The Senate Economics Committee has asked the corporate watchdog to investigate financing of loans to investors in the failed Great Southern forestry managed scheme. Source: The Australian
The commissioners of the Australian Securities & Investments Commission were grilled on their response to the collapsed scheme.
Thousands of small investors stand to lose their homes or will be bankrupted under a court settlement between some larger investors, former liquidators and the Bendigo and Adelaide Bank on October 28.
Up to $400 million is still owed by investors who took out loans in order to invest in Great Southern, which collapsed in 2009, much of the debt owned by Bendigo and Adelaide Bank.
The senate committee presented ASIC chairman Greg Medcraft and other commissioners with a letter asking that the corporate watchdog further investigate the collapse.
Liberal senator Bill Heffernan claimed up to 23,000 investors were at risk of being bankrupted if the settlement by the Victorian Supreme Court was approved.
The committee said the Great Southern scheme and the loans that serviced the investment met ASIC’s “public interest test” to intervene.
“During these hearings, senators noted that they had been inundated with correspondence by victims of the collapse of the Great Southern Managed Investment Scheme, and raised the possibility of a public interest intervention to investigate these matters,” the letter to ASIC states.
“ASIC officials confirmed that a request from the committee would be considered. The committee notes allegations of serious breaches of Australian law including the widespread provision of inappropriate financial advice.
“As the matter is currently before the courts, and a judgment is imminent, the committee believes this is an urgent matter of public interest that warrants the attention of ASIC.”
Labor senator and committee member Sam Dastyari, who has also asked Bendigo and Adelaide Bank to appear before the separate forestry investment senate inquiry, said: “The provisions of these loans by Bendigo and Adelaide Banks needs to be investigated, and investigated by a body with the authority and powers of ASIC.”
In the committee hearings, Senator Heffernan implored ASIC to act.
Bendigo and Adelaide Bank denies any wrongdoing, general manager Mike Hirst claiming: “Throughout this protracted matter the bank has acted lawfully, respectfully and morally and we reject any assertions that we have not.”
Senator Heffernan said a key problem facing the investing public was “just too many grubs” in the financial advice industry.
Nationals senator John Williams greeted Mr Medcraft with “welcome to paradise”, in reference to his statements that Australia’s lax civil penalties for white-collar crime made it “a bit of a paradise” for crooks.
Mr Medcraft backtracked from his statements earlier in the week at a Walkley Foundation business journalism function.
“I did say that but … the point I was making is not that we are a paradise, but we need to be careful we are not seen as a haven,” he told the inquiry.
Finance Minister Mathias Cormann would not comment on ASIC’s claims penalties were too low
“If the government receives persuasive evidence and advice that there is a problem with the level of penalties we would act,” Senator Cormann said.
