Trio hearing looks at Silverhall links

WHEN business partner Cameron Anderson was advising an associate, Shawn Richard, on the acquisition of Tolhurst Capital - a licensed super fund trustee and a responsible entity for managed investment schemes - Michael Anderson, (unrelated) said he didn't consider opportunities that might flow to the pair's property development company, Silverhall.

By InvestSMART · 29 Feb 2012

By InvestSMART ·
29 Feb 2012

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"I don't recall turning my mind to it," Mr Anderson said, while being questioned at a public examination yesterday into the fate of millions of dollars of superannuation funds invested by Tolhurst under new name Astarra, later Trio Capital, with Silverhall and its associated entities.

Silverhall rebranded itself as Ualan Property Holdings, and according to the fund's new responsible entity, ACT Super, super members invested about $19 million in shares in Ualan, and loaned it $6.5 million. Ualan is in liquidation, with no dividends foreshadowed for the super fund investors.

"Didn't Cameron Anderson say that Silverhall could become one of the asset managers of the super business?" asked Robert Beech-Jones, SC, for ACT Super.

"I don't recall," Mr Anderson said.

"But it happened, didn't it?"

"Yes," was the reply. Asset manager Silverhall charged a variety of management fees - including a 5 per cent acquisition fee on the purchase price of land, performance and marketing fees, and a 5 per cent commission to its real estate arm, Energy Realty Pty Ltd, the hearing heard.

Mr Anderson was questioned about conflict of interest in projects. He signed contracts, as a director of the building companies, with Energy Realty paying $27,500 commission per unit sold - in the case of a 50-unit development at Townsville, agreeing to pay $1.3 million in commission. Mr Anderson defended the level, saying most agents charged 3 per cent plus GST and the difference reflected that they were active rather than passive.

He said their fees and their ownership of the Silverhall entities had been disclosed to Astarra and a range of auditors and lawyers. But under questioning he agreed that such detail was not contained in the product disclosure statement provided to investors.

Mr Richard, Cameron Anderson and David Millhouse were the founding directors of Trio, then known as Astarra Capital. Mr Richard was jailed last year for his involvement in the theft of super funds to offshore accounts.

The examinations continue.

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Frequently Asked Questions about this Article…

What was the Trio hearing and which companies were examined for links to Silverhall?

The public examination looked into the fate of millions of dollars of superannuation funds originally invested by Tolhurst Capital (later Astarra, then Trio Capital) and examined links with Silverhall (which later rebranded as Ualan Property Holdings). The hearing also referenced Tolhurst/Astarra/Trio, ACT Super (the new responsible entity), and related entities such as Energy Realty Pty Ltd.

How much did super members invest in Ualan (formerly Silverhall) and what is the current status?

According to the hearing, super members invested about $19 million in shares in Ualan and loaned it about $6.5 million. Ualan is now in liquidation and ACT Super advised there are no dividends foreshadowed for the super fund investors.

What types of fees and commissions did Silverhall and its real estate arm charge investors?

The hearing heard that Silverhall (as asset manager) charged a range of fees including a 5% acquisition fee on the purchase price of land, performance and marketing fees, and a 5% commission to its real estate arm, Energy Realty Pty Ltd. In one example, Energy Realty was contracted to receive $27,500 commission per unit on a 50‑unit Townsville development (about $1.3 million total).

Were related‑party arrangements and ownership of Silverhall disclosed to investors?

The directors said their ownership of the Silverhall entities and fees had been disclosed to Astarra and to various auditors and lawyers. However, under questioning they agreed that those details were not contained in the product disclosure statement (PDS) provided to investors.

Did Silverhall act as an asset manager for the super funds tied to Trio/Astarra?

Yes. The hearing confirmed that Silverhall became one of the asset managers of the super business and charged management and commission fees in that role, as described during the examination.

Who were the founding directors of Trio (formerly Astarra) and were there legal consequences revealed at the hearing?

The founding directors of Trio (then known as Astarra Capital) were Shawn Richard, Cameron Anderson and David Millhouse. The article notes that Shawn Richard was jailed last year for his involvement in the theft of super funds to offshore accounts.

What did the examination reveal about potential conflicts of interest in projects involving Silverhall and Energy Realty?

The hearing highlighted potential conflicts of interest: directors signed contracts as building company directors while commissions were payable to Energy Realty (an associated entity). Although the directors said the arrangements were disclosed to Astarra and advisers, the specific details did not appear in the investor product disclosure statement.

What are the next steps or outcomes following the Trio/Silverhall examinations?

The article states the public examinations are continuing. Separately, Ualan (formerly Silverhall) is in liquidation with no dividends forecast for the affected superannuation investors, and legal processes related to the theft of super funds have already resulted in the jailing of one founding director.