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.
Frequently Asked Questions about this Article…
What was the Trio Capital and Silverhall case about?
The case centred on millions of dollars of Trio Capital (then Astarra) superannuation money that was invested with property developer Silverhall. A public examination and a liquidator's report found conflicts of interest and questioned how investor funds were used, including payments that did not go to property development.
Who owned Silverhall and how were they connected to Trio Capital (Astarra)?
Silverhall Asset Management and its related companies were owned by Cameron Anderson, his unrelated business partner Michael Anderson, and chief financial officer Michael Weller (who held a 10% stake). ASIC records show Cameron Anderson was one of Trio Capital’s (Astarra’s) three founding directors, and Trio appointed Silverhall as the initial manager of Astarra’s property investments.
How much money did investors lose through Silverhall and related trusts?
Unitholders lost more than $13 million in the Silverhall property group, and an investment in another Silverhall entity, the Marq property trust, recorded losses of more than $1.5 million. Separately, investigators identified more than $190 million lost in frauds across two Trio-related funds.
Were investor funds used to repay personal loans or related parties?
Yes. The public hearing revealed that some Astarra super funds loaned to Silverhall entities and funds were used to refinance a loan so Michael Anderson’s parents could have their roughly $150,000 investment repaid. Documents also showed similar payments totaling hundreds of thousands of dollars during 2005–2006, amounting to about $1.4 million by 2006.
What type of financing did Silverhall use and was it disclosed to investors?
Silverhall’s CFO Michael Weller said the method of funding was mezzanine financing. He confirmed Astarra knew it was mezzanine finance but agreed that this had not been mentioned in the Astarra prospectus.
Did regulators raise concerns about Silverhall’s financial position?
Yes. The Australian Prudential Regulation Authority (APRA) raised concerns about the liquidity of Silverhall Residential Property Holdings (SRPH). Under questioning, Silverhall’s CFO said he had been involved in presentations to Astarra for a capital injection, and he would not describe SRPH as lacking cash to pay debts in the way the questioner suggested.
What did liquidators and the new responsible entity do after the losses were revealed?
The liquidator’s report to parliament highlighted conflicts of interest in the Silverhall investments. ACT Super Management, the new responsible entity for the affected super funds, has sought compensation from the federal government for members who were defrauded.
How much compensation has ACT Super Management received or requested for defrauded members?
ACT Super Management has already received $55 million in federal compensation for members of APRA‑regulated super funds who were defrauded, and said it would ask for another $10.5 million on top of that.
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