Gatto Joins The Money Hunt

The Age

Tuesday April 8, 2008

Leonie Wood, Mark Hawthorne and Vanessa Burrow

A DIRECTOR of failed stockbroker Opes Prime has been ordered by a judge not to leave Australia, as fresh allegations emerge of manipulation and cover-ups in the lead-up to the firm's dramatic collapse.

The Australian Securities and Investments Commission yesterday obtained an urgent Federal Court order forcing Opes Prime director Julian Smith to surrender his passport - days before he had planned to go on a holiday to Fiji.

The order came on the eve of a series of meetings today in which hundreds of angry Opes Prime clients who are owed more than $500 million will be given an update on the fate of their savings by the firm's administrators.

As yesterday's court drama unfolded, The Age also learned that Melbourne underworld identity Mick Gatto had intervened in the collapse on behalf of an anonymous group of investors trying to recoup their losses.

Mr Gatto will fly to Singapore today with a business associate to pursue the Opes Prime money trail, but has declined to reveal who he will be seeing there or who he is representing.

"These Opes Prime clients can take their chances and lose all their money to lawyers and to the receivers, or they can take their chances with me to extract a return on their behalf," Mr Gatto told The Age.

"The proof is in the pudding with me. I solve problems, and I can extract a return on their behalf," he said. "It's my way or the highway".

Barrister Nicola Gobbo confirmed that Mr Gatto would be travelling overseas to try to track down money and shares related to Opes Prime.

Asked if his clients included some well-known Melbourne businessmen, she said: "Some would be described as business people. If you very loosely used the term 'business people'."

It is believed that Mr Gatto may also go to the British Virgin Islands, depending on how he fares in Singapore.

The parties being represented by Mr Gatto, as well as ASIC, are particularly concerned over transactions between accounts linked with Sydney solicitor Chris Murphy, and an account operated by a company registered in the British Virgin Islands. That company has an office in Singapore.

Last week, an affidavit sworn by senior ASIC investigator Richard Vandeloo alleged that Opes Prime director Lirim "Laurie" Emini directed staff to transfer shares or cash between the Virgin Island company's account and those operated by Mr Murphy or other Opes clients.

Yesterday, the regulator said fellow director Mr Smith may also have been involved in covering up massive losses for certain clients just before the stockbroking firm collapsed two weeks ago, owing more than $1 billion.

ASIC has also made fresh allegations about "double-counting" of shares, a practice it says shielded a handful of favoured clients from losing millions of dollars against their rapidly deteriorating share portfolios.

Late yesterday ASIC obtained urgent orders from Justice Ray Finkelstein in the Federal Court in Melbourne forcing Sydney-based Mr Smith to hand over his passport. He had previously booked a 10-day holiday in Fiji with his family and was due to leave on April 13.

On Thursday, he agreed to ASIC's request that he hand over his passport, but on Friday his lawyers withdrew the offer, saying ASIC had no power to request the travel documents.

Mr Emini last week consented to a court order barring him from leaving the country until October 3.

Mr Smith last night declined to comment on the allegations by ASIC or on the court order.

ASIC last week told the Federal Court that initial investigations and interviews with an Opes employee had uncovered "systematic manipulation" of share-trading accounts.

Yesterday, in support of its travel ban against Mr Smith, Mr Vandeloo outlined how shares held in a particular Opes account, identified only as "EE", were lent to a company called Leveraged Capital Pty Ltd, then routed through a company registered in the British Virgin Islands before being delivered back to Opes in Australia.

Leveraged Capital is jointly owned by Mr Emini and Mr Smith. Its registered office is at the same address as the Babo Group accounting firm in Cramer Street, Preston.

In his affidavit, Mr Vandeloo said there was some "double-counting" of shares in the EE account, and that the effect of this "was to avoid margin calls on certain client accounts".

He said Mr Emini and Mr Smith were suspected of having "an interest" in another account identified as "BB", which had defaulted on paying $38 million. It was suspected that the default had been concealed before the appointment of receivers and administrators to Opes Prime.

Meanwhile, the fallout from the collapse spread further, with ANZ bank partly blaming its involvement with the broker for a $1 billion bad debts problem.

© 2008 The Age

Back to News Index | Back to Home