Denise Brailey is a Crikey legend who on her own has done more than ASIC and any other regulator to sort out the dodgy lawyers, accountants and finance brokers ripping off retirees across the country. This update of her battles outlines just how effective she has been.
The Australian Securities Investment Commission have maintained a policy to create a “run-out” program enabling solicitor firms with defaulting loans to wind down their loan operations. Other financial planners and brokers are on bizarre “letters of undertaking”. In most cases mortgages supposedly used as security in these scams do not show the names of co-investors, only the name of the solicitor’s own company. For four years tens of thousands of retirees have been unable to get together to seek independent advice, forcing them to deal with the very solicitors who suggested they enter into this battle zone of heartache. For four years investors have pleaded with ASIC and the relevant law firms (all 128 of them according to the ASIC FIDO list) to release the names of their co-mortgagees. The magic “confidentiality” word is constantly used against the elderly investors. In WA, in 1998, I personally demanded that ASIC WA, step into the arena and assist the retirees with a letter which immediately released the lists of fellow mortgagees. Make no mistake, brokers and financial planners had no facility to draw up mortgage documents in WA. Solicitors were definitely part of the process and precisely why the WA Fraud Squad is currently investigating their activities.
The question looms: “why was it that ASIC, using Federal powers and current legislation, found a simple remedy by insisting that brokers/solicitors/liquidators send letters to retirees in WA – giving investors the opportunity to consent to the lists being circulated to co-mortgagees and now ASIC deny retirees in other states, the opportunity for the same remedy?” I sense a slight case of constitutional mumbo jumbo emerging.
These lists provided the nucleus for the truth to come bubbling to the surface in the three inquiries which have occurred in WA to date, including the current severely restricted Royal Commission. ASIC must be terrified of possible inquiries around Australia and appear to have used their powers to keep the rest of the victims in Australia, from obtaining their lists. ASIC cannot continue with the “confidentiality” game any longer. Confidentiality can only be used if it protects the interests of those affected. ASIC is very aware that their policies are only protecting the dreaded solicitors who caused this diabolical mess, and causing immense frustration to retiree victims. Legislative remedies obviously exist. Message for David Knott: end the misery and protect the people. A simple letter to solicitors from ASIC can solve the first step of the problem. Retirees also needed to feel they were part of a network of support, rather than an outcast. Many retirees have not told their families and suffer acute embarrassment in silence. Others have died waiting for ASIC to assist. Widows and widowers are unable to cope – they need compassion and support.
I flew to Queensland three weeks ago, at the request of Qld RECA members in trouble and attended their meeting with Greg Tanzer (ASIC Qld Regional Director) and National Director of FSR at ASIC: Darren McShane, who looked a little McStunned when I walked in the door. I had one message – ASIC must use its powers in favour of the people, it must end the ‘divide and conquer approach’ and facilitate the letters which will produce the lists, in the same manner ASIC did for WA in early 1999. ASIC were given powers in 1991 (under prescribed interests) to specifically protect consumers from these particular scams. The response was as expected: we will consider the RECA request. ASIC staff in Queensland hinted at the possibility of this being done. Queenslanders are still waiting along with all other victims in other states.
Members in Tasmania are also active. Lobbying Senator Nick Sherry for a Senate Inquiry into the Tasmanian Law Society (“TLS”), produced greater detail of the suffering of elderly retirees in the Apple Isle and the dishonest conduct of TLS and even greater neglect by ASIC. Tassie retirees obviously wanted assistance in the ever-growing national solicitors mortgage scandal. Many have invested with Queensland solicitors who advertised in Tassie. Investors paid for yours truly to fly to Hobart last week with the same request for lists of co-investors. We held a seminar, gathered 80 retirees together and planned a street march the following day.
Solicitors at the Tasmanian Law Society must have been terrified of the “kettle drum brigade”. They called the police prior to our arrival. Front page of the Hobart Mercury on Tuesday – RECA members were outside the Tasmanian Law Society – protesting along with 60 retirees who were using pots, pans, whistles and bells (colour and noise!) to wake up this incredibly lazy law society. Three policemen stood guard whilst we delivered our letter of demand for lists. Obviously regulatory authorities need protection before we even arrive! We also demonstrated outside a particular law firm who are also suffering from a slight case of mismanagement, with an estimated $12 million of loans in default. We then marched on to ASIC delivering further letters. One lady even marched behind a lawyer down the main street banging a pot with a ladle in time to his own “pace.” He looked a bit bemused. Retiree/investor victims marched through the streets – their spirits were high – and they now have formed a fabulous group of determined RECA members.
One of the Tasmanian Law Society Boards is chaired by the Tasmanian Attorney General. All regulatory authorities appear to be on national damage control. Senator Nick Sherry attended our meeting. He also backed our calls for a national inquiry after he listened to the evidence as a member of the recent Senate Inquiry into the TLS. Aunty ABC placed the mortgage scandal story – top of the news bulletin Sunday night ahead of he ALP National Conference. Kim must have been pleased. Onya Aunty! Hundreds of millions of dollars have been lost affecting the lives of over 33,000 retirees and the Federal budget. Who are the big players in this and why is the Federal Government displaying an obvious reluctance to assist the elderly retirees?
Our demands are simple: a letter is to be immediately sent by ASIC to the solicitors on the run-out program – preferably before investor/victims are statute barred. The letter demands that the solicitors send a letter to each and every client affected by defaulting loans or even the few loans, which are current. Solicitors who comply with this simple request, give retirees the opportunity to receive lists of co-investors by waiving the right to confidentiality in this instance. The letters simply offer investors the chance to have their name passed on to only the consenting mortgagees in the same mortgage.
I delivered letters, in person, to each of the Law offices, TLS and ASIC. I held a meeting with the Tasmanian ASIC hierarchy (with police escort – do you believe this!) and repeated RECA’s demands made three weeks ago, in Brisbane to Darren McShane. The Mercury rang Mr Johnston (Exec Dir of FSR nationally) for comment. His answer – he stated NO LISTS because of confidentiality – the weapon the lawyers have used for the past four years of defaulting loans. Messrs Johnston (EXEC Dir of FSR ASIC) and McShane are about to enter a correspondence course with RECA! We battle on.
Meanwhile, back where it all began in WA
The West Australian rang me in Hobart for the comments in their paper regarding the DPP dropping charges against a broker, even though serious charges were laid and evidence abounds, because “it was not in the public interest to proceed!” Another blot on the WA history books. Crikey, the lucky broker was a member of the Finance Brokers Board as well as the 1996 FB Industry Review Committee – at the time of the alleged offences. I will be writing to the DPP – Mr R Cocks and Co. Copies to everyone of course! Watch WA with interest – could be more charges dropped! Precisely what happened after Wanneroo Inc Royal Commission. It appears a standard pattern. Meanwhile the IMF packages are rolling through the door in Perth (and who doubted they would) as IMF prepares to take on the Finance Brokers Supervisory Board on behalf of WA retiree/victims for recovery of WA losses – the West Australian Government are bracing themselves for a massive compensation claim.
There are 4500 regulators and pollies out there, and millions of us. The odds are with those on the side of consumer reform. We are searching for lawyers with a social conscience, such as Doug Solomon in WA. Without doubt, standards must be raised in Australia. Integrity appears to be missing. HIH, One-Tel, CNAL are only the beginning. Masses of Super dollars are currently invested in companies, which have yet to be exposed. Messrs Costello and Hockey must explain their bizarre behaviour during this period and why this dynamic duo are acting as if we condone the proliferation of straw companies to the detriment of consumers both here and overseas and why we condone a weak an ineffective regulatory authority, yet boast internationally of our safe and “enviable” financial and economic regulatory systems.
The annual budget for “watchdog” activity is a generous $136 million, yet ASIC continually consult with political allies, industry bodies and do not see a need for consumer consultation. RECA receives no state or federal funding, yet we manage to carry out many of ASIC’s tasks whilst they practice “monitoring”. The time for monitoring ceased five years ago. Why is the Federal Opposition so silent on this topic? Kim’s seat in WA is riddled with retiree/victims who write regularly to him. Is this a “bipartisan” approach by the major parties to pretend it will all dissolve into history? Why is it not necessary (in their view) to hold a national inquiry into the Finance and Corporate Sector and why do we not need to know where billions of dollars of mums and dads life savings have disappeared? The Senate can only do so much. Parliament must respond to the people – or have the goal-posts been moved?
Remember that the Sunday Tasmanian (onya Simon) was the first to claim: “Bigger than HIH” – and it is – just through the massive number of people involved and the number of law firms involved. My quote for this week (thanks to Anne) in Tuesday’s Tas Mercury: “RECA believes a big yellow ribbon should be tied around the whole of Australia right now, and have it declared a crime scene.” Just where are the Corporate Cops this week and why do they all appear to be on mogodon? The best part of our Australian democracy is the freedom of the press, and we salute all those investigative journalists around Australia who have worked incredibly hard to prise open this particular pandora’s box. Perhaps Australian citizens are getting fed up with party politics standing in the way of good government. The Crikey Team are everything to do with getting the message out – and Aussies around the country owe you all debt of thanks. Our motto: if you have the will, it can be done.
cheers, Denise Brailey