Prime Trust founder gifted $60m from deal to sons: court

THE founder of failed retirement village group Prime Trust, Bill Lewski, gifted $60 million reaped from a controversial deal with Babcock and Brown to his sons, a court has heard.

By InvestSMART · 31 Oct 2012

By InvestSMART ·
31 Oct 2012

Comments

THE founder of failed retirement village group Prime Trust, Bill Lewski, gifted $60 million reaped from a controversial deal with Babcock and Brown to his sons, a court has heard.

However, Mr Lewski admitted that the management rights at the heart of the $60 million deal were partly based on temporary oral agreements that could have been terminated by the board of Australian Property Custodian Holdings, which ran the trust, at any time.

Mr Lewski was both chief executive of APCH and the holder of the management rights though his company Retirement Guide when he oversaw their formalisation into 25-year contracts shortly before APCH floated Prime Trust.

Retirement Guide received the rights for free after the APCH "directors discussed the matter" and Mr Lewski then sold them for a personal profit of $60 million.

The temporary oral agreements came to light on Tuesday during a public examination of people involved in the collapse of Prime Trust in October 2010, which put at risk $550 million in investors funds.

Bank-appointed receivers KordaMentha are investigating whether the $60 million can be recovered.

"Did you tell your fellow directors that . . . the oral agreements, they could be terminated or changed by the board if they wanted to?" Mr Lewski was asked by counsel for KordaMentha Jonathan Moore.

"I did not tell them. I thought that it would have been obvious and apparent to them," Mr Lewski replied.

He agreed that the full $60 million from the sale was distributed through a trustee to his wife, who then gifted the entire amount and any other assets to investment trusts in the name of the Lewski children.

Both these trusts are managed by Mr Lewski.

His wife, Roslyn Lewski, was also questioned because she was listed as the director of the company which ultimately received the funds. Mrs Lewski told the court her husband managed her financial affairs and she would sign documents when asked without looking at the detail.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What was the $60 million deal involving Prime Trust founder Bill Lewski and Babcock and Brown?

The article says Bill Lewski sold management rights that had been formalised shortly before APCH floated Prime Trust and personally pocketed about $60 million from the sale to Babcock and Brown. That $60 million was later distributed through a trustee to his wife and then gifted into investment trusts in the names of his children.

How did management rights and temporary oral agreements factor into the controversial Prime Trust sale?

According to the public examination, the management rights at the centre of the $60 million sale were partly based on temporary oral agreements. Those oral agreements could have been terminated or changed by the board of Australian Property Custodian Holdings (APCH), raising questions about how secure the rights actually were when they were sold.

What was Bill Lewski’s role at APCH and how did that relate to the sale?

Mr Lewski was both chief executive of Australian Property Custodian Holdings (APCH) and the holder of the management rights through his company Retirement Guide. He oversaw the formalisation of those rights into 25-year contracts shortly before APCH floated Prime Trust, and Retirement Guide then received the rights for free before he sold them for a $60 million profit.

Are receivers investigating whether the $60 million can be recovered?

Yes. Bank-appointed receivers KordaMentha are investigating the circumstances of the sale and whether the $60 million can be recovered following the collapse of Prime Trust.

Did Bill Lewski tell APCH directors about the oral agreement risks?

No. When asked in the public examination, Mr Lewski admitted he did not tell his fellow directors that the oral agreements could be terminated or changed by the board. He said he thought that fact would be 'obvious and apparent' to them.

How was the $60 million distributed after the sale and who controls the funds now?

Mr Lewski agreed the full $60 million was distributed through a trustee to his wife, Roslyn Lewski, who then gifted the entire amount and other assets to investment trusts in the names of the Lewski children. Both of those trusts are managed by Mr Lewski.

What was Roslyn Lewski’s involvement in the company that received the sale proceeds?

Mrs Lewski was listed as a director of the company that ultimately received the funds. In court she said her husband managed her financial affairs and that she would sign documents when asked without looking at the detail.

What investor risk resulted from the collapse of Prime Trust?

The collapse of Prime Trust in October 2010 put about $550 million in investors' funds at risk, prompting public examinations and investigations by bank-appointed receivers.