Bank 'tried to hide bad debts' from buyer

BankWest received attention yesterday in the Federal Court, where a mid-north coast developer, C2C Investments, is suing its administrator, David Leigh, from leading accountancy firm PPB.

C2C's barrister, Geoffrey Slater, said he expected to uncover alleged "serious irregularities" and "a complex web of dealings" between Bankwest, PPB and C2C's former lawyers, Stacks, in the emails.

Mr Leigh denies C2C's allegations and will "vigorously" defend its claims that he fraudulently had one of its properties signed over to himself.

The developer also alleges Mr Leigh falsely stated in a report to the Australian Securities and Investments Commission that his remuneration as administrator was $0.00.

BankWest was lender to C2C, which is run by a Port Macquarie builder, Geoff Shannon. In late 2008, C2C became insolvent and work stopped on its townhouse development at Harrington Waters marina.

At this time, the Royal Bank of Scotland was about to sell BankWest to the CBA. Mr Slater suggested BankWest did some "window dressing" to make its loan book appear more attractive to CBA.

To this effect, he said, BankWest had a C2C subsidiary taken out of administration. It had countermanded the appointment of Mr Leigh as administrator to the subsidiary, 33 Electra Pty Ltd. This was in breach of the Corporations Act because there was no vote by creditors to end the administration, Mr Slater said.

Asked by The Age about these claims, and whether they suggested a broader BankWest policy, the bank said it "strongly denies the claims being made. They are baseless and have absolutely no foundation."

Justice Steven Rares granted C2C leave to subpoena a wide range of emails transmitted between BankWest and Mr Leigh and David Irving, also of PPB, in 2008 and 2009.

The bank must also produce any emails between its staff concerning 33 Electra and C2C, the valuation of its loan book and/or impaired assets, and any emails on the same topic between BankWest, the Australian Prudential Regulation Authority, the bank's auditors and Royal Bank of Scotland.

Mr Slater pointed out alleged contradictions in Mr Leigh's statement to ASIC that he earned nothing from the C2C administration.

Separate ASIC minutes put his remuneration at $49,928, Mr Slater said. He noted documents showing a further contradiction between the disclosure of $0.00 and a mortgage for $170,00. That mortgage was linked to a property allegedly handed to Mr Leigh, in Kelman Drive, Cessnock, valued at $235,000. It is alleged that C2C Investments, while in Mr Leigh's control, signed over this property to him. C2C alleges Mr Leigh tried to backdate this transaction to November 3, 2008. On that same day, C2C's creditors had removed Mr Leigh as the administrator.

In correspondence last year, Mr Leigh said he undertook no property transactions while he was the administrator of the companies.

Exhibits tendered by Mr Slater included an unexplained reference to eight properties in and around Port Macquarie owned by Mr Leigh's wife, Kim Allison Leigh.

The same document also mentions a Lugarno property transferred for "$0.00" to another PPB partner, Scott Pascoe, in February 2001. It sold four months later for $417,000.

That property had belonged to Craig William Bottin. (Bottin faced court in Queensland last month charged with kidnapping. He is otherwise unconnected with the C2C proceedings.)

In a statement, PPB said: "Given the matter is before the courts, neither David Leigh nor PPB are able to comment at this stage as it may prejudice the outcome of the case.

"David Leigh strongly denies the allegations and they will be vigorously defended."