INVESTIGATIONS into the fate of millions of dollars of Trio Capital superannuation money invested with property developer Silverhall has heard that in one case, funds were used to pay out a loan from a director's "dad and mum".
Yesterday, a public examination in relation to funds invested with Silverhall Asset Management and its associated companies heard it was owned by Cameron Anderson, his unrelated business partner Michael Anderson, and its chief financial officer Michael Weller, who holds a 10 per cent stake.
ASIC records show Cameron Anderson was one of the three founding directors of Trio Capital, then known as Astarra Capital. Trio appointed Silverhall as the initial manager of the property investments of Astarra Wholesale Portfolio Service.
According to the liquidators report to parliament, the Silverhall investments fell under the banner of conflicts of interest. Unitholders lost more than $13 million of their investment in the Silverhall property group, and an investment in another Silverhall entity, the Marq property trust, has recorded losses of more than $1.5 million.
Under questioning by Robert Beech-Jones SC, for the super funds' new responsible entity, ACT Super Management, Silverhall's CFO Michael Weller said the method of funding had been mezzanine financing. He said Astarra knew it was mezzanine financing, but agreed that had not been mentioned in the Astarra prospectus.
"Superannuation fund members put their funds into Astarra funds, which lent to Silverhall Residential Property Holdings, which lent to [Silverhall entity] CPI Property Investment Pty Ltd so that Michael Anderson's parents could have their [$150,000 investment] repaid?" Mr Beech-Jones asked. "I guess that is how it is," Mr Weller replied.
Mr Beech-Jones said documents indicated the super funds from Astarra were to be used to acquire and develop property. He led Mr Weller through other similar payments, totalling hundreds of thousands of dollars paid out during 2005 and 2006, which by 2006 amounted to $1.4 million.
"Not a cent of this is going into digging holes in the ground or banging in nails," Mr Beech-Jones said.
Mr Weller replied: "This is the refinance of a loan that was an investment in an asset. By extension, this is an investment in the asset."
Mr Beech-Jones asked Mr Weller whether he became aware in late 2008 of the Australian Prudential Regulatory Authority's concern about the liquidity of Silverhall Residential Property Holdings. "You became aware at some point that SRPH didn't have cash to pay its debts?" he asked.
Mr Weller said he wouldn't describe it as such, and said he had been involved in presentations to Astarra for a capital injection.
In another development this month, ACT Super Management said it would ask for another $10.5 million from the federal government, on top of the $55 million it has already received as compensation for members of APRA-regulated superannuation funds because they had been defrauded. Investors lost more than $190 million in frauds identified in two Trio-related funds.