With banks reporting losses measured in billions, who’s going to care about another little “secure” debenture company going under with $63 million owed to 1,180 investors? Aside from those doing their dough, the answer seems to be “nobody much”.

Sandhurst Trustees appointed Ferrier Green Krejci Silvia as receivers and managers of LKM Capital Ltd on Friday, but perhaps didn’t feel an urge to publicise that. Sandhurst – owned by Bendigo and Adelaide Bank – was also the trustee for Fincorp, among others. Ferriers put out their own media release yesterday and it seems only businessspectator.com.au bothered to mention it.

There is more at stake here though than just the unfortunates who took up the invitation for “investment debentures with a trusted company”, as LKM’s website inevitably puts it. (“LKM is part of the Koops Martin Group”, we’re told, as if that’s supposed to mean something – a couple of regional lawyers who decided to expand into the asset management business, now claiming revenues of more than $50 million a year while managing $700 million worth of other people’s money.)

There are two other angles to consider:

  1. There are more to come. Remember that our initial wave of Fincorp/Westpoint/ACR happened before the credit crunch, back when money was still easy to come by. I’ve been waiting for the traditional series of developer collapses that tend to accompany tighter money in Australia, but that series of storms is still brewing. I’m told there’s no shortage of smaller developers in trouble in the more distressed areas – south-west Sydney – but the likes of LKM going under is an indication that the people they money to are going under as well.
  2. As Crikey reported at the time, the then-newish ASIC chief Tony D’Aloisio made a very brave, very hairy-chested statement to a Senate committee in May last year when asked why the watchpuppy hadn’t been serious about that earlier series of dodgy debenture company failures. “Because I wasn’t there,” said Big Tony.

Bad move that, because once you claim the first of the Bart Simpson defences, you are by implication on the job thereafter. And, well, Tony has been there for quite a while now and it’s still happening.

Particularly pointedly, Tony’s ASIC dropped proceedings against five Fincorp directors last month after Sandhurst said it would not fund insolvency claims brought by Fincorp’s liquidators. So much for using some of the rich profits ASIC reaps from honest Australian businesses to fearlessly pursue those accused of trading while insolvent.

And most obviously – at least to regular readers of Crikey and The SMH – is the way Big Bad Tony’s ASIC (and Graeme Samuel’s FuelWatch/GroceryWatch/whatever-my-new-masters-want-watched ACCC) dumbly stood by while the Firepower conmen shouted to the skies that they were running a massive scam. Only now is ASIC pottering about, looking to remove a little of the horse manure from the empty Firepower stable to toss on their petunias.

So don’t worry if you missed the LKM story – there will be more. Tony’s on the job.

Peter Fray

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