value and foregoing any rights to future recovery from any litigation.It wasn't until a month ago that we got the FIDO warning, officially....
http://www.fido.gov.au/fido/fido.ns...pected offers to buy your shares?opendocument
Perhaps better disclosure could direct that potential unitholders investing in mortgage trusts do a course in accounting...accounting for performance fees,management fees, severance fees,accrual accounting, accounting for contingent liabilities, accounting for disposal costs...etc, etc, and perhaps a course in legal terminology would help too...the difference between market value, current value, true value...etc, etc, etc...
imo... the first and foremost disclosure unitholders must have are ALL the loan details and market valuations of EACH asset in the fund.
Top marks to Senator Eggleston for this remark...
"....."The government has a role to play, I would suggest, in saying to the funds concerned that it's time that these funds were made available to the investors to deal with as they choose," Senator Eggleston said....''
imo...It should be made mandatory that unitholders in funds, especially those as highly impaired as our fund, be given the option to vote for or against winding-up their fund.
2011? We'll be on our own...
''.....''....It will continue to monitor the frozen funds situation and can escalate its involvement if appropriate, but it is otherwise in wind-down. The taskforce was not provided a separate budget," it said.....''
Looks like we are on our own....imo, we are the sacrifice. It seems that the survival of the industry as a whole is more important than the lives of the investors (and their families!!!) that have been so badly affected. We don't even warrant a task-force budget!!!
from the article..
"...The wind-down of the taskforce comes despite investor advocates saying many people with money locked in mortgage funds faced financial difficulty....''
".....Late last year, ASIC put the scale of frozen funds at $17bn-$20bn. One year on, "most funds that froze during the global financial crisis are still frozen", the regulator said in its Senate committee response last week.
The internal ASIC taskforce, set up in August last year, was instrumental in framing the hardship provisions used to release capital to the most cash-strapped of fund investors. It also helped convince mortgage funds to make regular withdrawal offers and is finalising better disclosure standards for investors in mortgage and unlisted property schemes.....''
WOW...how much did the WCPIF pay out for hardship payments? (not much at all, from memory..) In other funds, liquidity "offers" were facilitated on the funds own website, at half the already heavily impaired unit value and foregoing any rights to future recovery from any litigation.It wasn't until a month ago that we got the FIDO warning, officially....
http://www.fido.gov.au/fido/fido.ns...pected offers to buy your shares?opendocument
Perhaps better disclosure could direct that potential unitholders investing in mortgage trusts do a course in accounting...accounting for performance fees,management fees, severance fees,accrual accounting, accounting for contingent liabilities, accounting for disposal costs...etc, etc, and perhaps a course in legal terminology would help too...the difference between market value, current value, true value...etc, etc, etc...
imo... the first and foremost disclosure unitholders must have are ALL the loan details and market valuations of EACH asset in the fund.
Top marks to Senator Eggleston for this remark...
"....."The government has a role to play, I would suggest, in saying to the funds concerned that it's time that these funds were made available to the investors to deal with as they choose," Senator Eggleston said....''
imo...It should be made mandatory that unitholders in funds, especially those as highly impaired as our fund, be given the option to vote for or against winding-up their fund.
2011? We'll be on our own...
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Some more movement in the ASIC case against MFS/Octaviar Directors in the Brisbane Supreme Court:
40 24/12/2010 Notice PARTICULARS Applicant
This means that ASIC has provided further particulars about the case - probably as a result of information gleened from the public examinations.
http://www.courts.qld.gov.au/esearc...eNumber=12122/09&Court=Supreme&Location=BRISB
40 24/12/2010 Notice PARTICULARS Applicant
This means that ASIC has provided further particulars about the case - probably as a result of information gleened from the public examinations.
http://www.courts.qld.gov.au/esearc...eNumber=12122/09&Court=Supreme&Location=BRISB
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So what's new in the New Year?
http://www.smh.com.au/business/super-swindle-linked-to-sex-clinic-20110103-19dwy.html
Super swindle linked to sex clinic
Kate McClymont and Michael West
January 4, 2011
THE alleged mastermind behind Australia's largest superannuation swindle, in which $118 million vanished into a Caribbean tax haven, was also a silent partner in the failed erectile dysfunction company Advanced Medical Institute.
On the eve of his company's dubious practices being exposed by the Herald last month, the controversial medical entrepreneur Jacov ''Jack'' Vaisman placed AMI into administration.
A Herald investigation of company documents, here and overseas, has revealed that while Mr Vaisman was making millions, in the shadows controlling a 50 per cent interest in AMI was a network of unscrupulous financial engineers responsible for Australia's largest superannuation theft.
The ultimate controller of the group is Jack Flader, 48, The American-born trader, who lives in Hong Kong, has been under investigation in Hong Kong by the Securities and Investments Commission.
Mr Flader is alleged to be behind the collapsed Astarra Strategic Fund, part of the Trio Capital group based in the NSW town of Albury.
Trio, through financial planning networks fed by kickbacks, encouraged Australians investors to put their savings in Astarra. The money was then funnelled through Hong Kong to a British Virgin Islands company associated with Mr Flader.
There the trail goes cold. For a year Australian investigators have been hunting for the missing $118 million without success.
Just before Christmas, Mr Flader's sidekick Shawn Richard, who had raked off $6.4 million in payments from the Trio Capital scam, pleaded guilty in the Downing Centre Local Court in Sydney to two charges of dishonest conduct. Mr Richard, 35, who is dubbed Shawny Cash on Facebook, faces 10 years in jail. In court, he gave evidence that he was merely the puppet for the alleged mastermind, Mr Flader.
In 2005, Mr Flader and Mr Vaisman's lawyer, Richard Doyle, concocted a plan to float AMI on the US stock exchange. They gained control of a company shell and bought two Australian companies they had also set up - one with intellectual property rights for the erectile disfunction spray in Australia and one housing international rights to the ''technology''.
Although these rights were based not on a patent but on an ''innovation patent'' - which was achieved by filling out a simple form at a cost of only $150 - the promoters sold them to the US company for $24 million. They repeated this deal for the international rights the next year, again for $24 million.
Investigations by the Herald also found that interests associated with Mr Flader and Mr Vaisman were active in trading the US stock AMI among themselves.
No one appears to have informed the US stock exchange of AMI's woes in Australia. The day after AMI went into voluntary administration, the US share price, which had been wallowing at 1 ¢, leapt to 8 ¢. It is back to 1 ¢.
The same day the administrators were appointed to AMI, Mr Vaisman, who calls himself ''Dr'' since earning a PhD from an American university, was informed by the consumer watchdog that it intended to prosecute him and two of his doctors for ''unconscionable conduct''.
Mr Flader's first run-in with regulators came to light when the Financial Services Authority in Britain exposed Pacific Continental Securities, to which he was closely linked, as a ''boiler room'' operation whose share dealers engaged in cold calling unsuspecting retail investors to sell overpriced and worthless company floats.
AMI, famous for its ubiquitous billboards and radio advertisements promoting ''longer lasting sex'', has for years been the subject of a barrage of complaints for unethical medical practices and predatory tactics where callers are pressured to sign up for premature sexual dysfunction treatments costing thousands of dollars when the same medication could be obtained for a fraction of the cost through a family GP.
http://www.smh.com.au/business/super-swindle-linked-to-sex-clinic-20110103-19dwy.html
Super swindle linked to sex clinic
Kate McClymont and Michael West
January 4, 2011
THE alleged mastermind behind Australia's largest superannuation swindle, in which $118 million vanished into a Caribbean tax haven, was also a silent partner in the failed erectile dysfunction company Advanced Medical Institute.
On the eve of his company's dubious practices being exposed by the Herald last month, the controversial medical entrepreneur Jacov ''Jack'' Vaisman placed AMI into administration.
A Herald investigation of company documents, here and overseas, has revealed that while Mr Vaisman was making millions, in the shadows controlling a 50 per cent interest in AMI was a network of unscrupulous financial engineers responsible for Australia's largest superannuation theft.
The ultimate controller of the group is Jack Flader, 48, The American-born trader, who lives in Hong Kong, has been under investigation in Hong Kong by the Securities and Investments Commission.
Mr Flader is alleged to be behind the collapsed Astarra Strategic Fund, part of the Trio Capital group based in the NSW town of Albury.
Trio, through financial planning networks fed by kickbacks, encouraged Australians investors to put their savings in Astarra. The money was then funnelled through Hong Kong to a British Virgin Islands company associated with Mr Flader.
There the trail goes cold. For a year Australian investigators have been hunting for the missing $118 million without success.
Just before Christmas, Mr Flader's sidekick Shawn Richard, who had raked off $6.4 million in payments from the Trio Capital scam, pleaded guilty in the Downing Centre Local Court in Sydney to two charges of dishonest conduct. Mr Richard, 35, who is dubbed Shawny Cash on Facebook, faces 10 years in jail. In court, he gave evidence that he was merely the puppet for the alleged mastermind, Mr Flader.
In 2005, Mr Flader and Mr Vaisman's lawyer, Richard Doyle, concocted a plan to float AMI on the US stock exchange. They gained control of a company shell and bought two Australian companies they had also set up - one with intellectual property rights for the erectile disfunction spray in Australia and one housing international rights to the ''technology''.
Although these rights were based not on a patent but on an ''innovation patent'' - which was achieved by filling out a simple form at a cost of only $150 - the promoters sold them to the US company for $24 million. They repeated this deal for the international rights the next year, again for $24 million.
Investigations by the Herald also found that interests associated with Mr Flader and Mr Vaisman were active in trading the US stock AMI among themselves.
No one appears to have informed the US stock exchange of AMI's woes in Australia. The day after AMI went into voluntary administration, the US share price, which had been wallowing at 1 ¢, leapt to 8 ¢. It is back to 1 ¢.
The same day the administrators were appointed to AMI, Mr Vaisman, who calls himself ''Dr'' since earning a PhD from an American university, was informed by the consumer watchdog that it intended to prosecute him and two of his doctors for ''unconscionable conduct''.
Mr Flader's first run-in with regulators came to light when the Financial Services Authority in Britain exposed Pacific Continental Securities, to which he was closely linked, as a ''boiler room'' operation whose share dealers engaged in cold calling unsuspecting retail investors to sell overpriced and worthless company floats.
AMI, famous for its ubiquitous billboards and radio advertisements promoting ''longer lasting sex'', has for years been the subject of a barrage of complaints for unethical medical practices and predatory tactics where callers are pressured to sign up for premature sexual dysfunction treatments costing thousands of dollars when the same medication could be obtained for a fraction of the cost through a family GP.
HMNN, Sorry regulars, I have been out of action lately but find this media article possibly of interest (or my suspicious radar antenae is in overdrive!!)
KKR Scraps Perpetual Bid, Sends Target Stock Tumbling
Dec. 20 (Bloomberg) -- KKR & Co. ended talks to buy Perpetual Ltd. for at least A$1.75 billion ($1.73 billion), triggering the biggest drop in the Australian fund manager’s shares in more than two years.
The parties couldn’t agree on acceptable terms, they said in separate statements today. KKR won’t carry out due diligence and Sydney-based Perpetual doesn’t expect further discussions with the New York-based buyout firm, Perpetual said.
full story: http://www.businessweek.com/news/2010-12-22/kkr-scraps-perpetual-bid-sends-target-stock-tumbling.htm
Déjà vu??? I have been told the the fat turkey (turnkey??)is on high alert!!
Similar story to our own PIF before the :fan??? Is there more bad news being stifled?
Bearing in mind that Wellington Capital as our current Responsible Entity is in legal negotiations with Perpetual as the representative in a potential costly claim against our PIF!! Yes Jenny, HELLO!!! oops, SORRY, I forgot, you and your team of highly qualified hand picked team of performing seals are on extended holiday break. Well, I for one am extremely interested in reading our Dec 2010 PIF update, especially your excuse as to why we did not receive our extra 2 cent return of capital as previously indicated from you in relation to the pathetic (updated) deal negotiated by yourself in the Wollongong Hotel deal. Not to mention the rest of the results from other firesale property deals.
Seamisty (TDS)
KKR Scraps Perpetual Bid, Sends Target Stock Tumbling
Dec. 20 (Bloomberg) -- KKR & Co. ended talks to buy Perpetual Ltd. for at least A$1.75 billion ($1.73 billion), triggering the biggest drop in the Australian fund manager’s shares in more than two years.
The parties couldn’t agree on acceptable terms, they said in separate statements today. KKR won’t carry out due diligence and Sydney-based Perpetual doesn’t expect further discussions with the New York-based buyout firm, Perpetual said.
full story: http://www.businessweek.com/news/2010-12-22/kkr-scraps-perpetual-bid-sends-target-stock-tumbling.htm
Déjà vu??? I have been told the the fat turkey (turnkey??)is on high alert!!
Similar story to our own PIF before the :fan??? Is there more bad news being stifled?
Bearing in mind that Wellington Capital as our current Responsible Entity is in legal negotiations with Perpetual as the representative in a potential costly claim against our PIF!! Yes Jenny, HELLO!!! oops, SORRY, I forgot, you and your team of highly qualified hand picked team of performing seals are on extended holiday break. Well, I for one am extremely interested in reading our Dec 2010 PIF update, especially your excuse as to why we did not receive our extra 2 cent return of capital as previously indicated from you in relation to the pathetic (updated) deal negotiated by yourself in the Wollongong Hotel deal. Not to mention the rest of the results from other firesale property deals.
Seamisty (TDS)
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And the PIN on NSX is back to 0.066 from its dizzy heights of 0.075 late last year.
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Can anyone tell me how to spell PONZZZI SCHEME?
From the SMH Business Day
Equititrust acknowledges potential conflict in funding roles
Colin Kruger
January 10, 2011
THE mortgage fund operator Equititrust faces a conflict of interest as it raises $50 million from new investors to aid a fund which has been frozen for more than two years with $240 million of investor money.
A portion of the fresh funds raised was expected to be used to pay distributions to the frozen Equititrust Income Fund and to redeem unit holder investments in that fund, the company said.
EIF was one of many unlisted investment vehicles that were forced to freeze redemptions in 2008 to prevent mass withdrawals when the government placed a guarantee on bank deposits.
In a product disclosure statement inviting investors to the $50 million Equititrust Priority Class Income Fund (EPCIF), the company admitted it ''will potentially be in a position of conflict'' in its roles as responsible entity for both the lender, EPCIF, and the borrower, the frozen EIF.
The statement said a conflict would arise if EIF was unable to pay back the money when required.
''If the EIF did default, then there may be good reasons for the lender to delay recovery, grant extensions or grant other concessions. However, because Equititrust is on both sides, there is a conflict and a perception that the matter could be dealt with in a manner preferable to the interests of 'Equititrust','' the company said.
BusinessDay revealed late last year Equititrust's plans to raise the money to replace a $26 million NAB loan to EIF which has to be paid back this year.
Once the bank debt is repaid, the remainder of the funds raised will be lent to EIF for future lending, paying distributions to EIF investors, and redeeming their investments in the fund, according to the statement.
It also said EIF had sufficient cash to ''meet its operational cash needs, including income distribution payments to investors for the next three months''.
Equititrust has met all distribution payments to the fund's investors to date but it may face challenges in the future. There was $77 million worth of EIF loans in default in November, representing 29 per cent of funds under management.
Equititrust is pursuing the fund-raising as an alternative to a restructure of the business which would involve merging EIF and another major fund. These were conditions demanded last year by one of the company's financiers, the Bank of Scotland (HBOS Australia), in return for an extension of its loan.
According to Equititrust's financial accounts for 2009-10, the remaining $20 million it owes HBOS would have become repayable by December 31 if the conditions were not met.
The chief executive of Equititrust, David Kennedy, told BusinessDay in November that ''all dealings with our banks are under control'' and an extension of the facility was being negotiated.
The bank debt is one of several issues which prompted Equititrust's auditor to state in the company's 2010 financial accounts that there was material uncertainty about its continuation as a going concern.
From the SMH Business Day
Equititrust acknowledges potential conflict in funding roles
Colin Kruger
January 10, 2011
THE mortgage fund operator Equititrust faces a conflict of interest as it raises $50 million from new investors to aid a fund which has been frozen for more than two years with $240 million of investor money.
A portion of the fresh funds raised was expected to be used to pay distributions to the frozen Equititrust Income Fund and to redeem unit holder investments in that fund, the company said.
EIF was one of many unlisted investment vehicles that were forced to freeze redemptions in 2008 to prevent mass withdrawals when the government placed a guarantee on bank deposits.
In a product disclosure statement inviting investors to the $50 million Equititrust Priority Class Income Fund (EPCIF), the company admitted it ''will potentially be in a position of conflict'' in its roles as responsible entity for both the lender, EPCIF, and the borrower, the frozen EIF.
The statement said a conflict would arise if EIF was unable to pay back the money when required.
''If the EIF did default, then there may be good reasons for the lender to delay recovery, grant extensions or grant other concessions. However, because Equititrust is on both sides, there is a conflict and a perception that the matter could be dealt with in a manner preferable to the interests of 'Equititrust','' the company said.
BusinessDay revealed late last year Equititrust's plans to raise the money to replace a $26 million NAB loan to EIF which has to be paid back this year.
Once the bank debt is repaid, the remainder of the funds raised will be lent to EIF for future lending, paying distributions to EIF investors, and redeeming their investments in the fund, according to the statement.
It also said EIF had sufficient cash to ''meet its operational cash needs, including income distribution payments to investors for the next three months''.
Equititrust has met all distribution payments to the fund's investors to date but it may face challenges in the future. There was $77 million worth of EIF loans in default in November, representing 29 per cent of funds under management.
Equititrust is pursuing the fund-raising as an alternative to a restructure of the business which would involve merging EIF and another major fund. These were conditions demanded last year by one of the company's financiers, the Bank of Scotland (HBOS Australia), in return for an extension of its loan.
According to Equititrust's financial accounts for 2009-10, the remaining $20 million it owes HBOS would have become repayable by December 31 if the conditions were not met.
The chief executive of Equititrust, David Kennedy, told BusinessDay in November that ''all dealings with our banks are under control'' and an extension of the facility was being negotiated.
The bank debt is one of several issues which prompted Equititrust's auditor to state in the company's 2010 financial accounts that there was material uncertainty about its continuation as a going concern.
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Pontius Pilate washed his hands . This guy( a member of the supreme court of QLD) looks the other way knowing full well that 130 million of investors money is being stolen without informing ASIC . And then conveniently receives a generous redundancy pay out. You would not write this in a movie script for fear of being to far fetched
A SENIOR MFS executive was asked to sign backdated documents that purported to approve a controversial $130 million loan, the NSW Supreme Court heard yesterday.
It was also claimed that documents were backdated relating to MFS's $96m dividend payment in 2007.
Yesterday former chief operating officer David Kennedy continued giving evidence in the NSW Supreme Court, where lawyers for liquidator Bentleys Corporate Recovery are trying to uncover when the Gold Coast financial company became insolvent. MFS, later named Octaviar, owes creditors $2.5 billion.
The court heard yesterday that a $250m loan from Fortress Credit was due at the end of November 2007 and a series of transactions took place in the last few days of November. On the 27th, the MFS Premium Income Fund (PIF) borrowed $150m from Royal Bank of Scotland. Three days later, PIF transferred $130m to the MFS Administration account, which in turn made part payment of $103m to Fortress.
Start of sidebar. Skip to end of sidebar.
Related Coverage
Court told of MFS debt paper trail Courier Mail, 16 Dec 2010
Financier gave MFS many chances Courier Mail, 16 Dec 2010
Auditor quizzed over MFS The Australian, 15 Dec 2010
Octaviar due diligence 'ad hoc' Perth Now, 15 Dec 2010
Octaviar chief sells cars 'to pay rent' The Australian, 18 Jun 2010
End of sidebar. Return to start of sidebar.
Mr Kennedy, who sat on the investment advisory committee for PIF, said he knew nothing about the RBOS loan at the time.
Mr Kennedy said it wasn't until the following February that he found out about the $130m transfer, when the "right-hand person" of chief executive Craig White asked him to sign some backdated minutes purporting to approve the $130m transfer.
"I wouldn't sign them," Mr Kennedy said yesterday. "They were backdated documents and I didn't recall having that meeting".
Mr Kennedy said that was the first time he had reason to doubt the integrity of anybody at MFS.
"I was very unhappy with the transaction itself," Mr Kennedy said. "It smelt to me."
Mr Kennedy said Mr White later told him Korda Mentha had reviewed the transaction and was satisfied it was appropriate.
The court also heard that Mr Kennedy was planning to sue the board after ploughing close to $750,000 into MFS shares just days before the company announced it needed to raise $550m. Mr Kennedy said the board was negligent in opening a trading window for staff in the week it announced the capital raising, as the board either knew it needed to raise $550m, in which case it was inappropriate for staff to be trading, or the board didn't know "they had a $550m hole", in which case it was negligent.
Mr Kennedy said he didn't sue because he later waived his legal rights against the company as part of his redundancy package.
The hearing continues.
A SENIOR MFS executive was asked to sign backdated documents that purported to approve a controversial $130 million loan, the NSW Supreme Court heard yesterday.
It was also claimed that documents were backdated relating to MFS's $96m dividend payment in 2007.
Yesterday former chief operating officer David Kennedy continued giving evidence in the NSW Supreme Court, where lawyers for liquidator Bentleys Corporate Recovery are trying to uncover when the Gold Coast financial company became insolvent. MFS, later named Octaviar, owes creditors $2.5 billion.
The court heard yesterday that a $250m loan from Fortress Credit was due at the end of November 2007 and a series of transactions took place in the last few days of November. On the 27th, the MFS Premium Income Fund (PIF) borrowed $150m from Royal Bank of Scotland. Three days later, PIF transferred $130m to the MFS Administration account, which in turn made part payment of $103m to Fortress.
Start of sidebar. Skip to end of sidebar.
Related Coverage
Court told of MFS debt paper trail Courier Mail, 16 Dec 2010
Financier gave MFS many chances Courier Mail, 16 Dec 2010
Auditor quizzed over MFS The Australian, 15 Dec 2010
Octaviar due diligence 'ad hoc' Perth Now, 15 Dec 2010
Octaviar chief sells cars 'to pay rent' The Australian, 18 Jun 2010
End of sidebar. Return to start of sidebar.
Mr Kennedy, who sat on the investment advisory committee for PIF, said he knew nothing about the RBOS loan at the time.
Mr Kennedy said it wasn't until the following February that he found out about the $130m transfer, when the "right-hand person" of chief executive Craig White asked him to sign some backdated minutes purporting to approve the $130m transfer.
"I wouldn't sign them," Mr Kennedy said yesterday. "They were backdated documents and I didn't recall having that meeting".
Mr Kennedy said that was the first time he had reason to doubt the integrity of anybody at MFS.
"I was very unhappy with the transaction itself," Mr Kennedy said. "It smelt to me."
Mr Kennedy said Mr White later told him Korda Mentha had reviewed the transaction and was satisfied it was appropriate.
The court also heard that Mr Kennedy was planning to sue the board after ploughing close to $750,000 into MFS shares just days before the company announced it needed to raise $550m. Mr Kennedy said the board was negligent in opening a trading window for staff in the week it announced the capital raising, as the board either knew it needed to raise $550m, in which case it was inappropriate for staff to be trading, or the board didn't know "they had a $550m hole", in which case it was negligent.
Mr Kennedy said he didn't sue because he later waived his legal rights against the company as part of his redundancy package.
The hearing continues.
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Just looking back over some of the reports on the Liquidator's examinations that I missed and found this one:
http://news.smh.com.au/breaking-news-business/mfs-spent-investor-millions-20101020-16u23.html
MFS 'spent' investor millions
Nicole Stevens
October 20, 2010
AAP
The former chief financial officer of collapsed property group Octaviar Ltd can't recall taking any steps to ensure that more than $256 million of investor funds raised in 2007 were used for their intended purpose.
Financial accounts show the company channelled funds from equity raisings in early 2007 into a series of intercompany loans and debt payments, a public examination in the NSW Supreme Court heard on Wednesday....
MFS told investors the equity raising was to fund previously announced acquisitions of Sunkids and Sunleisure businesses, barrister Dominic O'Sullivan told the court.
But according to the company's general ledger and operating accounts, those payments were never made, Mr O'Sullivan said....
Mr Anderson was re-examined by Mr O'Sullivan on behalf of the liquidator for Octaviar Investments Notes Ltd and Octaviar Investments Bonds Ltd, Will Colwell of Ferrier Hodgson....
Mr O'Sullivan said investor funds were paid out in a series of intercompany margin loans, including payments to the Premium Income Fund operating account, Opus Prime, Tricom and Ridgebell.....
"If the arithmetic is done, it is apparent that the proceeds ... had been spent by the 19th of March 2007," Mr O'Sullivan said....
Does any one know what this is about - presumably if a repayment was made INTO our fund then FUNDS MUST HAVE BEEN TAKEN OUT at an earlier date. Is this another case of unauthorised borrowing from the fund? Or is it evidence of a PONZI - paying investors distributions from equity raisings?
http://news.smh.com.au/breaking-news-business/mfs-spent-investor-millions-20101020-16u23.html
MFS 'spent' investor millions
Nicole Stevens
October 20, 2010
AAP
The former chief financial officer of collapsed property group Octaviar Ltd can't recall taking any steps to ensure that more than $256 million of investor funds raised in 2007 were used for their intended purpose.
Financial accounts show the company channelled funds from equity raisings in early 2007 into a series of intercompany loans and debt payments, a public examination in the NSW Supreme Court heard on Wednesday....
MFS told investors the equity raising was to fund previously announced acquisitions of Sunkids and Sunleisure businesses, barrister Dominic O'Sullivan told the court.
But according to the company's general ledger and operating accounts, those payments were never made, Mr O'Sullivan said....
Mr Anderson was re-examined by Mr O'Sullivan on behalf of the liquidator for Octaviar Investments Notes Ltd and Octaviar Investments Bonds Ltd, Will Colwell of Ferrier Hodgson....
Mr O'Sullivan said investor funds were paid out in a series of intercompany margin loans, including payments to the Premium Income Fund operating account, Opus Prime, Tricom and Ridgebell.....
"If the arithmetic is done, it is apparent that the proceeds ... had been spent by the 19th of March 2007," Mr O'Sullivan said....
Does any one know what this is about - presumably if a repayment was made INTO our fund then FUNDS MUST HAVE BEEN TAKEN OUT at an earlier date. Is this another case of unauthorised borrowing from the fund? Or is it evidence of a PONZI - paying investors distributions from equity raisings?
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Additionally, as the equity funds raised were spent on "...a series of intercompany margin loans, including payments to the Premium Income Fund operating account, Opus Prime, Tricom and Ridgebell. Investor funds were also used to pay professional fees to Macquarie Bank, KPMG, Freehills and to pay a tax debt..." MFS evidently did not have sufficient cash to make these payments, then MFS must have been INSOLVENT from at least 19 March 2007. This has huge ramifications for the various transactions made after this date.
http://www.nsxa.com.au/ftp/news/021723622.PDF
Wellington Capital and Armstrong Registry – Client Services
Wellington Capital Limited as responsible entity of the Premium Income Fund advises that its offices,
including the Wellington Hotline, will be closed until Monday 17 January 2011 due to expected severe
flooding in the Brisbane CBD.
Armstrong Registry Services, the registry provider to Premium Income Fund is located in the same building
as Wellington Capital. Similarly, Armstrong Registry Services office will be closed until Monday 17
January 2011.
Further announcements will be made in due course.
Wellington Capital apologises for any inconvenience.
Wellington Capital and Armstrong Registry – Client Services
Wellington Capital Limited as responsible entity of the Premium Income Fund advises that its offices,
including the Wellington Hotline, will be closed until Monday 17 January 2011 due to expected severe
flooding in the Brisbane CBD.
Armstrong Registry Services, the registry provider to Premium Income Fund is located in the same building
as Wellington Capital. Similarly, Armstrong Registry Services office will be closed until Monday 17
January 2011.
Further announcements will be made in due course.
Wellington Capital apologises for any inconvenience.
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Thanks Seamisty for this post.
I think our combined sentiments are with the victims and sufferers of these terrible events.
Regards,
Yes simgrund, I sincerely hope that our fellow PIF holders and others are spared any further heartache and suffering from the floods. Its bad enough being subjected to despair and financial ruin/disadvantage from greedy individuals who have totally disregarded their obligations/commitments at the expense of others without having to cope with natural disasters out of their control as well. My heart goes out to all innocent victims and I hope this disaster is not used by others to justify their own imcompentence. Seamisty
"Wellington Capital Limited as responsible entity of the Premium Income Fund advises that its offices, including the Wellington Hotline, are now fully operational.
We have been advised by our registry services provider, who are located in the same building, that they are also now fully operational."
We have been advised by our registry services provider, who are located in the same building, that they are also now fully operational."
Having taken a break from reading this forum for a couple of weeks, I can only say that catching up on contributions isn’t a joyful experience. As usual, I hope that in the coming months Hutson and her colleagues will have to account for the poor performance of the fund before a full house of PIF investors.
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Selciper, hope you had a good break. I am hopeful that the Liquidator Bentleys will take action to recover the fund from WC on the basis of a preferential transaction during insolvency and then we might see an investors meeting. Bentleys primary motive though will be to recover the $8+mill in preferential payments that accompanied the "sale" of the RE. But nothing will happen until Bentleys complete their report on insolvency. With further examinations foreshadowed for February it will be some time away yet.
Here is some news about the ownership of the NSX exchange from todays SMH:
http://www.smh.com.au/business/asx-in-the-spotlight-but-theres-plenty-on-at-nsx-20110117-19u3i.html
ASX in the spotlight, but there's plenty on at NSX
January 18, 2011
Cleaning up in the 'clean and green' markets.
FORGET about the ASX being swallowed by the Singapore Stock Exchange. The lively end of market activity here is in environmental and carbon-type trading and exchanges.
A substantial shareholding notice filed yesterday for NSX, otherwise known as the National Stock Exchange, revealed that custom-bottle designer Vitron Werkbund Sud Australasia now owns 25 per cent of the alternative capital market.
Vitron is really just another arm of irrepressible futures trader Brian Price's mini-empire, under the Iron Mountain Group banner. He has now assembled a fascinating grab-bag of market platforms, green brokers and acronyms while everyone else is watching the ASX-SGX, or even rival Chi-X, games.
Some will remember that Price and his Iron Mountain Entertainment were behind local film The Bank almost a decade ago. Back in those days, he even had some support from Rod Adler and FAI Insurances. These days it is Perth's Bennett family - descendants of Lang Hancock's former iron ore prospecting partner Peter Wright - who have thrown their hats and wallets into the pool.
Price also has Macquarie Group, former New South Wales premier Bob Carr and US-listed Intercontinental Exchange (ICE) among his team in the ''clean and green'' markets.
The question does arise, though, whether Vitron and co-shareholder Financial and Energy Exchange (FEX) are behaving in the spirit of the takeovers code now that they own one share in every four of NSX, without having made a bid, by using the ''creep'' provisions.
FEX is owned by Price and the Bennetts' AMB Holdings, and has a put/call option deal over NSX shares with Vitron. It is not clear whether Macquarie has a stake in FEX, although one of the investment bank's high-profile executives, former Victorian treasurer Alan Stockdale, was a director at one point - as was one-time Telstra wunderkind Ted Pretty.
While in the latest notice, it looks like Vitron/FEX exceeded the creeping takeover allowance of buying 3 per cent every six months, they in fact snuck in by a bit over a week. The big jump came when the group bought Guinness Peat Group's 2.5 million shares for 22 ¢ in an off-market deal last week.
Price, some will recall, combined with other investors to roll the previous board of NSX in 2009. NSX is itself the result of bringing together the Newcastle and Bendigo stock exchange licences, to come up with an offer of a sort of junior ASX.
NSX and FEX turned the Bendigo exchange licence into a joint venture, SIM Venture Securities Exchange, which aims to offer ''cleantech'' companies a listed venue. There are no companies listed, although several are believed to be considering it.
FEX itself is focused on futures and derivatives in the energy and environmental products markets. In particular, it is hoping to get into Asia via an alliance with CNBC. In turn, FEX, Macquarie and ICE own Climate Change Products (Macquarie appears to have 52 per cent according to Australian Securities and Investments Commission records).
Climate Change owns Envex, which has Bob Carr as chairman, and aims to ''foster Australian environmental markets that are deep, liquid, efficient and transparent'', according to its website. Envex bought 51 per cent of carbon markets broker Next Generation Energy Solutions late last year, and is in partnership with the listed Green Invest on that one.
Price clearly has a plan to be at the hub of whatever develops in environmentally friendly trading in the Asian sphere. It will be intriguing to see whether that includes backdoor-listing his vehicles via NSX...
