An interesting debate... what to call this?.A Ponzi, no, at...

An interesting debate... what to call this?.

A Ponzi, no, at least certainly not when the business commenced. However, in later years when sources of funding dried up there was definitely a reliance on new sales to support the operations running existing projects.

Dont forget, in 1996 money was raised at $9,000 per ha and land was bought at around $2,000 plenty of free cashflow. However post around 2004/5 when land prices started to move (remember the industry flew around then so lots of companies bid up land prices) land got to $5,000 pha or even $7k in some cases.

With no money from equity raisings, quasi debt (GTPG etc) and then too much debt (ie club of banks)it exposed a flawed model i.e. that MIS is not the cashcow many thought it was when the stock was 5 bucks. - it was cashflow negative. All the while 'second rotation' was too far away.

Of course diversification sounded good in theory but planting horticutlural crops was also hugely cashflow negative at least for the first few years but mosttly longer.

Dont get me started on cattle.

So ponzi or scam who cares - the fact is most are going to do their dough. Sure the ATO didtnt endorse the investment BUT it was a government policy decision to incentivise private sector investment to grow forestry.

The researchers, although paid $30k per report plus got their costs paid, put their name to it to say it was a good thing.

Not all financial advisors are stupid, some actually did their homework and still lost money advising on it - but which sectors didnt lose in the GFC?

Those who sold it under the GSS licence - did they do anything wrong under this structure? no not if the advice was appropriate for specific clients. But remember ASIC allows advisors to be licenced to give single product advice- that in itself is not illegal.

As for the employees, most thought they were doing the right thing, those that didnt will surely get exposed.

Scam, scheme, ponzi - call it what you will.

The only thing that matters is $2b of investments is basically gone - roughly $1b of tax refunds that the ATO thought (and was covered in Product Rulings) was going to generate assessable income in the future is lost

Australian plantation forestry which does make sense for all of us is stuffed for a long time - jobs, exports,rural communities, environment all suffer.

And lastly, the situation for all stakeholders is that the big banks will get all their money out all the while eroding what little value is left.

Sure, the regulators will run around and bayonet the wounded but miss the real point that this is a DISASTER.

The impact of which will be felt for years because unlike the collapse of most other investments - the Project Investors havent actually paid for what they invested - it is still owed to the banks and they arent gonna miss calling it in!!