Tiwi Islands – Northern Territory

July 2009 GSL’s John Young Accused – Tiwi Forests Sacrificed – For What…?

Posted by tiwiccbb on July 3, 2009

http://www.abc.net.au/news/stories/2009/07/01/2613976.htm?section=business

Senate probes Great Southern collapse
Posted Wed Jul 1, 2009 4:05pm AEST
Updated Wed Jul 1, 2009 4:03pm AEST
A former board member of the defunct Great Southern Limited has told a Senate hearing that he resigned in 2005 because of serious concerns about the company’s lack of corporate disclosure.
The Perth-based company went into voluntary administration last month with $700 million of debt.
Jeff Mews resigned as a non-executive director of the rural funds manager in 2005, after a board meeting where he learnt that the company’s first plantation would not meet the predicted harvest yield.
Mr Mews also expressed concerns about director John Young’s decision to sell $32 million worth of shares before the forestry issues were disclosed to the board.
In the same letter, Mr Mews wrote that the company should disclose that it would make a loss on the first plantation harvest.
Former chairman Peter Patrikeos also resigned in 2005 because of concerns about corporate disclosure.
He told the hearing he was torn between his obligations to Great Southern shareholders and growers.

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http://www.businessspectator.com.au/bs.nsf/Article/Inquiry-hears-suggestions-of-insider-trading-at-Gr-pd20090702-TJN2X?opendocument&src=rss

3:17AM, 2 Jul 2009
Inquiry hears suggestions of insider trading at Great Southern
An inquiry into the collapse of Great Southern has brought up suggestions of insider trading against former chief executive John Young, management misleading auditors, and related-party benefits not being disclosed, according to The Australian Financial Review newspaper.
The evidence, revealed at a Senate inquiry, was given by former non-executive director Jeffrey Mews, who accused Mr Young of withholding market-sensitive information from investors and the board.
The paper said Mr Mew testified that Great Southern failed to disclose losses from its 1994 forestry project that were known to management when Mr Young sold his shares as part of a capital raising by the company.
Receivers were appointed to the timber plantation and cattle project manager in mid-May after the group’s banks declined to support its restructuring plans.
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http://www.theaustralian.news.com.au/story/0,25197,25594836-601,00.html

Director John Young in Great Southern debt deal
Adele Ferguson and Anthony Klan | June 06, 2009
Article from: The Australian

THE founder and former managing director of the failed $3billion Great Southern agribusiness empire could make millions of dollars from a deal completed weeks before the company was placed into administration.

The Weekend Australian can reveal that John Young, a current director of Great Southern, and his wife Sheila funded a $2 shelf company that purchased a book of loans with a face value of $25million from the group for $9million.

As part of its continuous disclosure obligations, Great Southern informed the ASX on April 8 that it had sold the loans, which had changed hands at a 62 per cent discount to face value.

It would have been more transparent for shareholders had the company revealed in the announcement the identity of the purchaser of the loans or the entity providing finance to the purchaser.

Documents obtained by The Weekend Australian reveal that a $2 shelf company called Javelin Asset Management Pty Ltd was assigned the loans on March 31, the day the company was registered. The directors of Javelin are Robert Charles Gould and Mark Drewett Kendrew, who hold the two $1 shares issued by the company.

On the day Javelin was registered as a company, a fixed and floating charge securing a prospective amount of $10million was lodged over its assets, in favour of a company called JSJA Holdings Pty Ltd, the shares in which are owned by Mr Young and his wife. The charge documents secure a convertible loan agreement between Javelin and JSJA. Such agreements customarily enable all or part of the loan to be converted into shares in the borrower at the option of the lender.

As revealed by The Australian, Mr Young, who founded Great Southern in 1991, was paid a $2.013million “retirement benefit” when he stood down as managing director in February last year. In the year to September, Great Southern reported a $63.8million net loss, a 15 per cent drop in revenue and a 24 per cent fall in managed investment sales to $444million.

The company was swept into receivership last month owing 43,000 mum and dad investors more than $2billion. Mr Young floated Great Southern in 1999 at about $2 a share. Those shares reached $5 in 2005.

The fortunes of Mr Young, an accountant, peaked in 2006 at $200million, according to BRW’s Rich 200 list.

Javelin’s Mr Gould refused to comment on whether his company had purchased the $9million of Great Southern debts, or who had financed the deal. Mr Gould also refused to comment on any involvement by Mr Young, or to say whether he knew Mr Young.

“I have no comment to make,” Mr Gould said. “We make no comment about the affairs of the people we deal with. We work for all sorts of people.”

Mr Gould joked that the phone calls he had been getting from journalists were reminiscent of State of Play , the new film starring Russell Crowe, who plays an investigative journalist.

“It’s a great movie,” he said.

A website indicates that Javelin Partners is a private equity company. It says Mr Gould and Mr Kendrew are chartered accountants.

“Javelin Partners conducts all engagements under strict confidentiality arrangements,” the website says.

The phone number listed on the site is disconnected.

Mr Kendrew did not return calls to his mobile phone.

Repeated attempts to contact Mr Young were unsuccessful.

Great Southern director Mervyn Peacock declined to comment when contacted by The Weekend Australian yesterday.

“I can’t comment,” Mr Peacock said. “You are going to have to direct any questions to the company.”

Deloitte confirmed that it organised the sale of the deeply discounted debts to Javelin. It is understood Deloitte was aware of the link between Great Southern director Mr Young and the purchaser of the discounted debts, Javelin.

Javelin wrote a letter to Great Southern investors on May 6, the day before Great Southern went into a trading halt, informing the agribusiness empire that it had to pay its loans to Javelin.

If the investors pay these loans in full, the scheme that involves the purchase of the loans at 38c in the dollar will result in a profit of more than $15 million to Javelin.

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http://www.thewest.com.au/default.aspx?MenuID=3&ContentID=142993

Great Southern bosses harvested nearly $44m
21st May 2009, 6:00 WST

Great Southern’s bosses have pocketed nearly $44 million since the failed company’s 1999 float.

The company’s annual reports show its top executives — initially classified as those paid more than $100,000 a year — received close to $44 million in base salary, bonuses and scrip in the 10 financial years to September 30 last year.

Aggregate executive pay for the 1998-99 year was just $550,000, but pay levels rose as the company expanded its management team and ramped up its business.

The past five years were particularly lucrative, with combined executive payments totalling $34.7 million as Great Southern sold $1.8 billion of MIS products.

The executive team, made up of executive directors and specified senior managers, peaked at 10 last year when they shared $5.7 million, down from a record $9.3 million in 2006.

One of the biggest beneficiaries of the company’s rapid-fire expansion was co-founder John Young, who established Great Southern with microbiologist Helen Sewell in 1987.

Mr Young took home less than $180,000 in 1999 but the pay packet rose to $586,099 in 2002 and then skyrocketed to $2.4 million in 2004 with the help of a $1.4 million bonus.

However, Mr Young has lost out on his 8 per cent shareholding in the company, which is worthless in the wake of Great Southern’s collapse at the weekend.

His shareholding was valued at $249 million when the group’s shares peaked in March 2005.

The company’s fall comes despite the impressive credentials of Great Southern’s seven-member board, which boasted well-known corporate players with backgrounds spanning investment banking, funds management, superannuation, taxation and law.

Mr Young stepped down as chief executive in February last year after holding the top job for 20 years but retained a non-executive directorship.

His replacement, long-time executive director Cameron Rhodes, is a former director of Pricewaterhouse-Coopers’ business services division, while Phillip Butlin — the other executive on the board — helped float Great Southern while with Macquarie Bank.

Chairman David Griffiths is also a former divisional director of Macquarie, Alice McCleary is a member of the Takeovers Panel and Merv Peacock is a former investment officer at AMP Capital and a one-time member of the Australian Stock Exchange’s corporate governance committee.

Former Freehills Perth managing partner and one-time West Australian Newspapers chairman Peter Mansell rounds out the board.

Mr Mansell is also a director of the cash-strapped base metals miner, OZ Minerals, which is being taken over by Chinese group Minmetals.

RACHEL DONKIN

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2 Responses to “July 2009 GSL’s John Young Accused – Tiwi Forests Sacrificed – For What…?”

  1. tiwiccbb said

    http://business.brisbanetimes.com.au/business/great-southern-project-manager-insolvent-report-20090609-c27x.html

    BRISBANE TIMES
    Great Southern project manager insolvent: report
    Danny John
    June 10, 2009

    THE corporate offshoot charged with running Great Southern’s managed investment schemes is insolvent and has no cash available to complete its forestry and horticulture projects.

    Investigations undertaken by McGrathNicol, the receivers of the collapsed timber investment company, have indicated that the responsible entity of the Great Southern group will have to be wound up because of its financial position.

    Great Southern Managers Australia (GSMA) is understood to have insufficient reserves and no chance of securing additional funds to continue in its role of managing the group’s 45 schemes. GSMA was the body with direct responsibility for the schemes that over the past 10 years raised $2.3 billion from 43,000 investors attracted by the tax advantages of the group’s managed investment projects.

    But Great Southern’s slide into administration last month after running up debts of $600 million has left the group’s investor growers facing an uncertain future, especially as GSMA is no longer in a position to support their schemes.

    Their situation mirrors that of the 18,500 investor growers in the rival managed investment company Timbercorp, which collapsed in late April owing creditors $900 million.

    Timbercorp’s responsible entity was found to be “hopelessly insolvent” by the administrators, KordaMentha, which estimated that at least $300 million in new capital was required to maintain its 24 almond and olive tree growing schemes.

    Both McGrathNicol and Great Southern’s administrators, Ferrier Hodgson, are now assessing the financial status of each of its projects to work out which are viable and which have little chance of surviving.

    They will eventually fall into three categories: those that can be harvested and even produce a decent return for their investors in line with original forecasts; those that may still be viable with the support of a new and financially strong responsible entity to manage them; those that will have to be wound up.

    The oldest of Great Southern’s schemes, including its 1998 and 1999 pulpwood forestry operations that are about to be harvested, are the least affected by the company’s collapse.

    But the prospects of those that followed, and in particular its most recent schemes, is less certain with some investors now having to face up to the fact there is little value left in their horticultural holdings.

    The receivers and adminis-trators hope to be in a position over the next three months to give a view about the best outcome for each scheme. However, Great Southern’s complex financial structure and the multitude of investment schemes means that it might not be before the end of the year before investor growers get to vote on what should happen to their individual projects.

  2. tiwiccbb said

    http://www.investordaily.com/cps/rde/xchg/id/style/6975.htm?rdeCOQ=SID-3F579BCE-98569F61

    Great Southern class action edges closer
    Decision imminent
    By Alice Uribe
    Mon 20 Jul 2009

    Slater & Gordon edges closer to commencing a class action against Great Southern and the advisers who recommended Great Southern investments.

    Law firm Slater & Gordon has edged closer to commencing a class action on behalf of investors in the failed agribusiness company Great Southern.

    “We feel like we are coming close to being able to go to market with a proposal to go forward, but we are still seeking active registration of interest for victims of the Great Southern collapse,” Slater & Gordon associate Ben Whitwell said.

    Whitewell told InvestorDaily that while the firm hasn’t commenced any action, it was investigating current avenues of recovery for investors.

    “A good number of people have called us, but we are still looking for more people for a better picture of what is going on,” Whitwell said.

    Slater & Gordon was also examining the role of advisers who recommended the Great Southern investments, particularly whether remunerations were adequately disclosed to investors.

    Great Southern investor action group Save My Trees was aware of the possible class action.

    “I know that they’re exploring the possibility of a class action. But that’s detracting from what people should be focused on,” Save My Trees chairman Rob Burns said.

    “We’re going to avoid court actions unless required.”

    Instead, Save My Trees has placed emphasis on lobbying the government so that it has an understanding of the issues and identifying an opportunity for replacing the current responsible entity Ferrier Hodgson.

    However, Whitwell said Great Southern investors may need to look at the possibility of action.

    “With collapses such as Westpoint and Fincorp, the investors generally need help in commencing proceedings,” Whitwell said.

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