Aftermath of Australia's botched timberland managed investment schemes rumbles on as investors years later still fight for compensation; Victoria's Supreme Court currently hearing country's largest class action, against Great Southern
July 19, 2013
– Years after a multibillion-dollar timber investment scheme promoted by the Australian government collapsed, thousands of investors are still seeking compensation, ABC News reported on July 15.
The managed investment scheme (MIS) system established by the Howard government aimed to establish more than 2.5 million hectares of taxpayer-funded forests so that Australia could become self-sufficient in plantation timber.
Big-name companies TimberCorp and Great Southern Group were among those operating MIS schemes, and among the most high-profile collapses, leaving some 61,000 investors poorer and rural areas suffering, reported ABC.
Court battles with liquidators and banks have left investors frustrated and landowners in limbo—unable either to obtain rental payments for trees on their land, nor to harvest the trees, according to ABC.
Some 20,000 investors are involved in a case involving Great Southern that is currently being heard by Victoria's Supreme Court; it is Australia's largest class action, ABC noted.
Great Southern's founding director John Young has reportedly spent AU$2 million on his defense; his lawyer asserts no guarantee was ever made of the success of any investments in the timber schemes.
However, agribusiness analyst David Marshall believes investors were misled, after being shown internal data in documents reportedly obtained from the former Great Southern Group on past and forecast timber yields.
Marshall said the average grow rate and stumpage price--the two key drivers of investment on a timber plantation—were both 40% to 60% below what the company’s prospectuses said, ABC reported.
The figures were prepared by key Great Southern executives including director and general manager of forestry Gavin Ellis, who plans to give evidence that he personally discussed concerns with Young that the company had misled investors, ABC reported.
Marshall told ABC the schemes were botched because of “greed” and “naivety driven by totally unscrupulous people” and had cost the government at least AU$5 billion, adding that perhaps only 20 of 1,000 MIS schemes were profitable.
Sam Patton, another agribusiness analyst, said the MIS schemes had no accountability, the government did not supervise them, and no-one was independently auditing them on behalf of taxpayers.
The primary source of this article is ABC News, Sydney, Australia, July 15, 2013.