ANZ boss faces court grilling over PrimebrokerAdvertisementEmail...

ANZ boss faces court grilling over Primebroker
AdvertisementEmail Print Normal font Large font AdvertisementColin Kruger
November 3, 2008

THE head of the ANZ Bank, Mike Smith, is expected to be dragged into the witness box as legal action over the bank's dealings with the failed margin lender Primebroker Securities is played out.

Laurie Fitzgerald, appointed as Primebroker's liquidator last month, said he intended to investigate ANZ's withdrawal of its offer to convert the bank's debt into equity in the margin lender, instead moving to put Primebroker into receivership.

"The liquidators will have the power to conduct investigations including public Federal Court examinations that may extend to current and former senior ANZ officers," he said.

Sources told the Herald that this included Mr Smith, who played a central role in ANZ's decision-making when troubles at Primebroker, and other margin lenders such as Opes Prime, became apparent.

The law firm Slater & Gordon is expected to complete a report as early as next week for Mr Fitzgerald, which will be handed to liquidation funders interested in funding legal action against ANZ. This is expected to include a $160 million claim for damages alone.

"ANZ believes it is in a strong legal position and will be vigorously defending any legal action," said a bank spokeswoman in response to the Herald's inquiries.

Mr Smith, who joined the group just months before ANZ's disastrous exposure to the margin lenders blew up in January, has failed in his attempt to put the damaging debacle behind the bank.

ANZ, which recently failed to successfully settle with Opes over the margin lender's collapse, faces years of litigation by former clients of Opes and Primebroker and by the liquidator.

The mediation talks between the Opes liquidator John Lindholm, ANZ, Merrill Lynch and the Australian Securities and Investments Commission collapsed last month, with Merrill blamed for its reticence to offer any money as part of a settlement.

But the Herald can reveal that at an Opes creditors' meeting last month Mr Lindholm hinted that differing agendas might have influenced the failure of the mediation.

It was suggested to the banks that creditors might support a settlement of 70c in the dollar on claims totalling $600 million - equating to a payment of $420 million.

Mr Lindholm said that while he was "strongly agitating" for a settlement on the liquidators' claims, the banks were looking for a "holistic solution" that also encompassed damages claims that creditors were looking to bring against the banks.

He pointed out that the latter would require the approval by each of the Opes creditors looking to take action against the bank.

Mr Lindholm hopes to recover between $205 million and $220 million from ANZ alone. This includes legal action to overturn a transaction that in effect delivered ANZ shares worth about $1 billion as security against its loan to Opes


Comment ...Asic signed on to the Opes mediation...
We know ML fell over ...the writer wonders ...whether ML just couldnt afford it

We know ANZ can ...it will be interesting if Asic loose patience with either one or both

Again time will tell..

I for one would rather see a full and frank Liquidators hearing