HIH Christmas party $735,000
Source AFR 10 Feb 2003.
You ask…What's this got to do with me?…….Have you lost money in investments??
Unbelievable!……says The Comet.
Rodney Adler of FAI and HIH infamy, who is facing a potential list of civil and criminal charges over the collapse of HIH, has condescendingly returned from a holiday in Switzerland to attend the hearing and present his case according to media reports.
How was he allowed to leave Australia while the hearing was in process?
Why haven't his finances been frozen while the hearing is proceeding?
Has the Federal Government learnt nothing from the Skase case?
Source; APSL (The Comet newsletter)
Shonky financial planners:
Shonky Financial Planners uncovered in a report into the quality of their professional advice could face disciplinary action, said Senator Ian Campbell.
Senator Campbell, the parliamentary secretary to the Treasurer and manager of government business in the Senate was commenting on the findings of a joint report by the Australian Consumers Association and the Australian Securities and Investments Commission.
The report found that many professional financial advisers gave poor advice and much of that was influenced by the commissions which financial institutions paid them.
The survey revealed evidence of how financial planners ignored their clients' needs, recommended plans without justification and often failed to disclose commissions.
Senator Campbell said the report came in the middle of a two-year process of phasing in a tough regime under the Financial Services Reform Act, which would drive out unscrupulous operators and clean up the industry.
He said the survey was a wakeup call for the industry but also came as a surprise for the federal government.
“Quite frankly, many of the planners who were the subject of this survey don't meet the grade and many of them, come March11, 2004, when the transitional period ends, would not get a licence and would simply not be in the industry.”
Out of 124 financial plans studied for the joint ACA-ASIC report, the study rated only two as “very good”, while 23 were ranked “good” and 29% were just “OK”.
Ten percent were rated “very poor” and 17% “poor”. Major deficiencies were discovered in the 24% who were judged to be “borderline”.
Meanwhile the Australian Consumers' Association has abandoned its support of proposed superannuation choice legislation because of the “disastrous” survey results.
The ACA has long been a staunch supporter of the Federal government's push for choice of fund legislation because it believed consumers who had a badly performing super fund had the right to choose a better performing fund.
But the consumer advocate said the quality of the financial planning industry had forced it to do a backup.
Source; SC Daily 12 Feb 2003
You may well ask……..Is your retirement money safe??
Governance:
A study in failure.
You cannot legislate against greed and ego, which is where the checks and balances of boards, independent auditors and regulators are meant to come into play.
Source; AFR (John Durie) 14 Feb 2003
Payout for Colonial First State “steward”;
Corporate Australia's $32 million man reckons be is worth every cent of his golden handshake.
But people on both sides of politics, including Federal Treasurer Peter Costello, say no executive is worth that big a goodbye.
Former Colonial First State chief executive Chris Cuffe walked away with the record payout of $32.75 million after he quit last year.
The payment was made public by the Commonwealth Bank of Australia, which took over the Colonial group in 2000 and with it inherited Mr Cuffe and his contract.
Mr Cuffe, 42, said in a statement that most of the payment — $29.5 million before tax — was made to him in July 2002 and was not connected to his recent termination.
It related mostly to bonuses and deferred bonuses for previous years and included retention payments before CBA's $10 billion acquisition of Colonial in March 2000.
All bonuses were linked to profits generated by the company, Australia's biggest funds manager.
"The formula giving rise to such payments since 1993 meant that, because of Colonial First State's unprecedented growth over the years that followed, the payments became significant in later years,” Mr Cuffe said.
Under him Colonial First State had grown between $4 billion and $5 billion by the time he left.
The Australian Shareholders Association described the payout as outrageous.
Mr Costello urged CBA shareholders to demand an explanation. “I find it impossible to believe that any executive is worth $32 million - I can't conceive it,” he said.
Even CBA chief executive David Murray admitted: “It's an awful lot of money. I understand people see it as an unacceptable sum.”
Details of Mr Cuffe's contract were not known before the takeover. The Federal Opposition said the Government should halt excessive payouts. Mr Cuffe, now chief of Kerry Packer's CPH Investment Corp. said CEA 'would have known of his contract before the takeover.
Source: WAN 14 Feb – AAP
Comment…Why didn't CBA “do its homework”??….Where were the regulators?
Victoria acts against lawyer misconduct:
The State Government plans to introduce laws to fix a problem that has thrown into doubt the legality of several investigations into allegations of lawyer misconduct.
The problem emerged in December when three judges of the Court of Appeal unanimously ruled that an investigation by the Law Institute into two solicitors' mortgage fund investment practices was invalid.
The court decided that because of the way in which authority for the investigation into the two solicitors was granted by the Law Institute, the Legal Profession Tribunal had no jurisdiction in the matter.
Attorney-General Rob Hulls announced yesterday that the Government would soon introduce to Parliament the Legal Practice (Validation of Delegations) Bill 2003 to retrospectively validate the regulatory powers of the Law Institute, the Bar Council and the tribunal.
The Court of Appeal decision found that between January 1997 and June 2002 the Law Institute had not complied with some of the requirements of the Legal Practice Act,” Mr Hulls said.
“That decision could potentially impact upon a range of regulatory functions. . . carried out between 1997 and 2002.”
Law Institute chief executive officer John Cain said he welcomed the Attorney-General's remedy.
A spokesman for Legal Ombudsman Kate Hamond said, It was vital'' that all possible loopholes were closed.
It is expected that the Law Institute will now drop an appeal to the High Court over the Court of Appeal's ruling.
Source: Fergus Shield, Age 10 Feb 2003
Comment:…that word “Retrospective”.
Lawyers and Brokers:
Ponzi scams originated in Boston in the 1920's by a man named Charles Ponzi.
Several of his the Aussie version of Ponzi scams created by dishonest Lawyers and Brokers and Financial Planners only ever offered approximately 1% or 2% above the current bank rate AT THAT TIME and only charged borrowers 1% or 2% above the usual bank commercial rates.
ASIC have disappointingly tried to deceive the public that the victims were chasing "very high returns." Was this for political reasons of the damage being too wide spread?
ASIC demonised the victims to mask dishonesty! The assertion of greed and chasing high returns is totally without substance.
Those that lost money handed the main bulk of the missing millions in 1994-1999. In 1994, bank rates were above 10%. The scamsters offered 1-2% above that figure.
When bank rates dropped to under 9%, many self funded retirees were forced to decide to apply for a pension OR live below the pension OR chase 1-2% higher to maintain the status quo.
Many cannot apply for Centrelink because Amanda Vanstone still determines that the victims are "deemed" to have the asset when they have had no income from the asset for five years and haven't been able to recover the original investment monies.
It is a shocking indictment of our regulatory system.
The regulators should have used their immense powers, already provided by Parliament, prosecuted the offenders in 1994 when ASIC first knew of the problems and that Ponzi Scams were raging Australia, faster than a speeding bushfire.
Over $700 million is missing. $140 million in WA alone. No state was left untouched from this insidious activity.
These scams attracted innocent, honest, hardworking ordinary Mums and Dads of yesteryear. They trusted the Advertisements, the Professional Associations and most of all the Regulators.
The "Code of Conduct" was used as a selling tool of integrity, which was never present. ASIC's very existence and its "monitoring" processes were used as an endorsement of the product.
Independent Valuers, Accountants and Auditors, Experts were used as a "bona fide" clearance of ethical standards which were farcical. Ask the regulators the vital questions: "when did you first know of these scams and what did your investigative staff do about the problems?"
Over 129 law firms were running these schemes. Over 20 broking firms were used as a "shop-front" and dozens of financial advisers and accountants fed clients into the vortex of loss of financial security - the very thing investors were assured would not happen because ASIC was watching.
Billions have been fed into the entire mess. The ads are currently showing 9-10% as they reach the next level of crookedness.
Anything over 8% is risky right now and possibly suspect. Due to lack of prosecutions those players are still out there preying on the innocent.
The scamsters claim: "we have not been prosecuted - so you cannot name us or we will sue."
The system has failed due to inept policies of "lets look after the industry first and the consumers can look after themselves. It is a sad state of affairs and none of us should remain complacent.
There are Nine finance sector investment scams currently raging Australia. Ponzi is only one of them.
The NSW Fraud Squad have identified fifteen. Each Fraud Squad in each state has had to place additional seasoned detectives on similar duties.
No one should seek financial advice from a financial planner, or lawyer masquerading as one, or broker, until the regulatory authority starts using its powers (bestowed since 1991 Corp law) for activities relating to "prescribed interests," and under the legislative provisions of "misleading and deceptive conduct."
Until the Federal Agency, ASIC, starts earning its $160 million dollars a year budget and adequately provides protection for Consumers and Corporate Australia and its citizens, the market place is unsafe in the finance/investment sector.
ASIC has a $212 million a year surplus, why cannot this be used to effect prosecution and reparation?
Both APRA and ASIC have been operating as a fee collection service for the Treasury.
In the name of good governance, that must cease immediately. Treasury has been using ASIC purely as a cash cow, earning a whopping profit of $200 million per year channelled back into Treasury coffers.
Until the Treasurer directs a much higher portion of its $360 million gross income into prosecuting some of these low-life's who would denigrate their own industry and impoverish ordinary Australians by their misdeeds, consumer confidence will be very low on the investment metre.
Further, Australia will never attract the overseas investment that a capital poor country needs.
Every Aussie should be outraged by these events during the past decade and the future of savings for the next generations are in grave danger.
The sad fact in all of this – it was utterly preventable.
Prosecutions in 1994 would have placed every "professional" on notice. Directors in handcuffs on the Nightly News Bulletins are always a disincentive, particularly to the white-collar brigade.
I have been warning my own members of all of the above for 8 years.
Those who know the above is true in substance and true in fact, are sadly those who have been fleeced whilst ASIC indulged in light weight "monitoring."
We need less monitoring, more compassion for those forced to sell their homes and a complete shut down of all these unAustralian activities and a raft of prosecutions. Round them up. The evidence has been collecting dust in ASIC's archives for far too long.
All comments on my communiqué should be directed to the man in charge of this mess: - Hon Peter Costello, Treasurer, Care of Parliament House Canberra, ACT.
Denise Brailey
Real Estate Consumer Association (Inc)
Level 4, Chancery House
37 St George's Terrace
PERTH WA 6000
Tel: +61 (08) 9225 2300
Direct Line: +61 (08) 9225 2318
Fax: +61 (08) 9225 2399
denise@imf.com.au
www.reca.com.au
Comment: Since 1994….we have been cheated!
My POSITION;
...Investment Fraud by a RECA member.
I have lost (at stake) $**,000 plus Interest since 1998.
This loss has created hardships and financial insecurity and the future now is uncertain. One might say….”you were greedy, or careless”? but I deny this - why single me out (and fellow investors) when other community sections are recognised as victims and compensated?
Rather I ask….” Were not those that defrauded us greedy”???
May I remind you of Rodney Adler, and Chris Cuffe and his $32m “golden handshake”!
This loss has now caused me to be a Social Security recipient, which is the very thing I have worked all my life to prevent. Taxpayers are now assisting in my income!
My belief is the following causes allowed the financial failures to occur:
These mortgages were promoted in Centrelink literature directed to retirees.
Should the above be acknowledged reasons for failure, either full or in part, the question arises “Where do we go from here, and how many others wish to join in 'fighting' for the return of their capital”?
The FACTS:
“The Aust. Securities Comm. (ASC) was established as an independent body in 1989. The aims were to protect the interests of companies and investors by providing information about companies, helping businesses to interpret the law and taking action against offenders”.
The ASC then, “succeeded in 32 or 41 cases a success rate of 78% which exceeded the target of 70%”. Source: Annual report.
In 2001-2002 “ASIC enforces and regulates company and financial services laws to protect consumers, investors and creditors”.
“Resolved more than 50% of public complaints, up from 37%.”
“92% of cases against individuals and companies successful.”
Regulating: Financial services, businesses, fund managers, stockbrokers, financial advisers and insurance brokers….“License them before they start operating” and “Investigate and act against misconduct”...... 246 new investigations.”
Source: Annual report. p10-13.
However the gaoling of only 69 offenders in the last 3 years (3 persons/year/state) is hardly a record of action against white-collar criminals. (P.Costello FT late 2002 on TV).
The Australian Institute of Criminology has found that fraud and white-collar crime cost the community up to $3.5 billion a year, far more than any other sort of crime (CM PW 16/ 7/02)
Other sources give a figure of $16 billion a year for company fraud (CM LB 26/5/00)
ASIC investigate 1 in 50 and gaol 1 in 250, of 8000 complaints per year. They have taken CIVIL action and therefore decriminalised the activities of brokers and financial planners. The Corp Law defines these activities as “criminal” and ASIC is reinventing the law…to go soft on white-collar crime.
Yet CIVIL offences are much easier to prove and would result in reparation, acceptable to most. (db)
ASIC said; In the last 10 years more than 100,000 investors have lost their life savings. They also said; “Read a chapter from our book 'Scams and Swindlers' about a Ponzi scheme that went horribly wrong and how 34 investors lost $6.5 million".
Source; www.asic.gov.au/fido/fido.nsf/byheadline/Ponzi+schemes?opendocument
The FOCUS; and most important point, the State and Federal REGULATORS failed in their duty to protect the public interest when it was clearly cognisant of the fact that these schemes were raging.
ASIC - led by the Treasury - shoved their responsibilities on to the Law Societies who ignored the entire issue. The Regulators must be held liable for the losses in the mortgage failure scandal.
To allow them to escape justice would be criminal indeed. Society does not deserve this type of Regulator, one which permits those responsible to walk away.
Those who were placed in charge have severely injured the Institution of the Public Service, and the Government, by their attempts to cover up the disgusting mess in the financial sector.
Schemes causing loss and under investigation.
Ponzi schemes - materialised with brokers, planners, accountants, valuers and solicitors dealing in mortgage investment on worthless land.
Promissory Note scams - higher, less secure offers by some commission agents.
Mortgage Investment Scams - proposals on over-valued properties.
Two-Tiered Marketing scams - selling/financing over-valued properties.
Property Syndicates - over-valued commercial buildings.
Certain Tax Schemes - over-valued business with questionable tax benefits.
Source RECA #6
Of course, mortgagees have different experiences in other States (the result is the same) and there may be even more reasons for the failures!
STATES issues:
Queensland;
This state has an Executive Committee consisting of John, Betty, Kevin and Jackie who are most anxious to hear from all other lenders and borrowers who have suffered losses.
Source: RECA #6
Western Australian; retirees of which an estimated 4000 people have been affected by the “Finance Brokers Scandal” have lost money - if not their entire retirement savings as a result of the immoral or criminal activity in the finance broking industry.
Estimates put the total losses across the State at between $100 million, possibly $200 million.
Source WA Gov't website.
Tasmania:
At least 1350 retirees have been affected with losses of $20 million of hard earned money.
Law firm, Piggot Wood & Baker had $12 million tied up in defaulting loans, belonging to 458 investors.
An Investors/Retirees Action Group has been formed with a committee of 10 and is gaining support in other States.
The average age of those effected is 76 years….will they see it thru??
Source RECA #6
South Australia: Alan Beaton of AIR is a reliable source, as are Dick and Rosemary O'Neill.
Alan Samm asks, “Where are the harsh penalties for those who abuse a position of trust?”
Over 180 investors lost $26 million when Growden's collapsed in 1997.
Source; RECA #6.
OTHER:
It is recognised, that Aust. political parties accept “donations” from individuals and groups. If the company fails….“should the parties (recipients) return the contribution?” This would apply to larger companies that failed eg HIH, OneTel, and Ansett etc etc.
And it's not over yet. The battle has just begun!
Actions are 'under way' in WA according to RECA (Denise Brailey) and it is she, that has made mortgagees aware of the cycle of Ponzi and fraud.
Actions proposed could be:
Join RECA and IMF in legal actions as the individual is unlikely to be able to support litigation alone…the 'fraudsters' know this! They are 'still in business' and awaiting another 'cycle' to begin.
Join a National lobby group or assist in forming another group for each State with affiliations to RECA.
Seek out politicians that are 'sympathetic' to Retirees causes, bearing in mind that those aggrieved will now be seeking government assistance and additional pensions. Perhaps ask them directly or in written format… “Where do you stand?”
Senator Nick Sherry and Senator Andrew Murray have both shown some interest!
Part X applicants by failed (Ponzi type) mortgagors should get LIFE, not just a few years. Some “crooks” have a LIFETIME of bad business and are still in operation, albeit at a lower level.
Do not subscribe to seniors groups that do not support senior's matters.
Put your money where your mouth is! (not wishing to be rude)
I'm advised that 20,000 Australians have lost their life savings, many would be retirees. In WA alone there are over 4000, so let's get together, strength is in numbers.
Fraud and embezzlement losses from private and public companies could be $20 billion a year (Bulletin GM 4/11/97)… retirees who are shareholders or superannuants are paying the highest price… would you agree?
With the International awareness being pushed by WHO and other large groups for Seniors health matters in retirement….Fraud and the resulting stress of managing on a lower fixed income does not contribute to a healthy mental state.
At this point in life we need to be relaxed and enjoy the benefits of retirement starting at say 65 years or earlier, thru to end of life which may well be plus 20 years. I and many others cannot start again.
THE BIG QUESTION ….to you, the reader!
The aforegoing is a combination of “thoughts” and facts taken from RECA and other sources….which 'begs the question” ?
1. What are you prepared to do?
2. Do you believe it necessary to…
(a) Conduct a survey?
(b) If so when?
(c) If so How?
3. What is your position, and will you be outspoken on “White Collar Crime”?
4. What is you position on 'good' Corporate Governance?
5. Are you prepared to act in the interests of the wider public?