Watchdog fears LKM founders will flee VANDA CARSON January 23, 2010
The founders of failed investment group LKM Capital plan to move to Europe and may never return to Australia if the corporate regulator can assemble evidence to lay criminal charges of dishonesty against them, a court has heard.
Rolf Koops, 49, and Sandra Martin, 48, appeared in the Federal Court in Sydney yesterday where the Australian Securities and Investments Commission argued the pair should surrender their passports and one-way plane tickets to London.
A solicitor for ASIC, Jonathon Moore, filed a statement by an ASIC investigator, Paul Rowland, who said the regulator was considering charging the company directors with reckless or intentional dishonesty for failing to act in the best interests of their mostly elderly investors.
Nearly 1200 debenture holders who invested in LKM Capital lost $63 million when it collapsed in August 2008.
Mr Rowland said he also believed the millionaires had sold all of their Australian assets, including the family home in Coffs Harbour. He said they may have transferred the funds overseas to avoid any future orders to pay damages to investors who lost their life savings.
Mr Roland said he needed four months to complete his investigation into several issues including where $7 million in dividends from the fund had gone; these were paid to the couple over the past four years.
Mr Koops, who was born in Sydney, has both an Australian and a German passport, and Ms Martin and their children have applied for European Union passports, the court heard.
The solicitor Harland Koops, who was representing his brother Rolf and Ms Martin, rejected the claim that they had sold their assets and transferred the funds overseas, saying there was ''not a scintilla of evidence'' to support such serious allegations.
Mr Koops said the pair had only ever sold assets in arm's-length transactions. They planned to move to London so Mr Koops could start a job with his sister's financial services company on February 2.
Mr Koops said his clients should not have to give up an opportunity to take up work overseas just because ASIC was too slow to complete its probe, which began in February last year. ''Very little has been done. They [ASIC] have been riding on the coat-tails of the receivers,'' he said.
Once its investigations are complete ASIC hopes to examine the pair under oath, which may trigger civil or criminal action. Mr Koops and Ms Martin offered to allow ASIC to question them under oath next week, before they are due to leave for London. They have offered to return to Australia to speak with ASIC later this year, provided the regulator gives them six weeks' notice.
The couple claim they have only $10,000 in the bank, and could no longer live in Coffs Harbour because the 1180 debenture holders who lost money in the collapse lived in the area. LKM Capital was the investment arm of the local law firm run by the couple.
The moves to stop the pair leaving the country came a day after the receiver of LKM Capital filed a civil suit for damages against them, alleging they are liable for breaching their duties as directors and misleading investors. The receiver alleges they breached their obligations to tell the trustee of the fund when their loan-to-value ratios exceeded 70 per cent.
The receiver had found instances where a loan-to-value ratio on loans to property developers had reached 740 per cent, and another where it reached 450 per cent.
ASIC also plans to examine whether the pair breached obligations to maintain sufficient liquid assets so redemptions could be met.
Justice Margaret Stone has res-erved her decision on the matter.
