❓ A parliamentary question addresses delays and limitations in compensation for victims of fraudulent finance brokers. The government defends its actions, citing prior assistance and moral grounds for the compensation fund, while clarifying eligibility criteria.
AnsweredQoN 3057Legislative Assembly
QuestionView source ↗
(a) it has taken over six years for any of the victims to receive financial compensation;
(b) the decision was made to create a fund that covers only 20 per cent of the total monies lost; and
(c) it was only those who lost money through the actions of brokers subject to the IMF action that were provided compensation?
(2) Why are those victims not party to the IMF action excluded from compensation?
(b) the decision was made to create a fund that covers only 20 per cent of the total monies lost; and
(c) it was only those who lost money through the actions of brokers subject to the IMF action that were provided compensation?
(2) Why are those victims not party to the IMF action excluded from compensation?
AnswerView source ↗
Answered
17 March 2008
Responded by
Minister for Consumer Protection
Response time
20 days
(1)(a) The State Government previously provided funding to liquidators appointed to two failed finance brokers as well as Legal Aid WA to assist finance brokers' victims to recover monies from various parties responsible for their losses. Finance brokers' victims previously recovered significant sums of money as a result of these initiatives.
The Government maintained and maintains that the State fell under no legal liability to finance brokers' victims and that the
Van Stokkum
litigation was unlikely to succeed. It is also noted that for a significant period of time the action was stayed by the Supreme Court on the ground that the nature of IMF's arrangements with its clients rendered the action an abuse of process. Ultimately, however, particularly having regard to the State's strong financial position, the State concluded that it was appropriate on moral grounds to make compensation available to those investors who had lost money as a result of the fraudulent and criminal activities of finance brokers and their professional advisers during the 1990s.
(1)(b) As noted above, finance brokers' victims recovered part of their lost investments as a result of the State providing funding to liquidators of failed finance brokers and Legal AidWA. For example, with funding from the State, the liquidator of Rowena Nominees Pty Ltd (Grubb Finance) recovered approximately $10 million in actions against the St George Bank and Mr Grubb's former auditors. Following these recoveries the liquidator advised that investors would receive between 62 and 78 cents in the dollar. The recent $30 million compensation fund was established taking into account all the circumstances, including the desire to provide further assistance to finance brokers' victims, notwithstanding the State's view that the victims' action was unlikely to succeed; the likely cost of that action whatever its outcome; the State's financial position; and the potential for many investors to recover funds from ongoing liquidations of finance brokers and/or through separate legal actions against a number of finance brokers' professional advisers (eg accountants, lawyers, etc).
(1)(c) The
Van Stokkum
litigation was commenced following a thorough review by IMF of the potentially actionable conduct of relevant finance brokers. The conduct identified in the litigation as potentially actionable was closely scrutinised by the State in the context of it defending the
Van Stokkum
action. It was therefore considered appropriate that the ex gratia fund's eligibility criteria should, in the interests of consistency, certainty and rapid claim processing, in essence reflect the nature of the claims made in the litigation.
(2) They were not excluded from the fund. The Government established the ex gratia finance broker victim compensation fund for the benefit of all persons, whether or not plaintiffs in the
Van Stokkum
litigation funded by IMF, who satisfied the terms of the fund arrangements. Approximately 200 non plaintiffs received monies from the compensation fund.
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The Government maintained and maintains that the State fell under no legal liability to finance brokers' victims and that the
Van Stokkum
litigation was unlikely to succeed. It is also noted that for a significant period of time the action was stayed by the Supreme Court on the ground that the nature of IMF's arrangements with its clients rendered the action an abuse of process. Ultimately, however, particularly having regard to the State's strong financial position, the State concluded that it was appropriate on moral grounds to make compensation available to those investors who had lost money as a result of the fraudulent and criminal activities of finance brokers and their professional advisers during the 1990s.
(1)(b) As noted above, finance brokers' victims recovered part of their lost investments as a result of the State providing funding to liquidators of failed finance brokers and Legal AidWA. For example, with funding from the State, the liquidator of Rowena Nominees Pty Ltd (Grubb Finance) recovered approximately $10 million in actions against the St George Bank and Mr Grubb's former auditors. Following these recoveries the liquidator advised that investors would receive between 62 and 78 cents in the dollar. The recent $30 million compensation fund was established taking into account all the circumstances, including the desire to provide further assistance to finance brokers' victims, notwithstanding the State's view that the victims' action was unlikely to succeed; the likely cost of that action whatever its outcome; the State's financial position; and the potential for many investors to recover funds from ongoing liquidations of finance brokers and/or through separate legal actions against a number of finance brokers' professional advisers (eg accountants, lawyers, etc).
(1)(c) The
Van Stokkum
litigation was commenced following a thorough review by IMF of the potentially actionable conduct of relevant finance brokers. The conduct identified in the litigation as potentially actionable was closely scrutinised by the State in the context of it defending the
Van Stokkum
action. It was therefore considered appropriate that the ex gratia fund's eligibility criteria should, in the interests of consistency, certainty and rapid claim processing, in essence reflect the nature of the claims made in the litigation.
(2) They were not excluded from the fund. The Government established the ex gratia finance broker victim compensation fund for the benefit of all persons, whether or not plaintiffs in the
Van Stokkum
litigation funded by IMF, who satisfied the terms of the fund arrangements. Approximately 200 non plaintiffs received monies from the compensation fund.
Notice: This document is created or edited using unregistered or evaluation copy of rtLib valid for testing or development purposes only. To use it for productive or any other purposes please register it. You may purchase the license on
http://www.rtlib.com
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