(1)   What is the Government doing in relation to the failure of the Australian Securities and Investment Commission to properly monitor Westpoint Mezzanine Companies.

(2)   What assistance will he give to those self-funded retirees who invested in good faith and have lost their retirement savings in Westpoint Mezzanine Companies.

(1)   The Australian Securities and Investments Commission (ASIC) does not accept the assertion that it has failed to properly monitor the Westpoint Mezzanine Companies. ASIC began monitoring Westpoint’s fundraising activities in 2002, and commenced regulatory action in 2003. ASIC then instigated formal court proceedings in early 2004 regarding its fundraising activities. In connection with this court case ASIC also wrote to each investor in the two fundraising schemes providing the subject matter of the case informing them of ASIC’s court action and outlining the nature of its concerns about the Westpoint mezzanine financings. ASIC also at various times placed warnings on its website alerting investors to the risks of putting money into high-yield debt instruments, with the first such release occurring in May 2003. In 2005 ASIC made applications for the winding up of certain Westpoint entities to the courts after receiving evidence that they were insolvent. The courts agreed to these applications, which has resulted in the end of all fundraising activities by the group. ASIC subsequently commenced investigations into the conduct of a number of parties involved in operating and promoting the Westpoint mezzanine finance schemes. Action has been started against a number of the main Westpoint directors, including group founder Mr Norman Carey. ASIC has obtained a court order freezing the personal assets of these individuals and barring them from leaving the country while its investigations continue. Those orders have since been extended. ASIC has also announced that it is investigating the conduct of financial advisers involved in promoting the Westpoint schemes and that appropriate action will be taken if breaches of the law are found to have occurred. ASIC acted to prevent one of the main promoters of the Westpoint schemes, Mr Neil Burnard, from leaving the country. Mr Burnard’s assets have been frozen pending further investigations by ASIC. ASIC continues to investigate all aspects of the collapse of the Westpoint group of companies. Heavy penalties, both civil and criminal, apply to persons who may be in breach of their obligations under the Corporations Act 2001. Anyone found to be in breach of the law will be referred by ASIC to the Director of Public Prosecutions for prosecution. The Australian Government made appropriate provisions in its 2006 Budget to ensure that ASIC has the necessary funding to pursue cases such as Westpoint. In particular, ASIC has received additional funding of $30 million per annum for the investigation and litigation of exceptional matters of significant public interest. Total additional funding of $234.6 million over the next four years has been made available to ASIC through the Budget.

(2)   ASIC’s actions since its insolvency applications to the courts have been principally intended to ensure that all assets and funds that are rightfully owned by Westpoint creditors are preserved for distribution to them. This is the reason for ASIC’s applications to appoint liquidators to some of the mezzanine finance companies and also to the Westpoint parent company, all of which were agreed to by the courts. ASIC is now as a matter of urgency also considering the position of Westpoint directors, company officers, advisers and auditors to determine what further action could be taken. In April 2006 ASIC obtained court orders freezing the assets of the main Westpoint directors, including group founder Norman Carey, and banning them from leaving the country. Those orders remain in force. These orders were made based on evidence submitted by ASIC indicating fraudulent attempts to move company assets beyond the reach of creditors. ASIC’s actions may have the potential to lead to the further recovery of funds for distribution to creditors. It is, however, too early at this stage to speculate on possible outcomes due to the ongoing nature of ASIC’s investigations. ASIC is helping investors in claiming compensation from financial advisers who gave them defective advice. ASIC has put together detailed advice for Westpoint investors on how to claim compensation from such advisers. This advice is available through ASIC’s website or upon telephone request. ASIC has announced that it will closely monitor the response of these advisers to ensure that client complaints and claims for compensation are dealt with quickly and fairly.