According to an article in todays The Age, Fang he has managed to sell all her shares and will lodge a change in substantial holding soon, according to Brisconnections. This means that Brisconnections must have been working with Mrs He to dispose of her holding before it turned into a bigger PR nightmare and ended up on ACA or Today Tonight.
Here is the full article:
Mrs Fang in a flap as her nest egg turns bodgie November 19, 2008
A BUDGIE, a Melbourne housewife with a dodgy share portfolio and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 are an eclectic trio, but the three are inextricably linked, thanks to a share transaction under a fake name.
BusinessDay's Mr Bud Gerigar made headlines after buying a share in listed Downer EDI using a loophole in the law and some very lax checks and balances within the nation's off-market transfer system.
That system allows shares to be directly transferred, free, at the registry office into just about any name you can think of — such as Bud Gerigar.
According to a spokeswoman for Nick Sherry, the federal Minister for Superannuation and Corporate Law, registering shares in the name of a budgie is a clear breach of the nation's anti-money laundering laws, introduced by the Howard government in 2006.
"Under section 136 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, it is an offence to provide false or misleading information to a reporting entity or produce false or misleading documents," a spokeswoman for the minister said.
One of the leading lawyers in the field of money laundering insists the budgie is innocent under that act — and a clear loophole exists that allows criminals and, potentially, terrorist organisations, to launder money through the Australian sharemarket.
"You have identified a clear loophole in the act," said Alison Deitz, a partner in leading law firm Deacons and author of the Anti-Money Laundering Handbook, released late last year.
"The act is designed to ensure that the money obtained from criminal or illegal activity cannot be washed through the financial system. The off-market transfer system for shares is a way that The Age has clearly identified as a means of washing money, a system of laundering money, that isn't captured by the legislation.
"It's a scheme a terrorist organisation could use but, more likely, a scheme a money-laundering operation could use."
Central to the loophole are the words "reporting entity". The act lists what it deems to be reporting entities — such as banks, credit unions, bookmakers that provide account services and department stores that provide gift vouchers — but share registry offices are not included.
"On my reading of the act, a share registry is not a reporting entity," Deitz said. "There are circumstances where they could be an agent, but in the instance The Age has reported, where the vendor is not a professional trader or a broker, then in that case there is a scheme that could be used to launder money.
"If the purchaser is buying through a stockbroker, then the broker is the reporting entity. In terms of an off-market purchase, unless the seller is itself involved in the business of selling shares, then it's not captured by the act, in my reading."
Alan Peckham, a Melbourne-based partner with leading law firm Freehills, concurred that the anti-money laundering legislation did not cover an off-market transfer to a fake name.
"A registry office could, in some circumstances, be a reporting entity, but I agree that in this instance, with the off-market transfer of a share into the name of a budgie, it is not strictly covered by the act," he said. In 2005, the Paris-based Financial Action Taskforce estimated that money laundering in Australia was worth up to $3 billion a year. According to the taskforce, criminals use accounts in Australia registered under false identities and substantiated by forged documents — the very technique used to obtain a shareholding in the name of a budgerigar.
Australia has recorded only five convictions for money laundering since 2003, and the Financial Action Taskforce reported that the main problem was that existing laws in this country were "not being effectively implemented".
Since then, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 has been introduced, but loopholes still exist.
"The legislation is trying to stop this, so it's good to identify these loopholes, as the legislation is still in its formative stages," said Deitz. "The regulator needs to know this, so the appropriate changes can be made to the law."
Indeed, that flaw in the off-market transfer system could have allowed a Melbourne housewife to avoid a hefty bill after plunging her savings into BrisConnections, the developer of Brisbane's $3.4 billion airport link toll-road project. The shares were issued at $3 each, to be paid over three instalments of $1, with the next payment due in April and a final payment in 2010.
Last month, Melbourne housewife Fang He turned a $32,300 investment into a $65 million nightmare after snapping up 32.3 million shares of BrisConnections, or 8.26% of the company, at 0.1 ¢ each.
It seemed a bargain at one-thousandth of the July listing price of BrisConnections' first instalment, but Mrs Fang didn't seem to note that two further $1 instalments were due on the share, and she was liable to pay a further $65 million.
"I am only a housewife. My husband is running this business in my name," Mrs Fang told BusinessDay at the time.
The private client adviser who helped BusinessDay with the budgie's initial share purchase said an off-market transfer into a false name could prevent Mrs Fang from paying the next instalment.
"If I owed $65 million, I'd be looking in the Ugandan phone book and off-market transferring those shares into any name I could find," he said. "You'd have a few residents of foreign countries owing BrisConnections $65 million."
Thankfully such desperate measures won't be needed — Mrs Fang has found a buyer for her shares, and one that is well aware of the amount owing on them, according to BrisConnections company secretary, Tamira Herbst.
The trade was completed last Thursday, and BrisConnections is desperately waiting for the housewife investor to lodge her substantial shareholder notice and end a rather embarrassing chapter in the company's brief history.
Despite the contrary legal opinion, a spokesman for Senator Sherry said "we maintain the previous statement in relation to anti-money laundering legislation".
The spokeswoman also pointed out that, in the department's opinion, the transfer of shares into false names also breached three sections of the Corporations Act.
Those breaches do not carry the same hefty penalties as breaches of the anti-money laundering legislation that was introduced in 2006.
BusinessDay is awaiting responses from the Australian Securities and Investments Commission, the Australian Transaction Reports and Analysis Centre, which is the nation's money-laundering regulator, and the Minister for Home Affairs, Bob Debus, whose portfolio includes AUSTRAC.
So far, none have been able to explain how it is possible for a budgie to own shares, or what regulation changes may be implemented to stop shares being held in false names.
"If the purchaser is buying through a stockbroker, then the broker is the reporting entity. In terms of an off-market purchase, unless the seller is itself involved in the business of selling shares, then it's not captured by the act, in my reading."
Alan Peckham, a Melbourne-based partner with leading law firm Freehills, concurred that the anti-money laundering legislation did not cover an off-market transfer to a fake name.
"A registry office could, in some circumstances, be a reporting entity, but I agree that in this instance, with the off-market transfer of a share into the name of a budgie, it is not strictly covered by the act," he said. In 2005, the Paris-based Financial Action Taskforce estimated that money laundering in Australia was worth up to $3 billion a year. According to the taskforce, criminals use accounts in Australia registered under false identities and substantiated by forged documents — the very technique used to obtain a shareholding in the name of a budgerigar.
Australia has recorded only five convictions for money laundering since 2003, and the Financial Action Taskforce reported that the main problem was that existing laws in this country were "not being effectively implemented".
Since then, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 has been introduced, but loopholes still exist.
"The legislation is trying to stop this, so it's good to identify these loopholes, as the legislation is still in its formative stages," said Deitz. "The regulator needs to know this, so the appropriate changes can be made to the law."
Indeed, that flaw in the off-market transfer system could have allowed a Melbourne housewife to avoid a hefty bill after plunging her savings into BrisConnections, the developer of Brisbane's $3.4 billion airport link toll-road project. The shares were issued at $3 each, to be paid over three instalments of $1, with the next payment due in April and a final payment in 2010.
Last month, Melbourne housewife Fang He turned a $32,300 investment into a $65 million nightmare after snapping up 32.3 million shares of BrisConnections, or 8.26% of the company, at 0.1 ¢ each.
It seemed a bargain at one-thousandth of the July listing price of BrisConnections' first instalment, but Mrs Fang didn't seem to note that two further $1 instalments were due on the share, and she was liable to pay a further $65 million.
"I am only a housewife. My husband is running this business in my name," Mrs Fang told BusinessDay at the time.
The private client adviser who helped BusinessDay with the budgie's initial share purchase said an off-market transfer into a false name could prevent Mrs Fang from paying the next instalment.
"If I owed $65 million, I'd be looking in the Ugandan phone book and off-market transferring those shares into any name I could find," he said. "You'd have a few residents of foreign countries owing BrisConnections $65 million."
Thankfully such desperate measures won't be needed — Mrs Fang has found a buyer for her shares, and one that is well aware of the amount owing on them, according to BrisConnections company secretary, Tamira Herbst.
The trade was completed last Thursday, and BrisConnections is desperately waiting for the housewife investor to lodge her substantial shareholder notice and end a rather embarrassing chapter in the company's brief history.
Despite the contrary legal opinion, a spokesman for Senator Sherry said "we maintain the previous statement in relation to anti-money laundering legislation".
The spokeswoman also pointed out that, in the department's opinion, the transfer of shares into false names also breached three sections of the Corporations Act.
Those breaches do not carry the same hefty penalties as breaches of the anti-money laundering legislation that was introduced in 2006.
BusinessDay is awaiting responses from the Australian Securities and Investments Commission, the Australian Transaction Reports and Analysis Centre, which is the nation's money-laundering regulator, and the Minister for Home Affairs, Bob Debus, whose portfolio includes AUSTRAC.
So far, none have been able to explain how it is possible for a budgie to own shares, or what regulation changes may be implemented to stop shares being held in false names.
BCS Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
