If the following gives the impression I regard Tony D’Aloisio as the enemy, it is not the case.
Although I am very unhappy with ASIC's approach in many matters, I recognise the current constraints imposed on him. ASIC is a very sick organisation, and the unregistered/unlisted area is not the only area in which ASIC displays its major deficiencies of a long-standing nature. It is an impossible management task to work on a many major problems simultaneouly and succeed in a very short time frame. It is even more difficulat when one is saddled with a management that has to date proved incapable of solving the problems. It is unrealistic a judgement can be made on Tony D'Aloisio in less than two years. He needs at least that time to begin to turn ASIC into a respectable organisation.
However, leaving the victims of Westpoint, ACR, Fincorp, and Streetwise, etc., to suffer because of ASIC’s glaring incompetence is morally bankrupt.
THE MEETING.
ASIC ATTENDEES : Tony D'Aloisio, Jan Redfern, and Lana Jenkins.
WIG ATTENDEES : A.C. Tai, Liang Chen and Graham MacAulay.
Mr. D'Aloisio emphasised Westpoint Investors should not become over excited, as there were many unknowns.
Westpoint investors have every reason to believe these words. My first thought was if this is true, why hasn't ASIC launched prosecutions against the Westpoint directors, and the planners? Further, if these planners have misled investors, and can be sued, why have they not had their AFSL's removed? It just shows how inefficient ASIC is in the area of consumer protection, It is only in recent weeks ASIC has begun to ban planners involved in the Westpoint tragedy. This slowness to act has allowed them an almost further two years to continue looting and plundering investor funds. However, as the presentation was scheduled for an hour, and WIG had other unanswered questions for ASIC, I did not interrupt the flow of the meeting.
In the ensuing discussion it became clear ASIC had no clear outcome of any of the proposed Section 50 cases. Nor do they have any idea of the financial standings of the targets.
GM stated he had brought up the question of ASIC using the power of a Section 50 in the Westpoint matter more than once over twelve month ago with ex-Chairman, Jeffrey Lucy.
One of the areas from which it is hoped money will be returned is through the insurance policies of planners. GM mentioned that from time to time he speaks to IMF's Special Projects Officer, Denise Brailey. Ms. Brailey had told him over twelve months ago that the insurance policies were useless because of the escape clauses in the policies. He reminded Mr. D'Aloisio this was because the Government and ASIC, had failed to ensure Parliament prescribed the content of Personal Indemnity Insurance (PII) policies, thus depriving protection of investors.
Mr. Daloisio said if he were the CEO of an insurance company, to minimise the chance of others viewing the company as an easy mark, he would direct his staff to reject every claim. He stated ASIC was in a superior position to IMF because of the nature of the suing company. GM asked him if that was because he was going to get the Government to lean on the insurance companies. Tony D'Aloisio laughed and replied it was nothing like that.
Mr. Daloisio gave no indication of the amount of research on each of the parties involved, nor any knowledge of the capacity of the target to pay. It is one thing to prosecute lawbreakers, but it is a waste of time to litigate for financial reasons where the target has no money.
While one never knows the outcome of a court case until a decision is given, is it wise to risk valuable resources with so little knowledge?
Those excluded from any financial return of ASIC's Section 50 include :-
ASIC MIGHT act on Westpoint regulated products in the future, but there is no guarantee. The majority of these arose from rollovers from non-regulated products and under the Finklestein decision, the possibility of rolling them back into the original product exists for some. However, in such cases an nvestor must repay any monies received from the later product before the liquidator will perform the rollback. It becomes another unknown risk for most without anything to guide them - particularly when ASIC has not guaranteed to extend the scheme to regulated products.
Tony D'Aloisio's claim of 85% of coverage is a most peculiar statistic.
This scheme leaves me with a major intellectual problem: what is the estimated dollar value of litigation in which the outcome of the case cannot be estimated, and where is a case is won, the ability of the sued party to pay is unknown. Further how does one distribute the money fairly among the various Westpoint companies?
Only ASIC could have come up with such a convoluted and unfair proposition as a solution for a problem caused by its own incompetence. THERE IS NO DOUBT ASIC INITIALLY FAILED TO RECOGNISE THE WESTPOINT MEZZANINE SCHEMES FROM DAY ONE WERE UNREGISTERED (ILEGAL) MANAGED INVESTMENT SCHEMES, AND HAS FAILED THE INVESTOR ON EVERY OCCASION SINCE THEN. THE NEED FOR A ROYAL COMMISION ON THIS SITE MAKES FOR INTERESTING READING.
I tried to bring up the matter that ASIC should be paying investors back for that initial mistake. If a planner misleads an investor for any reason, then they are responsible for the losses incurred investor. Why is ASIC not responsible? Mr. D'Aloisio's answer was to the effect that if Government in power wants to do something he will comply.
Perhaps he was referring to policy matters, and if he was, is the policy of the present Government to ignore reality and refuse to look at the facts? Does it mean the present Treasurer vetoed the idea. Peter Costello has used ASIC as cash cow for a decade, and surely it is not unreasonable he fully compensate the victims of ASIC's mistakes from the almost $4 billion ASIC has returned to Treasury over the last decade. The only other conclusion is Mr. D'Aloisio is protecting ASIC by not bringing the matter up with the Minister. I would like to think that was not the case.
I note with great interest the claim ASIC MIGHT sue the auditor.
It is over twelve months ago since Jeff Lucy made the same statement. How much more time does ASIC need to make such a decision?
GM related how a WIG member informed him they gave additional private information to FICS than they gave to ASIC. Later, the investigator mentioned the information in a discussion. This breach of confidentallity incensed the member, who then demanded how the investigator had obtained this knowledge. The WIG claimed the ASIC investigator became very embarrassed. Jan Redfern expressed surprise and said, "That's very unusual! They usually come to us for information." Tony D'Aloisio requested I ask the member to write to him." Tony D'Aloisio requested GM ask the member to write to him.
This is a strange matter. I realise ASIC has investigatory powers, but FICS makes no mention of ASIC in their rules. The alleged adjudication is made only on the basis of the formally written documentation by the investor and the planner. The other question is why would FICS contact ASIC on adjudication matters?
I tried to raise the inadequacy of FICS. They are an ASIC approved scheme. Tony D'Aloisio showed no interest in the matter and commented they would be combining a number of external dispute resolution schemes into a single entity, which would work quite differently.
I can only assume that he has more pressing problems on his mind. Particularly when the organisation under discussion will not exist next year.
GM raised a current problem currently experienced by many of our members. The liquidators have different views on the return of promissory notes. Some demand the original (and won't return it), while others say a statutory declaration is sufficient. ASIC didn't know the answer and have agreed to contact me. It is another matter they will add to their website in the common question and answer area.
This might seem a trivial matter, but it again illustrates ASIC's inability to know what is happening at low levels in the marketplace. This type of information is necessary for the early detection and rectification of problems before they grow into monsters. The cost involved in effective monitoring is negligible in comparison with the damage inflicted on investors at a later date, and the cost of court cases in both money and valuable resources that could be better employed elsewhere.
The meeting then closed.