About 400 Western Australian investors with failed finance broker Graeme Grubb could receive up to 70 cents in the dollar after St George Bank reportedly agreed to pay almost $10 million to settle long running claims.
About 400 Western Australian investors with failed finance broker Graeme Grubb could receive up to 70 cents in the dollar after St George Bank reportedly agreed to pay almost $10 million to settle long running claims.
Mr Grubb was probably the most high profile of a series of finance brokers whose failed dealings left many WA retirees in financial difficulties. The issue ultimately led to the electoral loss of the state Liberal government which had viewed as unresponsive to the issue and had too many political connections with some of the finance broking community.
Mark Conlan from RSM Bird Cameron, liquidator for Graeme Grubb Finance Broker, took legal action against Grubb's bankers, St George, for the recovery of trust funds.
Mr Conlan said the timing of any distribution is subject to WA Supreme Court approval for a complex trust distribution scheme which was heard by the Supreme Court last week.
A St George Bank spokesman declined to comment on the matter.
Below is a announcement on the issue from RSM Bird Cameron:
After five years, the liquidator of failed finance broker Graeme Grubb is confident there's 'light at the end of the tunnel' for hundreds of Western Australian investors.
Mark Conlan from RSM Bird Cameron said a settlement of litigation against St George Bank for $9.6 million reached recently through private mediation will mean he could deliver a return to investors of 60 cents in the dollar. He added that the total return to investors is likely to exceed 70 cents in the dollar if future recoveries are in line with expectations.
"There are more than 400 investors with outstanding claims, many of whom are self-funded retirees, and the conditional settlement means they are now likely to recover a significant proportion of their funds - towards the top end of our original estimations," said Mr Conlan.
Mr Conlan in his capacity as liquidator for Graeme Grubb Finance Broker took legal action against Grubb's bankers, St George, for the recovery of trust funds.
The litigation was extremely complex and raised a number of banking and trust issues not previously determined by Australian courts.
"We are very pleased with the result - and thank the State Government for their support in funding the litigation and St George for its co-operation in arriving at a mutually acceptable settlement at the mediation."
The liquidator's action against the Bank has been funded by the State Government.
"The issues involved have been complex. The State Government has been able to fund the action which will significantly improve the return for many investors," said Hon John Kobelke MLA, Minister for Consumer and Employment Protection.
The State Government also funded separate legal proceedings against the former auditors of the Graeme Grubb Finance Broker trust account. Those proceedings have also been settled in principle at a court-assisted mediation. Investors will also benefit from that confidential settlement.
Mr Conlan said that once the settlement with St George was finalised and payments made to investors, it closes a significant chapter in what has become known as "the finance brokers scandal".
"We would hope a trust distribution could take place early in the new year however the timing of any distribution is subject to the Supreme Court approving a complex trust distribution scheme which was heard by the Supreme Court last week," said Mr Conlan.
In the early 2000s, about 7000 people were affected by the collapse of several WA finance broking firms including Graeme Grubb Finance Broker. The "finance brokers scandal" was the subject of three government inquiries including an independent inquiry established under former District Court judge Ivan Gunning and a Royal Commission.
In June 2000 Graeme Grubb confessed to stealing more than $5.2 million from clients while a director of the firm, Graeme Grubb Finance Broker between October 1997 and October 1999. He was sentenced to 10 years jail.