Perpetual
Trustee has been forced to accept independent minders monitoring its
board. This after allegations that
interests associated with George Kerr, who ultimately controls Perpetual
Trustee, were siphoning off investment funds to support their own private business
interests.
Perpetual is the
financing arm of listed company Pyne Gould Corporation. It raises funds from the public and like all
public borrowers has a trustee corporation appointed to act on behalf of these
investors. Trustees Executors as
appointed trustee expressed concern that investor interests were at
“significant risk” because of alleged related party dealings between Perpetual
Trustee and the Torchlight Fund, a further fund involving interests associated
with George Kerr.
Concerns centred on a
$21.6 million loan made to Torchlight in February 2012. Perpetual board approval was not given until
after the funds had been advanced with the necessary paperwork to follow. Funds advanced ballooned beyond the total
approved to reach $28.2 million.
After learning of the
transaction, Trustees Executors reported its concerns to the Financial Markets
Authority. Fearing damage to Perpetual
Trustees’ reputation with the investing public, Pyne Gould commenced closed
door negotiations with the Financial Markets Authority, promising to refinance
Torchlight’s borrowings and repay Perpetual.
Concerns about both financial
management within Pyne Gould and the liquidity of Perpetual Trustees became
public in May 2012 with the resignation of Pyne Gould’s auditor KPMG.
Subsequently the High
Court appointed Ms Vivian Fatupaito and Mr Christopher Duffy as observers to
attend meetings of the Perpetual Trustee investment fund board meetings with
authority to see all information available to the board and to ask questions
relevant to the funds advanced to Torchlight.
Pyne Gould has said
that it “expected” to repay the Torchlight advances by the end of July 2012.
Perpetual
Trust v. Financial Markets Authority – High Court (26.6.12) & Trustees
Executors v. Perpetual Trust – High Court (12.7.12)
12.021