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A multi-million dollar asset stripping system is exposed ... But government and courts condone it by doing nothing, while the Tax Office says they know all about the scam but it's not within their jurisdiction !
Case Summary
In 1982 a local building/distributing/manufacturing firm (company "A") specialising in light steel frame construction, built a house in Singapore. It was featured in the trade journal "What's New In Building" and finalist in "Business Person of the Year". This resulted in many inquiries from Asia, the South Pacific and many parts of Europe. For nearly 15 years the company employed over 20 people and had the potential to become a major exporter of product and technology B.H.P. Ltd acknowledged the owner of the building firm to be the one of the leading, most knowledgeable people in Australia in the manufacture, supply and erection of light gauge steel house framing and as James Hardie Industry Ltd were prepared to assist in starting up a steel house framing system industry in Taiwan. The company was asked to quote on many large construction projects overseas, which included Hospitals, Orphanages, storage complexes and so on, including several very large housing projects. The owner needed funds to build a new much larger premises to service this expected demand and approached an Australian Bank to get money for the new venture. A new partnership "B" was set up to operate as a separate working identity from company "A". The advice of the manager of the local branch of the Bank was that the cheapest way to borrow the funds was not a normal business loan but rather by a system of simulated foreign currency loans with a bill's facility. The partnership "B" relied entirely on the bank manager's advice and had little idea of the nature of this loan. Without notice to either company "A" or partnership "B" the Bank placed the costs connected with the new loan facility for partnership "B" in an account, which it also changed account numbers of, in the name of firm "A" - the wrong entity. The owner complained continually but nothing was done to rectify this but he was told it would be changed to the Partnership Account when the new building work was completed. Thus the loan servicing debt continued to grow in company "A's" account with the Roll-Over Fees, Overdraft and other Charges. At one stage, nearly 50% interest was being charged to the company account, which did not own the debt or make borrowings to incur the debt. This had the effect of crippling the cash flow of company "A" to the point where the bank was dishonouring cheques by the company, which was still within its overdraft limit. The owner consulted the Federal Police, who told him it was Federal offence to change account numbers without authority. On finding out more about the loan arrangements the owner discovered the Bills of exchange involved it had not been negotiated on the open money market as required by the Bills of Exchange Act. But the expenses were being billed to company "A". Corporate law required the owner to freeze the company account, and this was done and the Bank advised. The Bank first agreed to adhere to this. Then a new manager took over at the local branch and served a letter stating that the Bank had reversed its decision, and the Bank served a letter of demand on company "A" which did not owe the debt. The company then served a Statement of Claim on the Bank. The Bank transferred the interest out of the frozen account but did not transfer the principal, which still left the company crippled. The bank then obtained judgement in its favour in Court proceedings, by withholding evidence, saying such evidence was irrelevant. In 1989 the company seeking documents used a Notice to Produce in the Supreme Court, which the bank did not do, and years later still has not done, although the bank claimed they had produced the documents. The company appealed the decision, and the bank moved to have the company's At the appeal hearing, the bank won the decision by again withholding evidence and so misleading the court as could be proved by documents in Discovery. The bank started to seek possession of the company factory. Thus the company was seeking to get criminal charges laid against the bank staff and others involved, without success. Owing to the costs incurred by then and the damage done to the business following this decision, the principals of the company were forced in 1989 into a Terms of Settlement Agreement under which they had to make a Public Apology to Bank and its Officers. Part of that apology was that the company lawyers had inspected the bank's files and found no evidence of fraud. Consequently, all allegations of fraud had to be withdrawn (But in reality the truth was that the company lawyers had never seen the files. And discovery of documentation concerned was only obtained in February 1997. In 1990 the Bank had offered the principles of the company a choice - either give a Public Apology or have our factory and house repossessed by the Bank.) The Bank did not abide by the Terms of Settlement although the principles had money in place and available to settle the matter as required which was admitted by the Bank's lawyer in court. As part of the terms, both sides agreed to strike out the actions in the Supreme Court. The lawyer for the Bank faxed the company lawyers stating that "they would strike out the Actions for both Parties". The company principals had paid required fees to another bank and their lawyers had faxed the Bank requesting settlement. But soon afterwards the principals of the company found out that the Bank's representatives had gone to Court and stated that the principals "could not raise the finance" and requested possession of our factory. The Bank was granted possession. The Bank then had the principal of the company arrested for "being on enclosed land" at the new factory site. This was an illegal act as no restraining order existed to prevent him from being there, also the property was only partially fenced and the gates were open. The senior constable said in court the property was fully enclosed with a chain wire fence. The principle showed the court photos that showed no fence existed. The prosecutor then called for an adjournment so they could and have a look at our property. The senior constable then told the court he thought it was fenced when he made the arrest. The Magistrate refused the principle the right to provide other evidence including Federal Parliament Hansard about the matter. And the principal of the company was found Guilty as Charged. (The Magistrate concerned has since threatened to sue in defamation the principal of the company if he writes about this matter. And he has since done, very publicly. The principal of the company has an "All-Grounds" Appeal pending - stood over until the outcome of a case to be heard in the Supreme Court to determine the owners of the properties. The Magistrate's Lawyers have indicated that they will wait until the outcome of the "All-Grounds" Appeal before proceeding further with the matter.) On February 25th 1997 the principles got discovery at last (some 1000 documents) and say they can now see how the Bank set the matter up and framed them. These documents show the following steps: (X is the principal of the company) (Troublesome Interest can be charged when a client is in default, which the principals never were.) a) "charge "X" TROUBLESOME INTEREST" The documents also exposed irregularities in the court action following the arrest on Charges of Trespass and how power was exerted by the Bank. The principal made a 1700 page submission to the Federal Banking Inquiry (The Martin Commission) but only 343 pages were made public by the government. The principal claims in a further submission to the Federal Government that a Senior Officer of the Australian Taxation Department later phoned him saying that two major banks "have been asset-stripping for years", but that he could not help as it was not in the Taxation Department's jurisdiction. The principal had support from his then local State MP, Mr John Hatton, and he obtained a letter from the then Minister for Police MP Mr Ted Pickering MLC, in which Mr Pickering states in answer to a question from Mr Hatton,
By 1997 the company was in liquidation. The liquidators on reading the submission to the Banking Inquiry commented that they may take action against the Bank, but they never did. If settlement had taken place in 1990 as signed by both parties (Rigg and the Bank ), Rigg would have paid $980,000 in 2 instalments. The property was then valued at $1.1 million. The Bank sold the property in 1994 for $725,000) in a private treaty sale to a NSW company. An illegal sale if the Federal Court decision in ALTRAN v WESTPAC which determined that "it is unlawful to sell property while in litigation" is followed as the litigation continues. The Bank served documents in 1993 for the re-possession of the home of Mr Rigg. Mr Rigg notes : Without our knowledge, the Bank had the local Council put the home, on their records, in the name of the Bank. Due to this action, during 1997 they were served with a notice from Council which threatened placement of a water supply restrictive device due to unpaid Water Rates for 1994, 1995 and 1996. We have paid all outstanding accounts and could have done so had we but known that they had been outstanding. The Rigg family lost two factories and their flourishing business, were evicted in March 2000 from their family home and are fighting bankruptcy proceedings. Their legal and human rights have been trampled on , and government ? ... just looks the other way.
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