great southern owns woodlots, page-4

The article is a bit dated,and that is why we need a royal commission
The paragraph on the $2.2 billion is sobering




Great Southern report calls for Liquidation Ben Butler From: Herald Sun November 12, 2009 9:17AM

ADMINISTRATORS of failed agricultural investment giant Great Southern are investigating whether the company misapplied investors money.

In a 100-page report to creditors, administrators from insolvency firm Ferrier Hodgson yesterday recommended Great Southern be liquidated.



KEY POINTS

Administrators recommend Great Southern be liquidated.

Deals with founder John Young among matters needing further investigation.

No estimate of likely return to creditors.

Great Southern ran $2.2 billion worth of managed investment schemes on behalf of 52,000 growers.


The four administrators handling the $2.2 billion flop said it was impossible to say how much of a return unsecured creditors would receive.

Related party transactions involving founder John Young are among other matters requiring further scrutiny, they said.


Funds for Great Southern action
The Australian,
The administrators intend to review the flow of money raised from investors in Great Southern's managed investment schemes "to determine their actual application as against the permissible use of those funds", they said.

"There has been much speculation as to whether the Great Southern group managed investment scheme projects simply raised new investor application monies to meet commitments made to investors on previous projects, and whether such action was compliant with the constitutional requirements and other requirements of the schemes," administrators Martin Jones, Andrew Saker, Darren Weaver and James Stewart said in the report.

"These questions are not easily answered given the complexity of the Great Southern group's affairs."

A $23 million loan book that was sold for $9 million to a company backed by Mr Young weeks before Great Southern collapsed in May also needs further investigation, the administrators said.

They also said it was "necessary to determine the reasonableness" of Mr Young's $2 million retirement payout last year.

And a 2005 deal that "topped up" the return to investors when the company's 1994 wood plantation project was harvested "will be investigated further".

The deal saw Great Southern sell the harvest to Great Southern Export Company, which numbered Mr Young among its directors.

Including the $4 million payment, investors in the scheme received $6.4 million, enabling Great Southern to say it had met price targets it had promised analysts.

"The transaction and the basis for it were not immediately disclosed, which brings into focus the continuous disclosure obligations of Great Southern," the administrators said.

Other matters the administrators said should be further investigated include Project Transform, a bid last year to convert investors in the company's cattle schemes into shareholders, and numerous property and cattle sales.

Concessions given to encourage recalcitrant investors to sign up to Project Transform, including cuts to interest rates on loans, are also to be investigated.

Administrators said no "dishonest actions" were involved but there might be claims for breach of duty against the company's directors.