The claims by Steve Vizard’s spin
doctors that he lost $330,000 on his investments plays in Sausage
Software, Keycorp and Computershare need to be examined in some detail,
so we’ve had a look at ASIC’s statement of claim lodged this week in
the Federal Court.

The text of the confidential email that Ziggy
Switkowski sent to Vizard and other Telstra directors on 5 March 2000
included the following statements:

* The leadership of Solution
6 and Sausage were well advanced in discussions to merge into one
organisation, possibly attracting a re-rating of their already high
sharemarket values.

* Telstra would move to a near controlling shareholding in the merged entity.

Vizard
knew at the time that Telstra only owned 10% of Sausage Software, with
options to go to 40% and 25% of Solution 6. A “near controlling
shareholding” clearly indicated that Telstra would be writing out
cheques to increase its stake.

Vizard saw the share prices of
Sausage, Solution 6 and Computershare rocket in the aftermath of
Telstra’s progressive investments in 1999 as the dotcom boom gained
pace. Lo and behold he establishes his secret technology investment
company to invest in precisely these stocks.

The time line is very interesting:

  • 22 June 1999: Telstra acquires 5% of Computershare for $84m from Royal Bank of Scotland.
  • 29 July 1999: Telstra pays $18.9m for 10% of Sausage Software with an option to go to 40%.
  • 15 December 1999: Telstra spends $50m increasing Solution 6 stake to 25%
  • 15 December 1999: Telstra spends $207m lifting Computershare stake from 5% to 15%

It
looks like Vizard was gearing up to profit on the Telstra moves in
December 1999 because he established Creative Technology Investments on
10 December, the bank account at the NAB was opened on 13 December and
$1 million was transferred to it from Vizard family accounts on 15
December, the very day Telstra splurged $257 million on Solution 6 and
Computershare, sending both stocks higher.

Alas, he was
obviously too late, but the immorality of his intentions didn’t dawn on
him and the insider trades started three months later, so let’s return
to the timeline for the Sausage deals he did, which is most
illuminating:

  • 5 March 2000: Ziggy Switkowski emails board on proposed merger between Solution 6 and Sausage Software.
  • 7 March 2000: Vizard instructs his accountant to buy $500,000
    worth of Sausage shares at market prices and picked up 86,000 shares at
    an average $5.82.
  • 17 March 2000: Telstra board approves merger proposal with telco to inject $101 million into Sausage.
  • 20 March 2000: Merger announced to ASX and Sausage shares
    surge $1.60 to a record $7.40, giving Vizard a paper profit of $136,000
    or 27% in just two weeks.

Surely, all of this evidence was
enough to sustain a criminal charge, especially given ASIC powers to
compel witnesses to testify.

Peter Fray

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