A lot of info can be spread over long period like this MIS...

A lot of info can be spread over long period like this MIS scam,and I reckon it will be on going,especially in the the light of the G20 summitt in the USA.You may ask what does that have to do with the investment in the plantations?,you would be right asking,may I suggest in carbon credit offsets $8.00 per ton minium and that is cellar door price
Based on what?----U let me know, now read on


SELECT COMMITTEE ON AGRICULTURAL AND RELATED INDUSTRIES - 31/08/2009 - Food production in Australia
TOWNSHEND, Ms Janette , Director-Accountant, Townshend Prudential; and IWC Woodlot Cooperative
CHAIR —I now call Ms Janette Townshend. Thank you very much. Do you have any comments to make on the capacity in which you appear?

Ms Townshend —Yes. I am a financial planner, Townshend Prudential, and also I have headed up the IWC Woodlot Cooperative.

CHAIR —Thank you very much. Would you like to make an opening statement?

Ms Townshend —Before I get started on the cattle MIS in particular, which is part of Great Southern, I would like to make a point about the land: it probably needs to be looked at nationally. UK companies are currently looking for a lot of land in the Ukraine and also I believe in South America and Guatemala. It is an important source for the future, not all of it is marginal, and there may be uses even for the marginal land. So leaving that aside, I would like to get on to the cattle. With the cattle project, you would lease a herd of cattle. The progeny belonged to the investor.

CHAIR —This is Great Southern?

Ms Townshend —This is with Great Southern. The important point here is that the manager had a responsibility to tag the cattle and advise all the investors that that was their property. The cattle identification and management project is in question. I have handed a prospectus in to that effect. People did get a livestock report at the end of the year and they did get a small return on their project. However, they got a very measly return and a lot of questions were asked. Eventually, they decided to do Project Transform. The investors were willingly or unwillingly put into a share instead of having title to their cattle, even though they did all have a specific title and ownership. They were very angry at this and we got a lot of calls as a consequence.

Then we looked at the number, the return, and what was happening with the cattle and things began to look wrong. As a consequence of that, we have had a number of calls telling us that perhaps in fact the cattle identification was not done properly. It gets worse than that, to the point that we were being told that there were problems with the tagging. I went on ABC Radio and after that we had a few mystery callers tell us all sorts of things were going on: tags were being removed off the cattle; they were being swiped through several times; the cattle in some cases did not have to be there.

We had another caller ring up, who said there were a lot of NLIS tags thrown down three different wells in Moola Boola. I reported this to the police. The police confirmed that they had a source that told them aviation fuel was used to try to burn these tags down the wells. This opens up a lot of alarming questions as to what happened to our property, what happened to the money we put in for the leased cattle and the progeny of those leased cattle. I alerted police—the various stock squads—as much as I could.

In one instance the police officer told me that the dogs had been barking for years and that Sterling Buntine was moving cattle all around Australia and getting most of it through the Port of Darwin where indeed they did not need NLIS tagging. As a result of that, his own cattle may have been mixed up with the cattle belonging to the investors. I have alerted the receivers, without a response. I alerted them prior to sales and said the title to the cattle was in question. As a result of that, as a receiver and liquidator, they were not in a rightful position to sell that property and a full investigation needed to take place.

I believe that has not been done and I do believe some people are looking into it but the issues are still there. If there is no legal title, then the receiver could not sell and he could not keep those proceeds. I do not know what has happened with the proceeds from the sales, but we have a lot of issues in regard to the cattle. They took financial planners out to have a look at the cattle, to see how well run and looked after they were, and it would be someone else’s cattle or the cattle would be shown again to make it look like they had more cattle.

CHAIR —How would they go out? Was that by road or air?

Ms Townshend —They flew them down to King Island and showed the financial planners the cattle farm, fed them lobster and make it look very professional.

CHAIR —You are not referring to any of the Northern Territory properties? This was on King Island, was it?

Ms Townshend —I am sure they flew them all around Australia, but mainly down there. We were assured that the progeny were going to be tagged properly. I do not believe the NLIS tags were tagged properly. I also alerted the Department of Primary Industries. They told me that it was not our property and as a result of that they did not investigate and have not stopped any sales; but obviously the progeny belongs to the investors and it has gone. The returns were abysmal and there were no proper explanations. I believe Project Transform was done just to cover up the whole mess. They only did the cattle project for two years, 2006 and 2007. Obviously there was no more done after that. I believe Sterling Buntine is now handling the matter for the receiver.

CHAIR —That is McGrathNicol.

Ms Townshend —Yes, yet he is in fact the person who was the manager at the time, so I do not feel he is the appropriate person to be handling the sale of the stations and the cattle.

CHAIR —He actually is the guy who leased country back to Great Southern to run. He was put in charge of managing. As I understand, he is a brother-in-law of the overall manager Mr McLeod—just to make sure that I have this right and it is the right Mr Buntine, because there is a large family.

Ms Townshend —Yes.

CHAIR —He is the brother-in-law of Mr McLeod and he was put in charge of the actual on-ground management. As I understand, on a lot of the bigger stations like Wrotham Park they got rid of a lot of the staff and brought in their own contractors.

Ms Townshend —Yes.

CHAIR —And the money was flooding into Great Southern and they were getting that much money in that they had to go out and get more cattle. He then bought property and leased it back to Great Southern to run cattle on. This is the same Mr Buntine?

Ms Townshend —It is the same Mr Buntine, yes.

CHAIR —Then when things went belly up, they started to recompense him with, instead of lease money, stock, which begs the questions: who valued the stock, who counted the stock and where are the stock?

Ms Townshend —All those things are exactly correct. I take it on board. There was also another situation in King Island where a caller rang up and said he had bought a property called Dinibili from Great Southern. So even though he was a manager at long arm’s length, he has bought the cattle and the cattle station, which I believe was not advised to us as investors. He was later forced by the banks to sell that property. He also had another property along with it in King Island at the same time. I do not believe anyone turned up to the auction. There were no bids. Subsequently, Great Southern bought it back for $20 million plus, and it was paid for with cheap cattle. I would ask: whose cattle? Were they ours? We do not know. Once again, this was a caller that rang up and told me that. He mentioned the name of a Brad Higgins from the Commonwealth Bank who should be questioned regarding that.

I believe we put in a proper police report to a Terry Hanley who once again, as I said, has confirmed that there were problems. I do not know how far his investigation has got. The important things are the legal title issues and the fact that McGrathNicol have continued to ignore us and go on and conduct their receivership with what is not their property. I do call for their removal and I feel that we need to re-examine, like Senator Milne has said, a solution to the whole mess, because it comes from so many different angles.

One of the important points I want to make is about the tax deductions and the tax side of it. Yes, it was a driver to make people invest, but wanting an income stream in retirement was certainly also a driver. There were other reasons why people would invest. As a result of that, the taxpayer is also a creditor of the Great Southern scheme. The taxpayers of Australia are all creditors. They are owed money and I put the situation to you that doing nothing will cost the taxpayer even more because the investors have write-offs still that will go on for years. A lot of them are paying back loans with nothing to show for it.

They will be writing those off as deductions. The taxpayer has lost income from proceeds of the fruition and the sale of these products. It will go to $10 billion plus easily. That is a far greater cost than not looking at the land. Therefore, I brought out my first comment on what is happening internationally with land—having a look at the marginal land and saying, ‘Well, it is a loss.’ We have got some loss leaders there; but getting the good land and perhaps rehabilitating some back to cattle and some to trees and carbon credits, which belong to the Australian people.

CHAIR —Just to get it on the record, is it fair to say that Townshend Prudential Pty Ltd—are you a financial planner?

Ms Townshend —Yes. I have an AFS licence.

CHAIR —Would you have recommended investments in the cattle scheme to some of your clients?

Ms Townshend —Yes, I did.

CHAIR —Can I just take you through and you tell me when I am wrong.

Ms Townshend —Yes.

CHAIR —My understanding is that a drove—I will declare an interest. I know a bit about cattle. I have plenty of hungry ones at the present time—was $5,000 for four cows, leased for seven years.

Ms Townshend —Correct. Yes.

CHAIR —To put an approximation on it, you paid $5,000 upfront and you got a cow of unknown age, unknown pregnant state, in an unknown destination.

Ms Townshend —No. You got a stocking guarantee that they were—

CHAIR —But where does it say that they are pregnant? It says in the glossy brochure—

Ms Townshend —You got a stocking guarantee within the prospectus.

CHAIR —Yes, but it does not say where they are. A lot of people that I spoke to thought they were on King Island.

Ms Townshend —In the product ruling they had to say on what farm the cattle would be on.

CHAIR —Did they?

Ms Townshend —I noticed very rarely, in some.

CHAIR —I have not spoken to anyone—

Ms Townshend —Correct.

CHAIR —not one person—who knew where their cattle were.

Ms Townshend —I have only found one out of looking at them.

CHAIR —I will take you through it. So for $5,000 you get a lease of a cow for—

Ms Townshend —Seven years. Yes.

CHAIR —So with the financials in, that is $1,250. That is a couple of hundred dollars a year you are paying for the lease of the cow.

Ms Townshend —Yes.

CHAIR —With your financials in. The trick for a lot of investors was that they actually thought it would be 100 per cent calving—you know, King Island, branded Black Angus or some damn thing. But instead of that Wrotham Park, as an example, was bought—there was a $10 million spotter’s fee, I understand, for Mr Buntine and his people for spotting the four properties for Great Southern.

Ms Townshend —Yes, I understand, a very hefty commission.

CHAIR —God help us! I wish I had have been in on the spotter’s fee. I could have got them some better places. The point I am trying to make is that you were never going to get any money out of this. For $200 a year you got a cow. The average calving rate in the Northern Territory is between 50 and 65 per cent. But just say it is 50 per cent, which is the calving rate they established for the first year. I do not know how they established that, by the way, because my understanding from neighbours and people living on Wrotham Park was that the muster was not complete. There were lots of mickey bulls et cetera. It was a very quaint operation because it was contractual and no-one seemed to know what was going on. So from the cow you have leased you get half a calf per year at 50 per cent rate.

Ms Townshend —That is a lower ratio than what was around in 2006. They were talking more 85—

CHAIR —It was 60-odd per cent in the next year.

Ms Townshend —Okay.

CHAIR —The first year 50 per cent—but just for easy working. So say for $200 you got half a calf, for which you have paid $200 to lease the cow. Then you have to give 45 per cent of the net value of the calf after costs out to the manager. But just say there was not much net and you got $100. So for every cow you have leased for $200, the best you can get back is $100. If you got 100 per cent calving you would not even get your money back because it is net costs. So the thing was doomed to failure from day one.

What in fact has happened to a lot of these cattle—and I know because I poke around the bush—is that there was a hell of a dry time up there and they ended up on a place west of St George there and ended up in the Dubbo saleyards in pretty lousy condition and sold for a song. Of course, the principal behind this for the shareholder is the management fees et cetera, not the return on the investment for the investor. So would it be fair to say that, in retrospect, if people had have studied what this was all about, you would have come to the conclusion that you could not possibly have made money by investing in these things, just if you got your four cows—and the herd was average. So if the cow died calving or got bogged in a dam or somewhere, they average it across the herd. But just for four cows, $5,000 for seven years, how the hell would you have ever made money?

Ms Townshend —You sold the progeny. So you made money off sales.

CHAIR —Yes, but you had to give 45 per cent of the net value of the calf. Bear in mind up in the north—it would have been different if it was all on King Island. King Island would have had to have been a big island. But it is not. It is in the Territory, it is up in the Kimberley et cetera where you have got lower calving rates. In a lot of that country they do not get a complete muster. There are no boundary fences. In a lot of the country they do not even take the bulls out because the management problem is just too big. So what they generally do is calve them in the wet, January-February, and they have to get them weaned before the dry low-protein feed comes along in September-October. So at seven months they wean them. I was being generous saying the calf would be worth $400 at weaning. They are probably worth $300. Then you have to cart them to hell somewhere to sell them and follow them on et cetera. You were never going to make money.

Ms Townshend —Possibly. The progeny were all yours, depending how many you had. I do not know how they were going to keep track of all of them.

CHAIR —Just to keep it simple, if you got half a calf per cow—and we might have got two-thirds of a calf per cow—

Ms Townshend —Yes, it is reducing. I take your point. It is 50 per cent gone.

CHAIR —and then say 50 per cent of the value of the calf goes for the management of the calf, so you get 50 per cent, so you get one-quarter of one calf per cow at 50 per cent and, if the calf is worth $400 that is $100, for which you have paid $200.

Ms Townshend —That is fairly bleak. We were taken to King Island. Wrotham Park was not even bought then.

CHAIR —Forget about King Island. I agree that the statistics—I cannot see why you would not get a 95 per cent calving, especially if you preg tested your herd.

Ms Townshend —Yes, we were working on a higher—up to 90.

CHAIR —But we are not. The bulk of the cattle are up here, not only on their own places but just leased. One bloke that I have been in touch with leased them 1,000 cows, which now he cannot find. He thinks they were sent to the Northern Territory somewhere. This could be the greatest cattle scam of all time.

Ms Townshend —Absolutely. We had to rely upon the independent management report and their experts. In regard to cattle or the looking after of cattle or anything like that, being a produce area, which was something that we had to take at their values; what they said was the likely outcome. So we were not told that.

Senator MILNE —You indicated earlier you were advising clients to go and invest in this scheme. Given what has been said, what sort of due diligence did you do about the likely returns, or did you just think that King Island was symptomatic of the whole country?

Ms Townshend —Over a seven-year period of time we felt that there would be a growing effect over the full seven years, with better herd, better stock, prices of beef. This is what we were told and this is what we believed would happen, with the sales increasing to Japan and America particularly, and the price to Japan going up. We believed that there would be a big impact.

Senator MILNE —So you basically just believed the promotion of what they told you? And they took you to King Island too, I presume. King Island must have done well out of all this tourism and visitation.

Ms Townshend —There is a fair amount of risk in most farming and I think people took that into account too. We also believed that the Chinese market might come along, with the increase in beef consumption in China.

Senator MILNE —It sounds to me like there was a lot of promotional hype which was believed, without any real due diligence on the ground, on the basis of the prospectus and that a lot of investment decisions were recommended on the basis of not much other than a promotional brochure.

Ms Townshend —I think it was the various types of cattle that they were bringing in, too. There were a lot of different types of cattle. They were bringing in some more with the marbling effect for the Japanese and they were going to use skill in that area as well.

CHAIR —Where were they bringing them in to?

Ms Townshend —Basically in the southern regions. They had mapped the northern and the southern regions for various cattle.

CHAIR —But all but 14 per cent of the cattle were in the north. All but 14 per cent of the cattle were Brahman-cross cattle, which are not into the marbling business.

Ms Townshend —Yes.

CHAIR —This was a complete con, in my book.

Ms Townshend —Yes.

CHAIR —The bulk of the cattle were on places where it is very difficult to get a muster. One of the big pastoral buyers went to buy one of these places since they went belly up and had a flyover and said, ‘The cattle are not there.’ The guy that was in charge of the RSPCA, as it were, making sure they were fed and watered, said he was paid a big lot of money to go around and make sure these cattle were being looked after. He tells me he might have seen 10 per cent of the cattle, because when you go to a million and a half or a two million acre property, you go to the water point and if the cattle are there having a water you will see the cattle; otherwise, you will not see them.

Ms Townshend —Right.

CHAIR —How will we ever know whether the cattle that were leased actually existed?

Ms Townshend —That is 100 per cent true and as investors we are not expected to go to these farms and check them out or know they are actually there.

Senator MILNE —But as a financial adviser. You would expect, as a client, that the financial adviser might have a bit of a clue about where the cattle were.

Ms Townshend —In the beginning we did. In the beginning it was different. We went in as a new project—2006; first time up. We went in on face value when we first went in. We all did our due diligence. It only lasted for two years.

Senator MILNE —If you did your due diligence—but it seems to me that ‘101 Due Diligence’ would tell you where the cattle were going to be.

Ms Townshend —They were on King Island at that point.

CHAIR —That was when they bought Environinvest.

Ms Townshend —No, that was later.

CHAIR —Oh. Righto.

Ms Townshend —After that they bought Environinvest.

Senator MILNE —I am astounded. How big do you think King Island is?

Ms Townshend —No, this is from inception, when it first started. The project got very big after that and then it stopped. In the initial stages it started up on a fairly small scale.

CHAIR —To explain that, they were not aware of the amount of money that was going to flood into the scheme.

Ms Townshend —No.

CHAIR —And my understanding—from people whom we have requested to attend these proceedings, by the way, and who have not responded yet, so we will deal with that in due course—was that there was such a huge response in investment income which they did not want to send back to the investors that they suddenly thought, ‘We’d better go north.’

Ms Townshend —They started buying up cattle stations and it got out of hand very quickly, but it was not the case in the beginning, so that is pre Wrotham Park.

CHAIR —As an investor and financial planner, when were you made aware that this was not just some tiny black Angus operation on King Island? When were you told that it was in fact a lot of country? And I have been there—unlike most people in this place—on a horse, riding around some of this country. It is impossible to get a 100 per cent muster. When they did the TB eradication program up there, we would fly over and shoot the ones you could not muster to try and get a clean muster. This is very difficult country to manage.

Ms Townshend —Absolutely. We were given independent cattle reports and the reports were all glowing. We just had to survive off those. It was not until Project Transform that we began to question what was going on.

CHAIR —Could I take you to Project Transform. For those who do not know, this was the proposition, when the whole show was going belly up, to get the cattle back. Mind you, I have not spoken to any investor who could tell me where their cattle were. You have spoken to one person. So they said, ‘Well, we’ll buy the cattle back and we’ll give you shares in the company.’

Ms Townshend —Yes.

CHAIR —They had to, as I understand it, have a special meeting to do the Transform deal and I understand they offered inducements to some of the larger investors to get the 75 per cent across the line for the decision to do the Transform deal. Is that your understanding?

Ms Townshend —I have heard that rumoured. In most cases people were given a vote to (1) change the constitution and (2) to allow their share to be turned into—

CHAIR —That is right, two decisions.

Ms Townshend —Yes.

CHAIR —One to change the constitution. I have actually spoken to people who are very intimidated by the process, who got a knock on their door on the morning of that meeting to say, ‘Look, if you vote yes for this we are going to give you a discount of’—whatever it was—‘two per cent on the money you owe us,’ because a lot of these people that did this stuff borrowed money from a related entity of Great Southern and so they borrowed forward to get the tax deduction. They were offered what I would have thought is an inducement to vote yes. Whether it was criminal or not would be a matter for the authorities. So they went along and voted yes.

My further understanding is that that decision to change the constitution should have been referred to ASIC before it was implemented but, instead of doing that, at that Transform meeting they said, ‘Now we’ve changed the constitution we’re going to vote to buy all these shares back,’ even though there were a lot of people who (1) did not know it was going on and (2) did not agree with it. There should have been a delay when ASIC considered—

Ms Townshend —Absolutely. They had buried it within the one vote, so it was misleading to most people. They would not have realised they were in fact changing the constitution. In fact, Great Southern staff had indicated to me that they were, first of all, going to decide after they got this vote whether in fact they were going to implement it. Then later when I spoke to them they said, ‘No, Cameron Rhodes said even if the vote doesn’t come in to 75 per cent he’s going to go ahead anyway.’ He was just going to ramrod it through. So it was very clear, by Project Transform, that something was wrong. All along it was clear. We started to look at valuations—the valuations on everything, all the schemes together. How did they get the valuation on what our share was worth? They were offering us less than what we paid for. We looked at the bank valuations: how did they get their valuations? It is all questionable.

CHAIR —We have invited KPMG and various players to this committee. A lot of these people have not responded at this point in time, but it is fair to say that the management of this was in few hands. The property management was with a few contractors. Having done the Transform arrangement, for the purposes of history there will never be any—it is like when you have a shed full of wheat and you are the Wheat Board. Trucks come in at harvest time. You weigh the wheat and put it in the she’d, but you do not really know until you empty the shed whether all the wheat that allegedly went in was actually in the shed, whether the weighbridge was right et cetera.

Ms Townshend —Correct.

CHAIR —With this particular scheme we will never know if the cattle were there in the numbers that were alleged to be there. Wrotham Park has changed hands again.

Ms Townshend —I did ask for that not to happen, prior to it being sold, and investigations should have taken place before that.

CHAIR —You are aware that the liquidators have been transferring cattle in lieu of cash for services provided, including lease payments to some of the people?

Ms Townshend —No, I was not aware of that.

CHAIR —Yes. There you go.

Ms Townshend —It does not surprise me.

Senator MILNE —There have been several statements in the newspaper reports about police being informed. Can you tell the committee what you know to be true? What have you referred to the police or what do you know has been referred to the police? And where is any of that up to? I would like a clear idea of who is meant to be investigating what.

Ms Townshend —The stock squads are state run, so they are very difficult to find; even in Queensland they have several. In the Northern Territory, where in fact a lot of the cattle were shipped out, unfortunately there is no stock squad. Once again, I do not know why.

Senator MILNE —The question I am asking is: did anyone report a possible crime or allege a crime to the police in any state so that they would deal with their own stock squads?

Ms Townshend —Yes, they did.

Senator MILNE —I am trying to establish which reports have been made and to whom.

Ms Townshend —To Detective Terry Hanley.

Senator MILNE —Who is state or Federal Police, and where?

Ms Townshend —He is in Charters Towers in Queensland. I spoke to him prior to that, but he also has his official formal complaint from myself and the other—

Senator MILNE —Is he state police?

Ms Townshend —I believe so.

Senator MILNE —He must be state police.

Ms Townshend —I believe he would be federal. I think all of stock is federal, isn’t it?

CHAIR —Mr Hanley, who I have spoken to a couple of times, is Queensland state.

Senator MILNE —Queensland state police. Okay.

Ms Townshend —Yes, okay. Also, Detective Trevor Stevens on 10 July and also on 7 July.

Senator MILNE —Is he Queensland state police?

Ms Townshend —Yes, also Queensland. And we sent emails. I have got emails to various others, including King Island.

CHAIR —I suppose I should put on the record, while I am at it, that I have actually contacted the Australian Federal Police because of the interstate travel of some of the cattle and on complaints from people who are reluctant to come forward as informants because they want to get their cattle. I think—and I have said it on the record—that the Commonwealth has got to get involved in this because they are the largest stakeholder because of all the tax deductions.

Ms Townshend —The Commonwealth is.

CHAIR —It is out of control.

Ms Townshend —The Commonwealth lost, too, as well as the investor. You have to remember that there are people here paying for loans for cattle they do not have.

Senator MILNE —I just want to be very precise about who has asked whom to investigate what, so that we get this clear. Senator Heffernan, you just said you have asked the Federal Police. Have you made a formal request or complaint to the Federal Police to investigate it?

CHAIR —We will deal with that. Is it the appropriate forum for that?

Ms Townshend —Yes, I have. It is a formal complaint on the cattle rustling to Detective Hanley and it is state police. Yes, it has gone in in writing.

Senator MILNE —So at the moment we have just got two complaints to the Queensland Police Service?

Ms Townshend —Yes.

Senator MILNE —You mentioned that you tried to stop a shipment out of the Northern Territory. Was there a formal complaint to the Northern Territory Police?

Ms Townshend —No. I believe it has to go to the stock squad and they do not have a stock squad.

Senator MILNE —But it would be a crime in the Northern Territory.

Ms Townshend —And the police that handle the cattle crime are the stock police—the stock squad.

Senator MILNE —If there is not a stock squad in the Territory, they must have some jurisdiction. It cannot not be a crime in the Northern Territory.

Ms Townshend —We spoke to the relevant stock squads in Queensland and they were advised of the situation to alert it—email it—to all their other stock squads.

CHAIR —Let’s clarify this. One of the problems we have is that, for live export out of Darwin from property of origin, you do not need an NLIS tag.

Ms Townshend —Correct, yes.

CHAIR —That is the problem we have. I am not making any allegations. All I know is that there is a great mystery about this. All the adjoining property owners are mystified at what has been going on. I asked the question to an agent from one of the big pastoral companies, who shall remain nameless at this point, who was involved in some of these transactions. I said, ‘These cattle that are being transferred in lieu of cash for lease payments—who is valuing them and who is counting them?’ The phone just went dead. That is from a major pastoral company.

Ms Townshend —I would call upon you then, please, Senators, to call the Federal Police to investigate this matter.

Senator MILNE —Okay. You mentioned that you thought it was inappropriate that the people advising the receivers have, clearly, a conflict of interest in relation to that matter.

Ms Townshend —Correct.

Senator MILNE —What was the process for the receivers to choose somebody to advise them or consult to them on that?

Ms Townshend —I would not know in this instance, but it is quite common in liquidations that they will go to the very person that has been dealing in that area. Usually, liquidators do not know the industry or what they have just walked in to, so it is quite common to consult the very people that may have caused the demise of the company.

CHAIR —One of the problems with the management of these cattle, given there was a disastrous drought in parts of the areas where the cattle were, is that as part of the arrangement, the investor paid $200 per year for the cow, has to pay 45 per cent of the net return from the calf, and in some instances I think for a drove they got a couple of hundred dollars out of the exercise. Expense was not top of mind for the managers because it was coming out of the investors’ money. If they had to shift the cattle two or three times for different agistment, which they did, cost was not a factor. Stress on the cattle and feeding the cattle became a nightmare because of the seasonal thing. And I am stressed enough now with my own cattle. The season is turning to—clay, shall I say—clay again this year. When you have got tens of thousands of cattle with minimal supervision because you have got rid of a lot of the staff to lower your overheads, and you are going to bring in contractors to do the muster, it just turns into a nightmare.

This guy in Queensland, in the panic to get the cattle together so that he did not have to return the money to the investors—they wanted to invest the money; they leased 1,000 cows off this character—does not know where his cattle are and neither do the managers. They think they have gone to the Northern Territory, but they do not really know. If ever there was a case for the Australian Federal Police and the Australian government to get involved in what could be the biggest scam of all time, it is this one.

Ms Townshend —I agree. Once again I ask the senators to call the Federal Police. Sterling Buntine’s company was Australian Pastoral Management Pty Ltd. He held himself out to be an expert in this area by the promotional material and that is what I went on. The same man is still there in charge. I have had many callers complain about the way the cattle are being treated by Sterling Buntine and it should be an RSPCA issue as well. Recently I had reason to call the RSPCA because there were weaners there that needed lick, and cattle starving on Wrotham Park.

CHAIR —That was on Wrotham Park, which has since been sold.

Ms Townshend —It was sold after I put it out there.

CHAIR —With respect to everyone involved, I am sure it was not intended to turn into the nightmare it has turned into, but it certainly appears to have become a living disaster.

Ms Townshend —I think this is more a criminal one and, as a result of that, I think the receiver should be removed and we should be looking forward now to a solution with the land. Two hundred thousand hectares is a lot of land in anybody’s country and I think some national pride should be there to have a look at the future—the long-term future; not only for us but for our grandchildren—and to make a real, sincere effort to see what can be done with it. Like I said before, marginalise some of it that is no good, but definitely there are a lot of people floating around that have a high price on it, and a lot of countries, and I think we should take claim of it first. I had the idea of a co-op with our people, but—the other point I made—the Australian taxpayer is a major creditor; they have put a lot of money into this. I do not think we should throw the baby out with the bathwater. We should have a serious look at keeping it, with perhaps some cattle, some sheep, some trees—whatever. I am sure there are people out there that can tell us which way to go.

CHAIR —The problem though, Ms Townshend, is that since the Transform arrangement the cattle more or less have disappeared from the jurisdiction of the investors.

Ms Townshend —They have.

CHAIR —And for all intents and purposes we will never know whether they were really ever there. But isn’t it also the obligation of McGrathNicol, the liquidator, to sell everything, as it were, that is not bolted down to satisfy the people who have the secured mortgages? I have spoken to people who have got a million dollars invested in this and have had, against their will, their cattle—so-called cattle—transferred into shares. Could you just summarise, if you know, the Transform arrangement where cattle at $5,000 for seven years for four cows were transferred into shares and what the value of those shares is now?

Ms Townshend —The shares are worthless, obviously, because of the liquidation, but they offered two-thirds below what they paid in the offer document that went across.

CHAIR —So the Transform arrangement then, it would be fair to say, was not there to protect the investor, it was there to protect the shareholder, because the shareholders at least ended up with the cattle.

Ms Townshend —Yes, presumably the leased cattle, according to them. The actual progeny belongs to the investor.

CHAIR —And we would be talking about the last drop of calves, because the first drop of calves, which was a 50 per cent calving—and they ran into a bad season—was somehow processed and, because of the scale of the operation, no-one really understands the intricacies—including McGrathNicol, I have to confess, which is why they have employed Mr Buntine. He is the only one that had any idea where the cattle were. The shareholders have just been left swinging in the breeze. But if there was a possible retrieval it would have been by transferring the cattle which were leased out, as I say, for $5,000 for seven years for four cows, that lease being cancelled and those cattle being transferred back to the shareholders in Great Southern. And, of course, subsequent to that the shares have fallen very low. I have no idea what Great Southern shares are worth. But that would have been—

Ms Townshend —You are saying that that may have been a solution for them to have taken up—

CHAIR —For the shareholders, not for the investors. But my point is that the Transform arrangement appears to me to have breached ASIC guidelines, in that they have altered the constitution and not got approval for the alteration of the constitution from ASIC. Instead of that, 10 minutes after they got the vote, having knocked on people’s doors on the morning of the meeting that altered the constitution—

Ms Townshend —Certainly that is wrong, yes, in the way they altered the constitution.

CHAIR —They then went on and did the Transform arrangement, which should not have happened without ASIC’s approval to change the constitution.

Ms Townshend —Absolutely. As well as the fact that a lot of people have loans and they forced it into worthless shares and still have the loans.

CHAIR —I regret that all that has happened, but we are grateful for your evidence. Thanks very much.

[12.22 pm]