THE liquidator of Great Southern has launched Supreme Court proceedings against seven former directors of the collapsed agribusiness company over allegations that they overstated assets and understated liabilities and expenses in financial statements. The court action in Western Australia – which comes three years after the collapse of the country's biggest agricultural investment scheme left more than 43,000 investors owed about $1.8 billion – is designed to recoup funds and test the responsibility of directors who sign off on company accounts.
Great Southern liquidator Ferrier Hodgson alleges that financial reports leading up to the 2006 fiscal year neither complied with accounting standards nor gave a "true and fair view" of the company's financial position, according to the writ viewed by The Australian Financial Review.
Specifically, it is alleged directors failed to disclose that they had subsidised returns paid to investors in earlier timber schemes and planned to do so again in the future. This type of structure has been likened to a Ponzi scheme because returns for some investors are artificially lifted by using deposits from others.
The liquidator is also seeking a declaration that the seven former directors failed in their statutory and fiduciary duties and that they overstated assets and understated liabilities and expenses.
The directors cited are: John Young (founder), Cameron Rhodes (former managing director), David Griffiths (former chairman), Phillip Butlin, Alice McCleary, Peter Mansell and Mervyn Peacock.
Mr Young told a public examination last year that "top ups" were no secret and that in at least one instance it was done for "promotional factors". He denied any wrongdoing.
A spokesman at Ferrier Hodgson declined to comment on the case. The liquidator is claiming an unspecified amount of "damages or statutory compensation".
The Australian Financial Review
The prolific "cut and paste" poster Wooduk is also acknowledged! Source: http://www.afr.com
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