1. Given ASIC's poor record, it is difficult not to believe making a profit is more important than protecting investors.

Perusal of the section Events by Date gives a plethora of instances where ASIC has failed to carry out its assigned duties.

Well-known advocate Denise Brailey approached ASIC with concerns about Westpoint issuing mezzanine products via Information Memoranda rather than full prospectuses. ASIC took no action on her warnings, and issued Westpoint with the no-action letter known as the "2000 Freehills letter", which allowed Westpoint to issue products using Promissory Notes.

On Channel Ten's David and KIM TV show of 05/05/2007, Denise Brailey claimed in 2001the Queensland ASIC Commissioner, in the presence of high level advisers, told her the Westpointproducts had been issued without a prospectus and people would lose their money.

1. If ASIC Queensland ASIC personnel knew this, why did ASIC not take any action to protect investors?

According to a document issued by the office of the then Labor Parliamentarian Graham Edwards, the West Australian Government wrote the first of five letters to Treasury/ASIC concerning Westpoint.  ASIC did not take action on any of them.

1. ASIC, in not disclosing both the contents of the letters and the reasons for not taking  action, prevented Westpoint Mezzanine Investors from making informed decisions.

ASIC Media Release 04 157 clearly states it believes that the promissory notes were in effect debentures and orders Westpoint to cease issuing them - despite the absence of any document countermanding the  no-action_letter_of_2000 as demanded by law.  

1.  Why did ASIC not follow the due legal process before taking action?
2.  Why was the investing public not informed of the no action letter?

ASIC took Westpoint to Court in mid 2004. All of the Westpoint Mezzanine Companies used the same model, and ASIC chose EMU Brewery and Bayshore Mezzanine as the test cases. The judge in the case directed ASIC to write to Westpoint investors in order that they might co-join the action. Ignoring the other 3800 affected investors, ASIC wrote to the 256 investors in the two companies. That document filled several pages with unintelligible legal jargon not understood by investors.

1. While it may not have been legally possible for only the investors in the two companies to  co-join the case. However, as the outcome of ASIC's action had import for every Westpoint Mezzanine Investor, why did ASIC not write a document, taking no more than two pages, to ALL Westpoint Investors, laying out the main points and their import in simple English?
2. Why did ASIC simply refer investors who rang them to contact their planner?
3. Mark Stewards claim that ASIC circulated what ASIC was doing and did not hear from any of them is false. The result of the test cases affected all investors, and ASIC only wrote tothe 256 investors of the tet companies. Further, many of the 256  investors ASIC did write to were simply directed to contact their financial planners for advice. In some cases, these  planners have now been "outed" by ASIC.

1. ASIC are the legal guardians for the market place. How could they have got is so wrong about the nature of the product - particularly when Brailey had warned them before the productsever came on the marketplace?
2. Immediately the judge made his comment, why did ASIC not carry out its role of protecting investors, and take immediate action to ensure th products were presented for testing?

1. KPMG is a very large, and respected, firm, but why is KPMG allowed to audit accounts if it must be directed in the manner in which it carries out its audits.
2. Is it the practice of senior ASIC personnel to contact auditing firms, and give additional directions to statutoryregulations on how they should carry out audits?
3. The SMH of 2006_06_13 states the 2004 audit was unqualified and that there were notes on eight of the companies. KPMG would later state those notes raised concerns about the viability of those companies raising public monies.
4. Why did ASIC accept unqualified accounts?
5. What action did ASIC take on these notes?
6. The same article claims KPMG contacted ASIC in early December of 2005 about its concerns. Why has ASIC never       mentioned this fact?
   
   With the exception of the 2004 accounts being unqualifified, neither Mark Steward or Jeffrey Lucy evr mention any of the above while under questioning at Senate Estimates Committees. The Senate Estimates hearing of 31/05/2005 is one instance in which they had every opportunity to do so. My question is, did Lucy and Steward commit perjury when they failed to mention any of the above - particularly KPMG's concerns?

The following two events of interest took place at the 23/02/2006 ASIC-WIG meeting (see Meetings).

1. I asked the then ASIC Chairman, Jeffrey Lucy, had ASIC written to Westpoint investors as directed by the court. He indicated he had no knowledge of the matter, and mention that was the second time he had been asked in the past week (Senator Sherry had asked him the same question at the Senate Estimates Committee Hearing of 16/02/20060. Not knowingthe answer, he took the question on notice). He still did not know the answer at the WIG meeting,  nor did he on the 7.30 Report a few hours later.
1. Given that Senator Sherry had asked him the question a week previously why had the head of ASIC notbothered to find out the answer to such a simple question? ASIC had written to the 256 investors of Bayshore and Emu brewery.

2. I asked Ms. Jan Redfern, ASIC's Senior Prosecution Officer, "How, as recorded in the ASIC Media Release 04 157, could ASIC legally demand Westpoint not issue any further promissory based products? ASIC has allowed these products since 2000 without query, and now, without reason, is demanding they cease issuing them?" She answered, "So we could take them to court."

   1. If ASIC had a valid legal reason for demanding the cessation of the issue of promissory notes, why did Ms. Redfern not give a direct answer? The simple truth is ASIC issued a no action letter to Westpoint in 2000, which was never rescinded.

    

1. Is it ASIC's role to "cat and mouse' with companies, or is its role to enforce the current laws as enacted by parliament?
2. Investors can only make informed investment decisions based on the available evidence. ASIC denied investors this opportunity when it did not immediately take action on non compliance with existing laws.

Tony is sounding rather hairy-chested about his new responsibilities. Asked why it had taken three collapses for the  commission to get serious about Westpoint-style schemes, he responded: "The simple answer is that I wasn’t there."[2008_05_12_Crikey]

1. This is a clearacknowledgement of ASIC's prior poor performance by no less than the ASIC Chairman! The article goes on to state the  ineffectiveness of ASIC in prosecuting corporate criminals. The criminal element of the financial marketplace knew ASICwould not move to protect investors.
2. What specifically did Tony D'Alosio have in mind that should have been done when he uttered those words..
4. Is it ASIC's role to protect itslf, or to protect the investing public?
5. >Considering the Storm, Opes Prime, Timbercorp, Great Southern, MFS, etc., collapses since his appointment as Chairman,  how effective has Tony D'Aloision  been?

 

In the trial of Neil Burnard  witness after  witness claimed Richard Beck was the  architect of using Kebbel Investment Bank as an all encompassing trading names for a  number of companies. Despite opposition from  within Kebbel on the basis it was not legal- including the compliance officer - he ignored all advice and  ordered the continuance of the practice. At the end of the  trial, Neil Burnard having been found guilty on all  eight charges, the Judge while waiting for an off court process to  finish, said to the Prosecutor. "I  presume this is the first of series of cases against senior personnel in Kebbel?" The prosecutor replied, "No we have other  matters going on in WA." To date, no formal  charges have been laid in this direction.[Trial Notes,

Summary, 2008_05_07_Redfern, 2008_05_23_MacAulay_Redfern),

Given that even the Judge believed the mountain of evidence in the case would mean a certain  prosecution (with a possile jail sentence of up to 7 years), why has ASIC not prosecuted Richard Beck?

A pre-trial event of some significance relates the following. In 2002, Ms Hoar’s supervisor issued directions for her to contact Kebbel Bank in relation to the use of the words boutique bank on their website. The Judge explained she couldn’t be sure to whom she spoke, because she used the de facto standard within APRA of replacing the early unimportant words at the beginning of a conversation with the word spiel. She thought it was Bernard, who blamed the website designer for the illegal use of the word "bank". As Ms Hoar wrote a full report to her superior, one cannot blame her. That record has disappeared from APRA’s records. The court rejected the evidence on two counts: she could not be sure to whom she spoke - and it was outside the period of the charges!

The trial evidence identified Richard Beck as the architect of the use of word bank.  It also recorded he couldn’t be dissuaded from its use. What was not stated in the trial is that Hansard records Jeff Lucy as saying the first time ASIC heard of Kebbel Investment Bank was in April 2005 when a complaint was made to ASIC. ASIC decided it was an APRA matter and passed it on to them. In May of the same year Beck suddenly changed his mind and changed all business cards and stationery and had all reference to Kebbel Bank erased from all Kebbel Office doors across Australia. APRA sauntered out to the Kebbel NSW Offices three months after the lodging of the complaint and found no ghen current evidence of the use of the word bank. APRA took no punitive action.

1. Banking may be an APRA domain, but the use of falsley claiming one is a bank in order to induce people to part with their  money in ta marketplace that is clearly an ASIC responsibility.
2. Why did it take APRA three months to arrive at the offices of Kebbel NSW?
3. Consider the following.
• Evidence at the Burnard trial indicated Beck's defiance against all advice to use the word bank.
• ASIC received a complaint in April about "Kebbel Bank", and passed it over to APRA.
• A month late. in May Beck has a sudden change of mind and changes the name, the stationery, and erases all evidence  of the words "Kebbel Bank" from all offices.
• APRA takes almost three months afte the initial complaint to arrive at The Kebbel NSW offices.  

    Do I have a suspicious mind, or was the timing of the above events just too "serendipitous"?

The background to the Karen Carey event mentioned in the previous item is as follows. ASIC took Karen Carey to  Court for not producing a report as directed under law. The truth was that ASIC had seized all  documents relating to the necessary company record without leaving her a copy. ASIC kept up the  pressure, and on arriving at the court on the appointed date, stated they were not proceeding  with the  case. ASIC gave no reason for its action. The reply from Jan Redfern, ASIC's Executive Director of Enforcement does not directly  answer my original question?

1. Why did it take ASIC so long to decide they did not have a case when they themselves had seized all records that would have allowed Karen Carey to respond to the original request.

During the period of the following communication exchanges with Ms McNally, I knew it was possible to  sue ASIC, however, at that time I was unaware that evidence of ASIC's incompetence/negligence is not  sufficient. What one has to prove is malfeasance - a very difficult thing to  prove. As I have said  elsewhere on the  website, it is incongruent in a democratic country that a publicly funded entity does not have to obey  the same rules as those it oversees. Her replies are just another example of ASIC's unwillingness to answer direct questions it  might find embarrassing.

In her communication of 12_02_2009, Ms McNally claims ASIC has previously answered my questions. I claim this is a deliberate lie as ASIC has displayed a pattern of not answering questions that would bring  discredit on itself. Where is the evidence ASIC answered any of them?

ASIC convened a mediation meeting for 15/06/2009 with a view to obtaining compensation for Westpoint victims. The total sum ASIC request from the 17 defendants is $559 million. It is unlikely any business would voluntarily pay out such substantial amounts of money willingly without having done anything illegal.

It emerged that many small investors assumed they were far better protected than they were - that a financialservices licence was some sort of guarantee of competence, and that ASIC kept a close eye on every potentially dodgy operator. Clearly, something was wrong. In August, ASIC chairman Tony D'Aloisio suggested debate was needed about the extent of investor protection. He pointed to the 1997 Wallis inquiry,which framed current financial regulations. ''If you read the Wallis inquiry, the report that underpins our whole powers, it's very clear. It says … 'we think the efficiency of the market will deliver such benefits thatoffsets the need for regulation'. Ten or 15 years later, when you've gone through what you've gone through,you say, 'Well, was that right?' [SMH article of 30/12/2009]

1. Where in the legislation indicating ASIC make any reference to the Wallis Report for direction?
2. Isn't it ASIC's legislated role to protect investors?
3. Tony D'Aloisio's statement loses any possible credence in light of the following : "Mr. Price,the Government whip, said another property investment company Westpoint collapsed in February last year owing $300 million to its 4,000 investors, while media reports said a further 10 companies were expected to go belly-up. Yet an Auditor-General's report found 99 per cent of complaints that ASIC received had been ignored and not investigated, he said  [9_National News_21_05_2007].

Senator Xenophon asked Tony D'Aloisio at the Senate Estimates Committee hearing of 01/06/2010 if ASIC had commissioned an external solvency report on Westpoint. He answered, "I cannot be sure. I think there was", before taking the question on notice.
Tony D'Aloisio has met with the Westpoint Investors Group (WIG)executive on an irregular basis since 1998. On each occasion he has been well acquainted with what has occured with each of the companies in ASIC's Section 50 Westpoint action. Given his contact with WIG, the nature of the action, and ASIC's exposure to another possible legal farce, Am I being being too harsh when I said I believe he must have known about the report, and its contents?

Mr D’Aloisio—ASIC has worked hard to recover money. We are now in the process where, I think of the $370 million or $380 million lost through liquidations and ASIC actions, investors have now received 79 somewhere in the order of $100 million [see Hansard copy, beginning line 77, Senate Estimates Committee Hearing of 01/06/2010 ].

ASIC's own website says that the total sum it sought from the 16 entitities in its Section 50 Mediation was approximately $549 million. To date (30/06/2010), there have been five successful actions. In the case involving MASU, ASIC has not disclosed the actual recovery figure. For that particular one, let us assume ASIC recovered the full , $12.5 million it sought [see MR 08-217]. The following table describes ASIC's revovery figure to 30/06/2010.

1. That implies the liquidators have recovered in the vicinity of $63 million if Mr. D'Aloisio's  figure of $100 million is correct is correct. Of the $63 million, $49 million came from EMU  Brewery (that figure arose becaue of the massive increases in land value in WA).
2. It would seem to me that after 2 years of "hard work", ASIC has manged to recover less than 7% of what it seeks.
3. Not all Westpoint investors will receive money from ASIC's actions. If ASIC cannot recover money from an entity, then the investors in that entity receive nothing. Further, even when ASIC is succssful, it does not mean the investors in the targetcompany will receive 100  cents in the dollar of their original investment. Victorian Estates is an example of the latter. ASIC sought $18.5 million and settled for $13.5 million. Had the target entities been prosecuted - and found guilty in a court, then investors would be entitled to a full refund of their capital, plus interest on monies lost.
4. While Tony D'Aloisio has spoken of ASIC's "hard work and success", I believe by his ommissions he has misled the Senate Inquiry.

ASIC has named KPMG as one of the 16 target parties in its Section 50 action involving Westpoint. At the heart of the matter is the quality of KPMG's audits of Westpoint companies. The current lack of publicy verifiable information in the matter damages the reputation of both ASIC and KPMG. The only matter on which both parties agree is the 2004 audit was unqualified. The only other known fact is KPMG's claim that the notes on the eight companies indicated any concerns they held in respect of Westpoint's viability as a going concern.

1. Why, in 2004, did ASIC accept unqualified accounts? Does this not prove laxity on the part  of   ASIC? 
2. ASIC has never acknowledged the veracity of KPMG's claim regaring the notes, nor have the rejected it. If KPMG's claim is  true, then why did ASIC not mention the existence of the notes, and their nature, in order to give a full and informative  answer to relevant questions at Senate Estimates Committees?