Who were the men handling state's $600m?

The businessmen have also had links to investment promoters who were later convicted for breaches of the Corporations Act or fraud.

The revelations will increase pressure on the Government to reveal the extent of due diligence carried out by its investment arm before $600 million of public service superannuation savings was put into the Life Settlements Wholesale Fund.

The fund remains closed to withdrawals and new applications. The directors of Life Settlements Limited, the entity responsible for the management of the fund, said on Thursday that they were reviewing the fund's status weekly.

The fund, which has $1.1billion under management, buys high-value life insurance policies off elderly US citizens at a discount rate, and receives the full payout when they die.

It struck trouble last year when it emerged the people from whom it had bought life insurance policies could be living up to 25 per cent longer than had been estimated - meaning it could pay much more in premiums.

The global financial downturn has also stalled trading in the US life settlements market, making it hard to value the fund's policies.

An investigation by The Age found:

Fund chairman Ian Cotton was a director of a Gold Coast firm that lost $4.3million of investor funds in the late 1990s through dealings with a London-based businessman later sentenced to 13 years' jail in the US for fraud.

Fund director Grant Vickers was a director and shareholder in a Queensland company, Vickers Corporation, which was forced into liquidation in 2000 owing creditors $4.4million.

Mr Cotton and Mr Vickers have had financial dealings or business associations with several men later convicted in connection to investment schemes - known as Ponzi scams - where money from new investors is used to pay amounts owed to older investors.

Queensland Supreme Court documents contain a claim that a company associated with businessmen with a continuing or previous connection to the Life Settlements Wholesale Fund was established in part to raise money to repay investors who lost money in Australia's biggest Ponzi scam, the $130 million Wattle Group scheme.

Opposition Leader Ted Baillieu said the revelations made it more important for the Government to explain the "chronic mismanagement and irresponsible investments" by Victorian Funds Management Corporation.

Court documents show one of MrCotton's former companies, Redemption Investments Ltd, entrusted $4.3 million of investor money to a London-based trader, William Dohan.

After evading authorities for years, Dohan was located in a castle in France in 2006 and extradited to the US where he was sentenced to 13years' jail and ordered to pay $US30 million restitution for his part in an international scam that fleeced $US95 million from investors.

Mr Cotton told The Age that his fellow Redemption Investment directors had carried out a "comprehensive investigation" of Dohan as part of their due diligence before investing with his brokerage firm. They found no reason not to invest.

He said investors were warned of the risks in the Redemption Investment prospectus. Once it became apparent funds had been lost with Dohan's firm, Mr Cotton said the UK Financial Services Authority was asked to investigate and a Redemption director went to London to make inquiries.

Mr Cotton believed Dohan was not convicted for his operations in the UK, but for "totally unrelated activities" in the US.

A group of Redemption Investment shareholders were unsuccessful in their bid to win leave for the company to sue Mr Cotton and his fellow directors for negligence over their dealings with Dohan.

Australian Securities and Investment Commission documents show Mr Cotton also had a business association with a Queensland businessman convicted for his part in the Wattle Group scam in which 2700 Australian investors lost $130 million in the 1990s.

Robert Edward Corbett was convicted and given a two-year suspended jail sentence in 2003 for 48 breaches of the Corporations Act. His company, Anscor Pty Ltd, was a major promoter of the Wattle scheme.

ASIC records show Mr Cotton was an office holder in two companies, Global Managed Investments and Marlin Capital Management, for periods between February 1997 and June 1998.

Mr Corbett has also been a director of these companies.

In a 2003 statutory declaration, Mr Cotton said Mr Corbett became a director of Global on the day he resigned as an office holder. Mr Corbett became a director of Marlin three months after Mr Cotton resigned from the board.

Mr Cotton declared that he was never an investor in or promoter of the Wattle Group and was not an officeholder in companies at the same time as Mr Corbett.

His statutory declaration also reveals that a Queensland businessman, David Christopher Smith, was the negotiator of exclusive licensing arrangements between a web of Gold Coast companies - including the predecessor to the Life Settlements Wholesale Fund - and US firms involved in the life settlements industry.

In 2003, Mr Smith was given a good behaviour bond for multiple breaches of the Corporations Act for his role in promoting the Wattle Group scheme.

Mr Cotton said he first met Mr Smith in 2001 and was not aware at that time he had been a Wattle Group promoter.

ASIC documents show Mr Vickers, a director of the Life Settlements Wholesale Fund, and Mr Smith were associated in the early 1990s through a Queensland company called Sailtide Pty Ltd, later known as Vickers Corporation Pty Ltd.

Mr Smith ceased as director the same day Mr Vickers joined the company board. A company owned by Mr Smith was for a period the main shareholder in Sailtide before it became Vickers Corporation.

A man believed to Mr Smith's son was also a director alongside Mr Vickers in companies related to Life Settlements or Viaticorp between 2002 and 2004.

Mr Vickers said he only became aware of Mr Smith's role in Wattle just prior to his 2003 conviction.

Court documents show another Queensland businessman convicted for promoting the Wattle Group also claimed to be in business with Mr Smith, Mr Vickers and the Viaticorp company in 2001.

In his statement of claim, William Ross Jackson said he had reached an agreement with Mr Smith, Mr Vickers and two other businessmen to raise money to buy US life insurance policies through Viaticorp (Aust).

But Mr Jackson alleged that he was unfairly removed from the company in August 2001, putting what he claimed was his agreed shareholding at risk.

The court documents show Mr Jackson planned to use part of commissions earned from investing $2million in the US life insurance market to repay investors who lost funds in the Wattle scheme.

ASIC records show Mr Jackson and Mr Corbett served together as directors numerous other Queensland companies during the 1990s.

Got a tip? Email: investigations@theage.com.au