great southern disclosure issues

http://www.businessspectator.com.au/bs.nsf/Article/Great-Southern-disclosure-issues-pd20090610-SUMTW?opendocument&src=rss

A director of Great Southern sought legal advice that indicated the company breached its continuous disclosure obligations, while the founder sold shares before a board room fight over disclosure and a forestry project, according to The Australian Financial Review newspaper.

The paper reported John Young pocketed $32.6 million selling shares in early 2005, before a boardroom battle over an ill-fated forestry project and disclosure issues.

It said Mr Young marketed his share sale with the message that sales were booming and Great Southern's first forestry project would make strong returns.

However, the company was already planning to use funds to top up a shortfall on the forestry project.

The shortfall and differences about the need for disclosure split the board, and pushed non-executive director Jeffrey Mews to quit.

Mr Mews reportedly sought independent legal advice before he resigned.

"The advice said put your objections on the record, resign and pray the company remains solvent beyond the statute of limitations" a source told the paper.

Chairman Peter Patrikeos also resigned over concerns about disclosure.

Meanwhile, The Sydney Morning Herald newspaper reported that Great Southern's corporate offshoot, charged with running the timber company's managed investment schemes is insolvent.

Great Southern Managers Australia is understood to have insufficient funds and no chance of securing more money to continue managing the group's 45 schemes.