In BIG trouble

ASIC probes Powerlan, KAZ over trades
Author: Katrina Nicholas
Date: 21/08/2002
Words: 450
Publication: Australian Financial Review
Section: News
Page: 1

 
One of Australia's largest technology companies was raided early yesterday morning by the Australian Federal Police and the Australian Securities and Investments Commission over alleged irregular share trading.

A search warrant was served on management at Powerlan's North Sydney offices. ASIC is also investigating IT services group KAZ, which denied yesterday it had been raided. It is understood KTM Capital, a Sydney investment bank and adviser to both companies, is also involved in ASIC's inquiries.

A source at KTM Capital downplayed the investigation, saying the inquiries were conducted on a ``circumstantial basis".

The raid relates to an investigation by ASIC into unusually heavy trading of shares in Powerlan and KAZ. The trades, made earlier this year, could involve KTM Capital. A spokesman for the AFP confirmed yesterday it had helped ASIC with its searches.

The investigation surrounding trade in Powerlan's shares centres on heavy turnover by stockbroker BNP Paribas. BNP Paribas has had a close relationship with KTM Capital, which has employed some of its former staff. A statement released yesterday to The Australian Financial Review by Powerlan confirmed ASIC had begun inquiries into certain trading in the company's shares during June 2002. A statement said that officers of ASIC and the AFP ``executed a search warrant ... to obtain copies of relevant documents".

According to sources close to the company, 11 ASIC and AFP officers descended on Powerlan's premises well before most staff started work. They spent until late yesterday evening infiltrating computer files and poring over documents.

Mobile-phone calls made by the officers and overheard by staff confirmed consecutive raids were being carried out at premises around Sydney. While a spokesman for KAZ denied ASIC had been at the IT services group's premises, documents sighted by Powerlan employees indicated it was undergoing a similar search.

KTM Capital underwrote a number of high-tech floats, including Powerlan, its now 100 per cent-owned subsidiary Clarity, KAZ, Objectif Telecommunications and Sirtex Medical. It underwrote four of 2000's top 10 floats.

KTM Capital is thought to have executed trades in KAZ and Powerlan via BNP. Australian Stock Exchange documents show trading volume in Powerlan shares spiked significantly in June. Almost 29 million shares changed hands on June 14, and 23.7 million changed hands on June 20.

BNP crossed a line of 23 million shares on June 14 and a further 4 million on June 20. The deal was done at 13.5¢, a slight premium to Powerlan's then share price. Now, shares in Powerlan are trading at about 6.2¢.