Draft:Gippsland Secured Investments
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Gippsland Secured Investments Limited (GSI), was an Australian Public Company and Gippsland-based lender and debenture firm operating from 1970 until it was placed in receivership in 2013. The company headquarters was in Bairnsdale, Victoria.
The principal business of GSI involved raising funds from retail, mostly rural, investors and issuing debenture notes. The funds raised through the issue of debenture notes were then used to lend or advance loans to third party borrowers, primarily for property investment purposes. Such loans were secured by registered mortgages granted by the third party borrowers in favour of GSI.
The company was placed in administration in September 2013 following a review of its loan assets and security properties[1].
Directors
At the time that the company was placed into administration, the board of directors was made up of the following people:
- Mr Glenn Sanford
- Mr Duncan Johnstone, also the CEO of Collins Booksellers
- Peter Murphy
- Mr John Stephenson
- Mr Anthony Stewart
- Mr Geoffrey Ellis
Collapse
In July 2013, doubts about the value of GSI's loan book were raised by their trustee. Once these concerns were raised and it was reported that GSI did not have the assets to cover the value of its loans, GSI froze all investor withdrawals.[2][3] At this time, GSI indicated that it "may have a deficiency in its net tangible assets and may not have equity equal to the shortfall." [4] Receivers were appointed in September 2013. The company had $144 million (AUD) in liabilities at the time receivers were appointed, most of which was from rural investors in Victoria's Gippsland region.
Controversy
During collapse of the company, its directors were investigated for misclassification of loans and were found to have obtained for themselves close to $5 million (AUD) in cash at discounted interest rates. It was also found that some directors and staff were also paid substantially higher rates on investments.[5][6][7]
In December 2014, an investigation by the Australian Securities & Investments Commission into the collapse found that GSI's auditor had failed to verify the existence of loan receivables and had failed to obtain assurances about the valuations of loan receivables, in what was described as "a deficient audit of the since collapsed debenture issuer." The auditor subsequently agreed to never reapply for registration or perform any duties or functions of an auditor.[8][9]
As of July 2024, investors of GSI have received approximately 89 cents on the dollar of their original investments.[10]
References
- ^ "Troubled regional lender GSI has been placed into receivership". ABC News. September 3, 2013. Retrieved July 18, 2024.
- ^ "Money is frozen". Gippsland Times. July 22, 2013. Retrieved July 18, 2024.
- ^ Dobbin, Marika (July 23, 2013). "Gippsland lender freezes $150m". The Age. Retrieved July 18, 2024.
- ^ "Trustee seeks receiver for Gippsland". Banking Day. July 29, 2013. Retrieved July 18, 2024.
- ^ Rogers, Ian (October 7, 2013). "Gippsland directors earned favoured returns". Banking Day. Retrieved July 18, 2024.
- ^ "Receivers probe related-party loans at failed lender Gippsland". InvestSMART. October 5, 2013. Retrieved July 7, 2024.
- ^ Wilkins, Georgia (September 7, 2013). "Gippsland lender's collapse puts town on edge". The Sydney Morning Herald. Retrieved July 18, 2024.
- ^ "Gippsland Secured Investments auditor deregistered". (Media release). Australian Securities & Investments Commission. December 18, 2014. Retrieved July 7, 2024.
- ^ "Enforceable Undertaking" (PDF). (Notice of Enforceable Undertaking). Australian Securities & Investments Commission. December 10, 2014. Retrieved July 18, 2024.
- ^ Dahlsen, John (August 18, 2015). "Submission to the Parliamentary Joint Committee on Corporations and Financial Services". Parliament of Australia. Retrieved July 18, 2024.