Auditors amiss?!/!
From SMH
Online acclaim for Sullivan yet to click
Scott Rochfort
August 15, 2011
CBD
<em>Illustration by John Shakespeare</em>
Everyone loves a former chief ... Phil Sullivan's name is coming up roses. Illustration by John Shakespeare
The founder of Gold Coast property development concern City Pacific, Phil Sullivan, seems to have a level of popularity not enjoyed by the former chief executives of other failed investment schemes.
Well, that is if you go only by the comments posted on a website set up by a group of anonymous investors seeking to take management control of the City Pacific-founded First Mortgage Fund.
Days after Sullivan said on the website that he would give ''whatever unpaid assistance'' to the group calling itself Protect PFMF, the tributes have been pouring in.
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''Great effort,'' said one unit holder commenting on Sullivan's efforts to dump Balmain Trilogy as the managers of the fund containing more than $900 million of now-eroded deposits.
''Delighted to hear from you - the 'words of truth' that was sadly missed during the past three years of darkness and misery - that you've recovered health and are still willing to help us all,'' said another testimonial. ''I never doubted Phil, and I do not doubt him now,'' said another.
CBD was unable to find a negative word on the website about Sullivan.
The adulation shown towards Sullivan comes despite unit holders seeing the value of their units in the fund sink already by more than 70 per cent. They have also managed to get only 5 ¢ back (as a capital return) for each of their $1 units. Imagine Sullivan's level of popularity had unit holders actually received a positive return.
In his posting Sullivan rejected the ''ludicrous suggestions … that City Pacific was operating a 'Ponzi scheme'.''
Unit holders have been unable to withdraw their deposits since early 2008, more than a year before Balmain Trilogy secured enough support from unit holders to have City Pacific dumped as the manager of the fund.
BACKER PUZZLE
Sadly, CBD was unable to find many of its own tributes about Sullivan among the unit holders it has contacted.
''We were absolutely amazed and insulted when we received that anonymous form,'' said one unit holder about the correspondence she received from Protect PFMF. ''How dare they,'' she said, disgusted that the group had declined to identify who its backers were.
''Is this an attempt by Phil Sullivan to regain control over the fund? How is this possible?'' asked another unit holder. Sullivan's sudden reappearance on the scene comes about three years after he left City Pacific to ''allow the next generation of management to lead the business forward''.
Sullivan blamed the problems in the First Mortgage Fund on the difficulty in securing banking finance and being forced to ''sell down … assets to repay the banks''.
''This forced sell-down of assets resulted in a reduction of the perceived values of all property by valuers and auditors and the consequent impairments and reduction in our fund unit holding values,'' Sullivan said.
SIN OF OMISSION
The City Pacific founder made no mention of how more than 90 per cent of the $920 million in loans lent to property developers were in default by the end of 2008, more than six months before Balmain Trilogy gained management control.
Sullivan departed only seven weeks before the end of 2008.
Among the fund's toxic loans was the $264 million loaned to property developments run by City Pacific. In the last half of 2008, the fund booked more than $80 million in impairments on these related party loans. And by the end of 2008, the $1 units in the fund had been written down to 61 ¢.
''Only when the world's finances and banking system hit the wall with the onset of the banking credit squeeze and the global financial crisis did City Pacific see rough water, along with every other mortgage and property-based fund, worldwide,'' Sullivan said in his version of history.
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http://www.smh.com.au/business/onli...et-to-click-20110814-1it0l.html#ixzz1V4x0EOrY