12 July 2012

Perpetual Trust: Trustees Executors v. Perpetual Trustees


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