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From the SMH:
Watchdog turns up heat on Allco directors Danny John
September 27, 2010
.THE corporate regulator is closely examining the $263 million Rubicon real estate deal as part of its own inquiries into the collapse of Allco Finance Group in late 2008.

Investigators at the Australian Securities and Investments Commission are understood to have homed in on the transaction that saw Allco hand over $64 million in cash and 19 million shares worth $132 million to the group's then chairman David Coe, director Gordon Fell and Rubicon executive Matthew Cooper in return for buying the business.

The deal to acquire the 80 per cent of Rubicon that Allco didn't own at the time was originally worth another $65 million in total value when it was first announced in October 2007.

But such was the outcry from shareholders concerned about the related party nature of the transaction that Allco was forced two months later to reduce the amount to be paid in Allco shares. The revised terms were subsequently approved by Allco's investors but with a significant minority vote against.

The Rubicon acquisition was aimed at underpinning Allco's faltering finances. But the purchase coincided with a ravaging of Allco's share price amid the global financial crisis. The group subsequently collapsed under a mountain of debt 11 months later.

Evidence given to public examinations by former Allco directors to the group's receivers Ferrier Hodgson earlier this year indicated that Rubicon was heading for a ''small profit or loss'' at the time contrary to a more rosier earnings picture presented to shareholders.

Both Ferrier Hodgson and Allco's liquidators McGrathNicol have identified the Rubicon deal as an issue that warranted detailed investigation as one of the contributory causes of Allco's failure.

In their first report to creditors in March last year, McGrathNicol said the deal was one that could be ''potentially be regarded as an unreasonable director-related transaction''.

This has raised the prospect of the liquidators and the receivers seeking to recover some of the money paid out to buy Rubicon on behalf of creditors owed hundreds of millions of dollars.

ASIC has been monitoring the twin inquiries and quietly launched its own investigation last year to look at potential offences resulting from alleged breaches of the Corporation Act.

The watchdog recently agreed to fund part of the investigation by McGrathNicol after the liquidators disclosed that there was not enough money left within Allco to continue.

An ASIC spokeswoman said it was not in a position to comment on a continuing investigation.