By Kate Lahey
A FORMER officer of failed funds management company MFS says the group had so many companies he was unsure exactly which of them were the 26 he was a director of, and that when he tried to raise concerns about the business he was suspended.
On the first day of liquidators' examinations into MFS, later known as Octaviar, which collapsed in 2008 owing more than $2 billion, David John Kennedy described uncontrolled spending of MFS executives, ''Mickey Mouse'' approval processes and a hostile culture in which the company's chairman, former Liberal leader Andrew Peacock, screamed at staff.
Mr Kennedy told the NSW Supreme Court he started work for MFS in May 2007, as chief operating officer - a role that no one at MFS ever lasted long in.
On February 25, 2008, he said he tried to raise his concerns about the company.
''I sent an email to the then chief executive Craig White about some concerns I had about the way some of the directors were doing their job, doing their duties,'' Mr Kennedy said.
''I was considering whether I should be bringing any action against them.''
The next morning, ''Craig called me and told me I should go home,'' he said.
Several weeks later he left the job.
Mr Kennedy said before he was suspended he had approved an internal investigation into a $130 million transaction that another colleague had raised doubts about. That colleague also left before the audit was completed.
Intercompany loans are suspected to total about $1 billion.
Mr Kennedy said many of the dozens of companies under MFS were essentially dormant.
Asked if he was a director of MFS Castle, or MFS Investments Limited, he said: ''I have no idea. I think I was a director of 26 companies in the group.''
MFS companies invested in everything from affordable housing to aquariums and tree-top walks.
Mr Kennedy was employed by MFS Administration, as most staff were.
MFS Administration would act as a treasury, making payments on behalf of other wholly owned subsidiaries, and Mr Kennedy said he expected the loans were credited to other companies in the group.
He said he was not involved in approving loans to other group companies, and he acted only on instructions.
He said real decisions were made at board level, and that Michael King was ''the decision-maker''.
An internal investment approval committee could reject a proposal, only to have Mr King override the decision and approve it anyway, he said.
Examinations continue today before senior deputy registrar Andrew Musgrave.