Font Size: Decrease Increase Print Page: Print Susannah Moran |...

Font Size: Decrease Increase Print Page: Print Susannah Moran | April 26, 2008
Article from: The Australian
ANZ executives should have been receiving margin calls on six-figure loans last year but were given preferential treatment by a company owned by Opes Prime directors Laurie Emini and Julian Smith.

ANZ's securities lending manager, Clint Bradshaw, and securities lending trader Brendan Mitchell had "protected" accounts with the bank's client, Leveraged Capital, an Opes insider has revealed.

That ANZ staff knew some clients were receiving special treatment - because they themselves were the beneficiaries of such treatment - is likely to fuel the anger that Opes clients have directed towards ANZ for selling shares they claim are theirs.

ANZ loaned Opes and Leveraged Capital $650million, but when Opes collapsed it took possession of shares worth $919million, which it has been selling to recover the debt.

About 1200 Opes clients have lost hundreds of millions of dollars and some are taking legal action against the bank. But a lawyer for ANZ recently told the NSW Supreme Court that the bank was an "innocent bystander".

Mr Mitchell's account with Leveraged Capital was "relatively small", but Mr Bradshaw had a loan in the vicinity of $100,000, according to an Opes staff member.

The pair were given monthly financial statements relating to their accounts and, as far back as late last year, should have known their accounts were being given special treatment, said the Opes insider. "They would have known they should have been margin called, but by being in Leveraged Capital they were protected."

Neither Mr Bradshaw, a former member of the Australian Securities Lending Association, nor Mr Mitchell could be reached for comment yesterday. Both Melbourne-based executives have been suspended by ANZ.

"Matters involving staff members are going to be fully investigated as part of the review that (chief executive) Mike Smith is leading with (independent company director) David Crawford," ANZ spokesman Paul Edwards said yesterday.

Mr Smith has indicted he is not happy with what the investigation has uncovered. "When you shake the tree, stuff falls out of it and frankly more fell out of it than I expected, which I wasn't too pleased about," he said on Wednesday.

He added that senior management and the board were not aware of the details of the Opes relationship as it produced profits only of about $8million-$10million a year and had gone "under the radar".

Opes administrators Ferrier Hodgson this week said the company probably collapsed because of manipulation of client accounts - "such that margin calls were not being made when they should have been" - the fall in value of listed companies and a lack of proper corporate governance.

A $95million loan by ANZ, made on March 20, is now being examined by Ferrier Hodgson, and it could be reversed. The loan was to help Leveraged Capital return a $95million share portfolio to a client.

Mr Edwards said neither Mr Bradshaw nor Mr Mitchell were involved in the bank's decision to grant the $95million loan.

The Opes insider said several staff were also protected from having to put in additional funding or sell shares to avoid margin calls.



Comment ....Innocent Bystander ....Heck