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Tuesday, 29 May 1973
Page: 2759

Mr STALEY (CHISHOLM, VICTORIA) - Now the Hopewell caper thickens. Not only were the Dividend Fund shareholders who sold out closely associated with Mr Dyason, but the very debt for which other Dividend Fund shareholders are being chased is also associated with Mr Dyason. The Dyason interests are massive shareholders in the Increment Fund which will reap the reward of the liquidation as it is owed money by Dividend Fund. Public shareholders invest in an unlimited liability mutual fund Dividend Fund Incorporated. Dividend Fund goes broke, owing a substantial amount to Increment Fund and its shareholders. Because Dividend Fund has an unlimited liability structure, its shareholders will be called on to cover its deficiency, and in effect to help cover the debt to Increment Fund. Some Dividend Fund shareholders close to the managers of the whole messy business arrange a $2 companystooge to save them from the call.

And while they miss out on having to meet the unlimited liability debts of Dividend Fund, they continue to reap the benefits of payments by others.

It is a clear case of innocent victims of a corporate failure being sucked dry to meet the losses of the guilty. Incredibly, some of the innocents money in payment of the debt will actually be channelled back to those associated with the culpable management. The tragedy of Dividend Fund is that most of the shareholders are older people who had sought a safe investment for their lifetime savings. They were not shrewd speculations, gamblers or opportunists. They are simple, thrifty people who were anxious to provide for their own financial well-being. They are now being hounded to meet the unlimited liability debts of Dividend Fund, and to find more money to cover extra losses. The company liquidator is now pursuing these investors for their money, and unless something is done they will be forced to pay up.

Apart from the obvious iniquities of this devilish mix-up, there is another important consideration. The liquidator involved, a Melbourne accountant, Mr D. O. Oldfield from the firm of Hornemann, Macaw and Oldfield, appears to be in a most difficult position. He is not only the liquidator of some of the Garretty group companies. He was also asked by the former Garretty director, Mr Dyason who also happens to be his client, to liquidate Dyason Investments Pty Ltd. This company was involved with the Hopewell manoeuvre. So Mr Oldfield is also a liquidator of a company which is involved with the Dyason family's attempts to avoid responsibility for the debts while reaping the results of the liquidator's debt collection. The risk of conflict appears devastating. Because of the problems of finding an equitable solution to this disaster, because of the problems of hardship on innocent victims of sharp company practice, and because of the conflicts and the unprecedented nature of this situation, I appeal to the Victorian Government. This liquidation should be stopped. Before it proceeds, every legal means should be explored to prevent the gross iniquity of having innocent victims of a company failure contributing to the wealth of the people who helped cause the failure. If the law allows this, then so much the worse for the law. In the name of justice for decent, average Australians,a solution must be found.

Finally we must examine more closely than ever the need for new national controls on the securities industry. The Victorian Government is trying to investigate and keep tabs on company criminals, but it is understaffed and restricted by the national nature of many of the crimes involved. The Dividend Fund case and the Hopewell caper also bring out some important questions for future law in the securities area. (Extension of time granted).

Firstly, is there sufficient control of non-listed public companies and mutual funds such as Dividend Funds and, with no stock market supervision or interest in the affairs of these companies, is there adequate supervisory machinery geared to protecting investors involved? Secondly, are the affairs of mutual funds and unlisted public companies given sufficient attention in the finance media and would it be reasonable to insist that these companies advertise in the media their annual and half year profit reports? Thirdly, is the law of defamation too strict in Australia to allow fair reporting of the affairs of these companies? The fact that I must raise these matters under parliamentary privilege, I think, indicates that this may be the case. A vigilant and critical Press has been proved a salutary force against corporate and other criminals in many places. Fourthly, do the provisions of the various State Companies Acts provide for sufficient supervision of such people as liquidators, receivers and other official company managers? These are important questions for the future. Scandals such as the Garretty one must be nipped in the bud before they break the hearts and plunder the pockets of innocent average Australians.

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