Westpoint Corporation
Encyclopedia
Westpoint Corporation Pty Ltd was the head company of the Western Australia
n based Westpoint Group of Companies ("Westpoint Group") which was primarily engaged in property development and raising finance for that purpose. Receivers and managers were appointed on 2 February 2006. Prior to the collapse the corporation was worth A$
1.7 billion. During 2006 assets of the corporation were being sold.
, in which investors' own money was used to pay their interest. New money was pooled, turned around and, in part at least, shoved out to service old money.
Financial planners encouraged their clients to make what were obviously bad investments because the promoters kicked back an average up-front commission to planners of 10 per cent out of the money that they raised. Thus, every $10 invested became $9 from the beginning.
A total of $304,370,984 was invested by 3524 unsuspecting people in a series of seven mezzanine funds devised by Westpoint's Norm Carey and Richard Beck, and now controlled by PricewaterhouseCoopers. Another two funds have $37 million invested and are controlled now by Ferrier Hodgson. The money was immediately and entirely transferred into the same number of property development companies which in turn churned it back into Westpoint Corporation from which it was spent.
From this money, Westpoint paid interest to the investors who provided that money, and the commissions to financial planners via Richard Beck, a director of Westpoint, former West Australian head of property firm Colliers Jardine and former head of KPMG's national corporate governance practice.
The salaries of 400 Westpoint workers were paid, plus interest to first mortgage lenders who financed the acquisition of land at rates of 10 per cent and more, upon which the hotels and apartment blocks were supposed to be built with investors' money.
The debts total $312 million, including $3.5 million in unpaid super. According to one administrator, Ian Francis of Taylor Woodings in Perth, the net assets available for distribution total roughly $21 million, after ING, which appointed the administrators to Westpoint Corporation, has been paid. Cash at bank at the time of the collapse late in 2005 was about $975,000.
None of the nine mezzanine funds that actually raised the funds and the related property development companies that existed to build the buildings, had any money at all. Every cent was advanced to Westpoint and then vanished. The investigation by ASIC has continued throughout 2006 and 2007.
The Australian Securities and Investments Commission
is investigating possible action against the directors, Norm Carey, Graeme Rundle, John Dixon and Richard Beck. ASIC has sought specific information about Westpoint from financial planner
s whose clients invested in Westpoint and requires planners to provide monthly reports about how they are dealing with Westpoint related client complaints and losses.
In June 2006, ASIC has successfully sought orders against Mr Neil Austin Burnard, whose company was believed by ASIC to be involved in raising substantial funds of more than $100 million for Westpoint from retail investors, mainly in NSW and Queensland, and earned commissions from Westpoint of approximately $6.5 million.
The Bayview Apartments, located on 78-92 Bay Street, Port Melbourne
, was a $130 million project value and one of Westpoint's development projects. The land of the apartment
block was stretched from the east, Little Bay Street, to the west, Rouse Street, and from the south, Dow Street, to the north, Bay Street. It contains 280 apartments including a heritage bank building (1874) and a heritage bluestone
warehouse (1864) in the Bay Street and Dow Street respectively. The main part of the Bayview Apartments development is on the old envelope
manufacturing plant site. The outlooks of both heritage buildings are well preserved. The construction of Bayview Apartments commenced in October 1999, and was completed in July 2003.
Westpoint originally organized two schemes to investors providing either buying the units of the apartments or the promissory note
s through the financial planners and its sales network. Today, units in the development still have the market value but investors who bought the promissory notes issued by Westpoint have been told they were unlikely to get their investment back in the Westpoint collapse. 2,000 of the 4,000 investors in the failed Westpoint are suing their financial advisors in one of Australia's biggest class action
litigations.
The former National Bank
building on 96 Bay Street was constructed in 1874. Tenders were called for this building by Terry and Oakden on the 1st January 1874. By 1874 the rate books recorded the 9 rooms of brick building valued at £250. In 1889, G Jobbins, Architect
, undertook the additional of the extra bay to the south in a sympathetic manner.
This building provides an excellent example of an intact bank in the conservative classical style, employing all the correct architectural mouldings of the Italian Renaissance Revival. Also this building provides extremely important streetscape element to Bay Street.
The heritage bank building was integrated as the part of Bayview Apartments development and converted to 12 heritage apartments.
A large early bluestone
warehouse at Dow Street has historic importance as being built by Messrs. Morley and Carrick, important figures in the history of Port Melbourne
.
In December 1864 allotments 6 and 7 contained various wood and iron building owned by Reynolds & Co. in the rate book entry, the name is crossed out and the name Morley & Carrick is penciled in.
The rate book entry for November 1865 has description “Bond’d & Free Store Stabling for 30 horses”. By 1868 the description of the building was “Store Bond & Free Store” and 1870: “Large Bluestone Store”.
The heritage bluestone building was integrated as the part of Bayview Apartments development and converted to 26 heritage apartments.
Western Australia
Western Australia is a state of Australia, occupying the entire western third of the Australian continent. It is bounded by the Indian Ocean to the north and west, the Great Australian Bight and Indian Ocean to the south, the Northern Territory to the north-east and South Australia to the south-east...
n based Westpoint Group of Companies ("Westpoint Group") which was primarily engaged in property development and raising finance for that purpose. Receivers and managers were appointed on 2 February 2006. Prior to the collapse the corporation was worth A$
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
1.7 billion. During 2006 assets of the corporation were being sold.
History
Westpoint Corporation and its mezzanine funds constituted a Ponzi schemePonzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
, in which investors' own money was used to pay their interest. New money was pooled, turned around and, in part at least, shoved out to service old money.
Financial planners encouraged their clients to make what were obviously bad investments because the promoters kicked back an average up-front commission to planners of 10 per cent out of the money that they raised. Thus, every $10 invested became $9 from the beginning.
A total of $304,370,984 was invested by 3524 unsuspecting people in a series of seven mezzanine funds devised by Westpoint's Norm Carey and Richard Beck, and now controlled by PricewaterhouseCoopers. Another two funds have $37 million invested and are controlled now by Ferrier Hodgson. The money was immediately and entirely transferred into the same number of property development companies which in turn churned it back into Westpoint Corporation from which it was spent.
From this money, Westpoint paid interest to the investors who provided that money, and the commissions to financial planners via Richard Beck, a director of Westpoint, former West Australian head of property firm Colliers Jardine and former head of KPMG's national corporate governance practice.
The salaries of 400 Westpoint workers were paid, plus interest to first mortgage lenders who financed the acquisition of land at rates of 10 per cent and more, upon which the hotels and apartment blocks were supposed to be built with investors' money.
The debts total $312 million, including $3.5 million in unpaid super. According to one administrator, Ian Francis of Taylor Woodings in Perth, the net assets available for distribution total roughly $21 million, after ING, which appointed the administrators to Westpoint Corporation, has been paid. Cash at bank at the time of the collapse late in 2005 was about $975,000.
None of the nine mezzanine funds that actually raised the funds and the related property development companies that existed to build the buildings, had any money at all. Every cent was advanced to Westpoint and then vanished. The investigation by ASIC has continued throughout 2006 and 2007.
The Australian Securities and Investments Commission
Australian Securities and Investments Commission
The Australian Securities & Investments Commission is an independent Australian government body that acts as Australia's corporate regulator...
is investigating possible action against the directors, Norm Carey, Graeme Rundle, John Dixon and Richard Beck. ASIC has sought specific information about Westpoint from financial planner
Financial planner
A financial planner or personal financial planner is a practicing professional who helps people deal with various personal financial issues through proper planning, which includes: cash flow management, education planning, retirement planning, investment planning, risk management and insurance...
s whose clients invested in Westpoint and requires planners to provide monthly reports about how they are dealing with Westpoint related client complaints and losses.
In June 2006, ASIC has successfully sought orders against Mr Neil Austin Burnard, whose company was believed by ASIC to be involved in raising substantial funds of more than $100 million for Westpoint from retail investors, mainly in NSW and Queensland, and earned commissions from Westpoint of approximately $6.5 million.
Bayview Apartments Port Melbourne
Port Melbourne, Victoria
Port Melbourne is a suburb of Melbourne, Victoria, Australia, 5 km southwest of Melbourne's central business district. Its Local Government areas are the cities of Port Phillip and Melbourne. At the 2006 Census, Port Melbourne had a population of 13,293....
, was a $130 million project value and one of Westpoint's development projects. The land of the apartment
Apartment
An apartment or flat is a self-contained housing unit that occupies only part of a building...
block was stretched from the east, Little Bay Street, to the west, Rouse Street, and from the south, Dow Street, to the north, Bay Street. It contains 280 apartments including a heritage bank building (1874) and a heritage bluestone
Bluestone
Bluestone is a cultural or commercial name for a number of dimension or building stone varieties, including:*a feldspathic sandstone in the U.S. and Canada;*limestone in the Shenandoah Valley in the U.S...
warehouse (1864) in the Bay Street and Dow Street respectively. The main part of the Bayview Apartments development is on the old envelope
Envelope
An envelope is a common packaging item, usually made of thin flat material. It is designed to contain a flat object, such as a letter or card....
manufacturing plant site. The outlooks of both heritage buildings are well preserved. The construction of Bayview Apartments commenced in October 1999, and was completed in July 2003.
Westpoint originally organized two schemes to investors providing either buying the units of the apartments or the promissory note
Promissory note
A promissory note is a negotiable instrument, wherein one party makes an unconditional promise in writing to pay a determinate sum of money to the other , either at a fixed or determinable future time or on demand of the payee, under specific terms.Referred to as a note payable in accounting, or...
s through the financial planners and its sales network. Today, units in the development still have the market value but investors who bought the promissory notes issued by Westpoint have been told they were unlikely to get their investment back in the Westpoint collapse. 2,000 of the 4,000 investors in the failed Westpoint are suing their financial advisors in one of Australia's biggest class action
Class action
In law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
litigations.
The former National Bank
National Australia Bank
National Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation...
building on 96 Bay Street was constructed in 1874. Tenders were called for this building by Terry and Oakden on the 1st January 1874. By 1874 the rate books recorded the 9 rooms of brick building valued at £250. In 1889, G Jobbins, Architect
Architect
An architect is a person trained in the planning, design and oversight of the construction of buildings. To practice architecture means to offer or render services in connection with the design and construction of a building, or group of buildings and the space within the site surrounding the...
, undertook the additional of the extra bay to the south in a sympathetic manner.
This building provides an excellent example of an intact bank in the conservative classical style, employing all the correct architectural mouldings of the Italian Renaissance Revival. Also this building provides extremely important streetscape element to Bay Street.
The heritage bank building was integrated as the part of Bayview Apartments development and converted to 12 heritage apartments.
Bluestone
Bluestone is a cultural or commercial name for a number of dimension or building stone varieties, including:*a feldspathic sandstone in the U.S. and Canada;*limestone in the Shenandoah Valley in the U.S...
warehouse at Dow Street has historic importance as being built by Messrs. Morley and Carrick, important figures in the history of Port Melbourne
Port Melbourne, Victoria
Port Melbourne is a suburb of Melbourne, Victoria, Australia, 5 km southwest of Melbourne's central business district. Its Local Government areas are the cities of Port Phillip and Melbourne. At the 2006 Census, Port Melbourne had a population of 13,293....
.
In December 1864 allotments 6 and 7 contained various wood and iron building owned by Reynolds & Co. in the rate book entry, the name is crossed out and the name Morley & Carrick is penciled in.
The rate book entry for November 1865 has description “Bond’d & Free Store Stabling for 30 horses”. By 1868 the description of the building was “Store Bond & Free Store” and 1870: “Large Bluestone Store”.
The heritage bluestone building was integrated as the part of Bayview Apartments development and converted to 26 heritage apartments.
External links
- Report on the liquidators report
- Westpoint Justice web site - Information and help for victims of Westpoint Investments