At last, Macquarie Bank is on the record in a meaningful way about the extraordinary dealings surrounding Allstate Exploration and its Beaconsfield gold mine in Tasmania.

As we’ve reported before, Macquarie Bank is suing The Australian over a Michael West feature in May this year which claimed the bank had done a sweetheart deal with Allstate’s administrators to buy $50 million worth of inter-company debts for just $300,000. Adam Shand and Paul Steindl from Channel Nine’s Sunday program have also been working on a story about Allstate.

I mentioned all of this at the Macquarie AGM yesterday and then asked the board to explain what had happened. Was it true that Macquarie was on to a bonanza and what about all these allegations and legal stoushes?

Managing director Allan Moss declined to give any figures but said Macquarie originally “lent a large amount of money,” believed to be $20 million, to Allstate and when the mine didn’t function as planned the company went into administration.

“The administrator was appointed by the board,” Moss stressed. “As one of the measures to raise money to keep the mine going, the administrator proposed to creditors that Macquarie Bank be offered some substantial inter-company debts.

“Subsequently, as sometimes happens in the mining industry, things have gone better than expected… and you are correct that that investment is turning out relatively well for us, but it’s still got some way to go.”

Making a 166-fold return on an investment is surely better than “turning out relatively well,” although Moss was keen to stress that unsecured creditors are also doing better that originally expected.

“I understand that unsecured creditors have today been paid more than 80c in the dollar and I understand that they have got a very good chance of getting all their money back from a company that was in administration,” Moss told shareholders. “We’ve looked carefully at this and we’re satisfied we’ve behaved completely properly in all respects.”

“To my knowledge we’re not being sued by anybody… no action is being taken against us, of any kind.”

Professional litigators IMF is taking action in the NSW Supreme Court to investigate the administrator, so Moss was technically correct in saying that Macquarie is not yet being directly sued, but the game plan is for IMF to put its hands in Macquarie’s pocket and help itself to some of this extraordinary windfall coming out of the Apple Isle.

The Australian surprisingly ignored Moss’s comments and The AFR remains uninterested, but The SMH and The Age both ran the Moss comments at the bottom of other stories.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey