23/07/2008 - 22:00

ASIC takes Firepower fight to court

23/07/2008 - 22:00

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There are plenty of potential losers in the story surrounding fuel technology group, which traded under the high profile banner of Firepower.

There are plenty of potential losers in the story surrounding fuel technology group, which traded under the high profile banner of Firepower.

But, among the investors listed in documents filed this week in the Federal Court as part of a civil action launched by the Australian Securities and Investments Commission, one stands out for sheer scale.

While many investors dumped in tens of thousands of dollars and quite a few got into six figures, former Esperance farmer Les Andrews had the biggest investment listed, with his Badah Pty Ltd, the trustee for The Badah Trust, stumping up more than $9.4 million for 7 million shares in Firepower BVI.

Mr Andrews' exposure to Firepower appears only to have been outdone by Ross Graham, the founder of mining services company ET, who revealed he had $20 million at risk split between equity and debt.

British Virgin Islands-registered company, Green Triton Ltd, sold the shares to Badah in May 2006.

Mr Andrews was cashed up at the time, having sold his Esperance cattle and cropping property Linkletters Place for a record $32.5 million.

Around the same time, Mr Andrews also reportedly paid, via Badah, $8 million for a 20 per cent stake in Aspen Dunsborough Lakes development.

WA Business News has been attempting to contact Mr Andrews for more than a week.

Among the minor Firepower investors is Errichetti Nominees Pty Ltd, a company linked to Peter Errichetti who is a former director of Axis International Management Pty Ltd, one of the companies named as a defendant by ASIC in the legal action launched this week.

ASIC's case also names as defendants Malaysian company Firepower Investments Pte Ltd, Owston Nominees No 2 Pty Ltd, Sattvic Pty Ltd, Seaswan Holdings Pty Ltd, Tim Johnston and Quentin Ward.

Perth property developer Warren Anderson is a director of Owston Nominees No 2 Pty Ltd but was not named as a defendant by ASIC. Seaswan is linked to former politician Gordon Hill.

In its case, ASIC claims that shares in Firepower BVI were sold without a prospectus.

While the number of investors listed in the court documents falls short of the 1,400 who committed funds to the group, it contains numerous names from the sporting world and few business leaders.

Australian Finance Group founder Brett McKeon bought more than $70,000 worth of shares in 2005, while Mt Romance founder Steve Birkbeck is listed as buying $20,000 worth in April 2006.

Mr McKeon said he was a regular venture capital investor and was comfortable with a high degree of risk which rewarded him about seven times out of 10.

He said the Firepower referral came from a contact who had provided successful leads in the past. Mr McKeon said he had checked out Firepower's story, including contacting Austrade.

While he was disappointed at what has happened he felt worse for those who had less to lose and took financial advice.

"People like me go in with my eyes wide open," he said.

Another investor is Pejean Pty Ltd, a company owned by Mr Anderson's Peppermint Grove neighbour Robin Baird, which paid more than $200,000 for shares in May 2006.

Of course, all may not be lost.Firstly, some involved cling to the hope that the technology is good.

While WA Business News has disproved many of the claims in promotional material produced by Firepower, there remains claims by at least one person in mine management, at Barrick Gold Corporation, that trials on trucks had achieved a fuel saving above 3 per cent.

However, a further obstacle to earning anything from this investment is doubt over which entity owns the assets, should they be proven to perform.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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