As ASIC fiddles (2000) , bring on the finance broker Royal Commission.
RC with Ian Temby QC...... achieved by people power in 2001.
Note: RECA is the fore-runner of BFCSA.
22 April 2001
https://www.crikey.com.au/2001/04/22/as-asic-fiddles-bring-on-the-finance-broker-royal-commission/
In order to avoid yet another stream of threatening letters, we will keep this yarn very simple, whilst we consider the LINKS.
In 1992, Krafty Ken was Chairman of Perpetual Trustees and he still sits on the board today. Two notable employee/managers of PTs were arranging “loans” for borrowers, who have since been arrested and charged and named in parliament as the notorious “dirty dozen.”
Two PT account managers moved to Clifton Partners, the company who affected a slight name change to Knightsbridge with the full knowledge and blessing of ASIC.
With $160 million falling rapidly into default,
ASIC kindly placed everyone on the “run-out” program along with 120 other solicitor mortgage “run-outs.”
We note that during 1992, KKen at the helm of PTs was having a few defaults of his own in both the Northern Territory and Queensland. We are told $35 million was settled out of court on three of them. Some of the mortgagees were paid out, but with whose money? Shareholders and cute accounting perhaps?
The full story of diabolical overvaluations and members of the public facing years of anguish and lost capital can be viewed at Hansard WA 6th and 7th Dec 1995 re the Katherine Dairy (acquisition of Rural Property Trust – Perpetual Trustees).
The lead players in all of this are Ken Court (Premier Richard's brother) and his mates. You would think as a law abiding citizen KKen would have learned a lesson with regard to the practice of moving millions of other peoples money, usually it appears, without their knowledge of what is truly going on.
In October 1999, KKen again starred in another event.
Ken Court (Premier Richard Court' SPIV brother, is Non-exec director of MFA Finance,
telling ABC audiences “no-one has ever lost money in MFA Finance.”
It was a full blown UNtruth because the money was lost at the very beginning of these notorious deals in 1998, but KKen considers that if one moves millions around for a few days – no-one gets hurt.
Graeme Grubb is currently serving 10 years for adopting a similar thought process. However, we must stop there because charges have been laid in the MFA deals on every-one but KKen, and several retirees carefully placed on second, third, and fourth mortgages are short of a few million quid. You would be forgiven for believing this time KKen has learned another valuable lesson. Not quite.
Two weeks ago I attended a creditors/shareholders/mortgagee meeting of one of Knightsbridge’s more colourful “golf club” deals – Meadowsprings. The property in question has had four valuations from the top end of town ranging from $14 million to $8 million for the same structure.
In any event $4.5 million of shareholders are less than amused, as well as some 60 retirees who poured in another few million via Clifton’s, as well as a few “GIs” (properties - geographically impossible to do a drive past) for those who poured in yet another $3 million in early 2000 all registered with and during ASIC’s investigation!
ASIC was busy “monitoring.” These fools love “monitoring.”
For those who doubt the crossing of state borders issue – the GIs this time were from Melbourne (HG&R Noms) the Kelly clan. They were given a neat 3rd mortgage, but on the proviso that the first mortgagees were coerced into relinquishing 1st ranking and that all ranks join together. The fourth mortgagee – well wouldn’t you guess – KKen. He had signed a contract with Transmetro in complex lease and sub-lease arrangements the subject of current highly contentious legal wrangling.
Meanwhile local agents appraised the property at well below the above figures. And here is the rub. Ken Court and Max Fowles (ex pres of the Perth Stock Exchange) were listed as directors of NKH Securities, nominated by Knightsbridge as the “single responsible entity” whilst Clifton is on the “run-out” program.
ASIC used the trusted "independent" SRE''s as the "Gatekeepers" to look after the problem of protecting the best interests of Consumers................pure farce.
The current administrators of Meadowsprings announced that the company is insolvent to the tune of $800,000 as at 30th June 2000. More unhappy investors, shareholders, creditors and interstate interested parties. I ask the obvious question – how long prior to 30th June had the company been insolvent? On tape – the answer is: “in our opinion, from the beginning.”
Here are the gems: This file was given to parliamentarians and read out by Jim McGinty on the 4th April 2000. We found out about the deal three weeks prior, and it does take a few weeks to put the file together in reasonable format.
Complete files were also given to the Fraud Squad and ASIC.
The response gave the impression that until “the PONZI payments stop” it isn’t fraud!
We need to all understand that the “deal” is set at the beginning prior to anyone handing over one dollar, but authorities are all learning a lesson in kindergarten criminology.
In defence of the Police – they tell us they cannot act until they have a complaint; and a complaint from ASIC or MPs or support groups do not count.
ASIC have sweeping powers, but little imagination. So when did KKen and Max Fowles sign these contracts as the company (SRE) “watchdog?”
On 26/1/2000, just two months after KKen appeared on the ABC over the MFA Finance mess. The Melbourne money was gleaned in mid March 2000. KKen and Max do a “run-out” of their own on the 30th March 2000, shortly after several people around town knew we had the file. They resigned as directors. Who was the previous SRE prior to KKen? Crikey – Phillips Fox.
They are presumed to be searching for a good lawyer to represent their interests. And, who had the authority to sign on behalf of the Foxy ones? Our mate Clifton Partners. And round and round and round we go.
No wonder Richard Court, Tricky Dicky to his mates, fought bitterly against the Royal Commission. If the eastern states journalists think the WA election was won or lost totally because of the greens or the perils of Pauline, think again. The battle was won when the Little “Libs” bank accounts were slightly thinner and they and their next two generations voted accordingly.
VOTE 1 Labor they cried “we will never ever vote Lib again.”
The Judicial Inquiry will explain why.
The pollies can't keep ignoring something bigger than HIH
12 August 2001
https://www.crikey.com.au/2001/08/12/the-pollies-cant-keep-ignoring-something-bigger-than-hih/
Denise Brailey is a Crikey legend who on her own has done more than ASIC and any other regulator to sort out the dodgy lawyers, accountants and finance brokers ripping off retirees across the country caught in what is known as the Solicitor Mortgage Scandal.
This update of her battles outlines just how effective she has been.
The Australian Securities Investment Commission have maintained a policy to create a “run-out”
program enabling solicitor firms with defaulting loans to wind down their loan operations.
Other financial planners and brokers are on bizarre “letters of undertaking”. In most cases mortgages supposedly used as security in these scams do not show the names of co-investors, only the name of the solicitor’s own company. For four years tens of thousands of retirees have been unable to get together to seek independent advice, forcing them to deal with the very solicitors who suggested they enter into this battle zone of heartache. For four years investors have pleaded with ASIC and the relevant law firms (all 128 of them according to the ASIC FIDO list) to release the names of their co-mortgagees.
The magic “confidentiality” word is constantly used against the elderly investors. In WA, in 1998, I personally demanded that ASIC WA, step into the arena and assist the retirees with a letter which immediately released the lists of fellow mortgagees. Make no mistake, brokers and financial planners had no facility to draw up mortgage documents in WA. Solicitors were definitely part of the process and precisely why the WA Fraud Squad is currently investigating their activities.
The question looms: “why was it that ASIC, using Federal powers and current legislation, found a simple remedy by insisting that brokers/solicitors/liquidators send letters to retirees in WA – giving investors the opportunity to consent to the lists being circulated to co-mortgagees and now ASIC deny retirees in other states, the opportunity for the same remedy?” I sense a slight case of constitutional mumbo jumbo emerging.
These lists provided the nucleus for the truth to come bubbling to the surface in the three inquiries which have occurred in WA to date, including the current severely restricted Royal Commission. ASIC must be terrified of possible inquiries around Australia and appear to have used their powers to keep the rest of the victims in Australia, from obtaining their lists.
ASIC cannot continue with the “confidentiality” game any longer. Confidentiality can only be used if it protects the interests of those affected. ASIC is very aware that their policies are only protecting the dreaded solicitors who caused this diabolical mess, and causing immense frustration to retiree victims.
Legislative remedies obviously exist. Message for ASIC CHIEF David Knott: end the misery and protect the people.
A simple letter to solicitors from ASIC can solve the first step of the problem. Retirees also needed to feel they were part of a network of support, rather than treated by ASIC as an outcast. Many retirees have not told their families and suffer acute embarrassment in silence. Others have died waiting for ASIC to assist. Widows and widowers are unable to cope – they need compassion and support.
I flew to Queensland three weeks ago, at the request of Qld RECA members in trouble and attended their meeting with Greg Tanzer (ASIC Qld Regional Director) and National Director of FSR at ASIC: Darren McShane, who looked a little McStunned when I walked in the door.
I had one message – ASIC must use its powers in favour of the people, it must end the ‘divide and conquer approach’ and facilitate the letters which will produce the lists of fellow victim, in the same manner ASIC did for WA in early 1999.
ASIC were given powers in 1991 (under prescribed interests) to specifically protect consumers from these particular scams. The response was as expected: we will consider the RECA request. ASIC staff in Queensland hinted at the possibility of this being done. Queenslanders are still waiting along with all other victims in other states.
Meanwhile, Members in Tasmania are also active. Lobbying Senator Nick Sherry for a Senate Inquiry into the Tasmanian Law Society (“TLS”), produced greater detail of the suffering of elderly retirees in the Apple Isle and the dishonest conduct of TLS and even greater neglect by ASIC.
Tassie retirees obviously wanted assistance in the ever-growing national solicitors mortgage scandal. Many have invested with Queensland solicitors who advertised in Tassie. Investors paid for yours truly to fly to Hobart last week with the same request for lists of co-investors. We held a seminar, gathered 120 retirees together and marched through the streets of Hobart the following day.
Solicitors at the Tasmanian Law Society must have been terrified of the “kettle drum brigade”. They called the police prior to our arrival. Front page of the Hobart Mercury on Tuesday – RECA members were outside the Tasmanian Law Society – protesting along with 100 retirees who were using pots, pans, whistles and bells (colour and noise!) to wake up this incredibly lazy law society. Three policemen stood guard whilst we delivered our letter of demand for lists. Obviously regulatory authorities need protection before we even arrive!
We also demonstrated outside a particular law firm who are also suffering from a slight case of mismanagement, with an estimated $12 million of loans in default. We then marched on to ASIC delivering further letters to the Regional Director. One lady even marched behind a lawyer down the main street banging a pot with a ladle in time to his own “pace.” He looked a bit bemused. Retiree/investor victims marched through the streets – their spirits were high – and they now have formed a fabulous group of determined RECA members.
One of the Tasmanian Law Society Boards is chaired by the Tasmanian Attorney General. All regulatory authorities appear to be on national damage control. Senator Nick Sherry attended our meeting. He also backed our calls for a national inquiry after he listened to the evidence as a member of the recent Senate Inquiry into the TLS. Aunty ABC placed the mortgage scandal story – top of the news bulletin Sunday night ahead of he ALP National Conference. Kim must have been pleased. Onya Aunty ABC! Hundreds of millions of dollars have been lost affecting the lives of over 33,000 retirees and the Federal budget.
Who are the big players in this Scandal and why is the Federal Government displaying an obvious reluctance to assist the elderly retirees against the crooked lawyers and SPIV Property developers?
Our demands are simple: a letter is to be immediately sent by ASIC to the solicitors on the run-out program – preferably before investor/victims are statute barred. The letter demands that the solicitors send a letter to each and every client affected by defaulting loans or even the few loans, which are current.
Solicitors who comply with this simple request, give retirees the opportunity to receive lists of co-investors by waiving the right to confidentiality in this instance. The letters simply offer investors the chance to have their name passed on to only the consenting mortgagees in the same mortgage.
I delivered letters, in person, to each of the Law offices, TLS and ASIC. I held a meeting with the Tasmanian ASIC hierarchy (with police escort – do you believe this!) and repeated RECA’s demands made three weeks ago, in Brisbane to Darren McShane. The Mercury rang Mr Johnston (Exec Dir of FSR nationally) for comment. His answer – he stated NO LISTS because of confidentiality – the weapon the lawyers have used for the past four years of defaulting loans.
Messrs Johnston (EXEC Dir of FSR ASIC) and McShane are about to enter a correspondence course with RECA! We battle on.
Meanwhile, back where it all began in WA
The West Australian rang me in Hobart for the comments in their paper regarding the DPP dropping charges against a broker, even though serious charges were laid and evidence abounds, because “it was not in the public interest to proceed!” Another blot on the WA history books. Crikey, the lucky broker was a member of the Finance Brokers Board as well as the 1996 FB Industry Review Committee – at the time of the alleged offences. I will be writing to the DPP – Mr R Cocks and Co. Copies to everyone of course! Watch WA with interest – could be more charges dropped!
Precisely what happened after Wanneroo Inc Royal Commission. It appears a standard pattern. Meanwhile the IMF packages are rolling through the door in Perth (and who doubted they would) as Litigation Funder IMF prepares to take on the Finance Brokers Supervisory Board on behalf of WA retiree/victims for recovery of WA losses – the West Australian Government are bracing themselves for a massive compensation claim.
There are 4500 regulators and pollies out there, and millions of us. The odds are with those on the side of consumer reform. We are searching for lawyers with a social conscience, such as Doug Solomon in WA. Without doubt, standards must be raised in Australia.
Integrity appears to be missing. HIH, One-Tel, CNAL are only the beginning. Masses of Super dollars are currently invested in companies, which have yet to be exposed. Messrs Costello and Hockey must explain their bizarre behaviour during this period and why this dynamic duo are acting as if we condone the proliferation of straw companies to the detriment of consumers both here and overseas and why we condone a weak an ineffective regulatory authority, yet boast internationally of our safe and “enviable” financial and economic regulatory systems.
The annual budget for “watchdog” activity is a generous $136 million, yet ASIC continually consult with political allies, industry bodies and do not see a need for consumer consultation. RECA receives no state or federal funding, yet we manage to carry out many of ASIC’s tasks whilst they practice “monitoring”. The time for monitoring ceased five years ago.
Why is the Federal Opposition so silent on this topic? Kim’s seat in WA is riddled with retiree/victims who write regularly to him. Is this a “bipartisan” approach by the major parties to pretend it will all dissolve into history? Why is it not necessary (in their view) to hold a national inquiry into the Finance and Corporate Sector and why do we not need to know where billions of dollars of mums and dads life savings have disappeared? The Senate can only do so much.
Parliament must respond to the people – or have the goal-posts been moved?
Remember that the Sunday Tasmanian (onya Simon) was the first to claim: “Bigger than HIH” – and it is – just through the massive number of people involved and the number of law firms involved. My quote for this week (thanks to Anne) in Tuesday’s Tas Mercury: “RECA believes a big yellow ribbon should be tied around the whole of Australia right now, and have it declared a crime scene.”
Just where are the Corporate Cops this week and why do they all appear to be on mogodon? The best part of our Australian democracy is the freedom of the press, and we salute all those investigative journalists around Australia who have worked incredibly hard to pries open this particular Pandora's box.
Perhaps Australian citizens are getting fed up with party politics standing in the way of good government.
The Crikey Team are everything to do with getting the message out – and Aussies around the country owe you all debt of thanks.
Our motto: if you have the will, it can be done.
cheers, Denise Brailey
Postscript 2017: As a direct and indirect result of the lobbying and achievement of
an RC.....A total of $300 million nationwide was paid out as compensation.
Total of 36 people jailed, most of whom charged with fraud, including 23 in WA,
Legislative changes in most States and also Federal laws relating to Consumer
Protection and MIS laws came into being 2001 due to previous collective efforts for
change in 1999. Powerful laws relating to CONSUMER PROTECTION have been left as
dormant by ASIC. The RC and the Fully Funded law-suits affected change, whilst lazy
ASIC sat back making mother-hood statements. ASIC continued to ignore thousands
of letters of complaints against Bankers and dodgy mortgage lending 2001 to the
present day. Only a Federal Royal Commission - wide TOR - will again come to the
rescue of the aggrieved consumers in 2017.