A GROUP of companies controlled by the family of former high-profile state Liberal politician Roger Pescott, has sunk into liquidation owing, by his estimate, about $100 million.
In the past 10 days, the Australian Securities and Investments Commission has been formally advised by two insolvency specialists of serious deficiencies in maintaining the books and records of the Environinvest group.
The specialists have directed the regulator's attention to what they describe as suspicious transactions involving the Pescott family.
The regulator is also examining allegations that Environinvest Ltd, which is 70% controlled by Pescott family interests, traded while insolvent for a long time before it was put into administration on September 19.
Of enormous concern to regulators, investigators and the Victorian Supreme Court is $77 million of funds at risk, which Environinvest raised from the public and put into managed investment schemes that developed thousands of hectares of blue-gum plantations and wheat crops.
While Environinvest raised $62 million to develop tree plantations, millions more were directed to wheat, tomato, lamb and cattle schemes in Victoria, NSW, Queensland and Western Australia - most of which failed and all of which are said to be insolvent.
The only schemes that appear to have value are blue-gum plantations, mostly stretching west of Ballarat, which one day should be harvested for woodchip but, depending on a complicated tussle over their inherent value, may end up being bulldozed.
Mr Pescott, who attended a tense meeting of Environinvest creditors yesterday, insists he has done nothing wrong. He claims the allegations against him and fellow directors are little more than bully tactics by the CBA, and described the meeting as a "farce".
He argued that investments in the schemes should have been notified and accredited with voting power. He also scoffs at claims that Environinvest traded while insolvent.
"We have looked after the tree investors and that is what we continue to try to do in the face of diversionary tactics, which is to try to denigrate the company and its officers," Mr Pescott said outside the meeting.
"These allegations, which are being put into the public, are allegations that will be proven in due course to be nonsense."
The company's receiver, Craig Shepard of Korda Mentha, and liquidator Jim Downey of J. P. Downey & Co, beg to differ. Mr Downey clashed several times with Mr Pescott during the meeting and raised special concern about $8.2 million that Mr Pescott says he is owed for personally guaranteeing Environinvest's loans over nine years.
He says it is mentioned in the 2004 board minutes, but Environinvest's accounts do not log the potential liability until 2007. That was when directors set aside $2 million in the event that Mr Pescott eventually lodged an invoice - which he did two weeks ago.
Mr Downey yesterday challenged Mr Pescott and fellow director Jason Bresnehan, saying the $8 million liability "seems to have existed for some years and that raises some very real implications for the conduct of the directors in not disclosing in a public company records a very substantial liability accruing on this".
Commonwealth Bank, which is owed $47 million and has a charge over Environinvest's land, wants to sell the company - which is exactly what directors had planned for the past year - yet the bank is facing heated opposition.
What will happen to the trees on Environinvest's land, which in fact are assets of the managed investment schemes, is not clear - and that concerns Bendigo and Adelaide Bank, which is owed more than $30 million. Continued…
