When the Trio Capital fraud came to light, victims looked to their elected representatives to help them recover their stolen investments and launch an investigation into what went wrong. Some victims were compensated. Others were not. The distinction between the groups was not always clear and some argue there is no difference. Today CYDONEE MARDON speaks to the MPs and ministers at the coalface.
Despite calling for further investigation into the Trio Capital fraud, politicians are still keen to lay blame at the door of financial advisers.
Throsby MP Stephen Jones called for the re-opening of the parliamentary inquiry into the collapse of Trio after Mercury revelations that millions of dollars from Illawarra Trio investors was used to pay pensions to prop up a Ponzi scheme run by convicted fraudster Shawn Richard.
ANZ bank statements released from ASIC under Freedom of Information laws show money was moved from Trio funds, mainly the Astarra Strategic Fund, to cover commitments of the ARP Growth Fund.
Astarra investors did not qualify for compensation under federal law, while people who invested in ARP were granted compensation.
All investors were affected by a fraud within the complexity of Trio Capital - an ASIC approved and APRA regulated scheme.
Mr Jones, Oppositon Leader Bill Shorten and Finance Minister Mathias Cormann would not be drawn on whether this evidence meant Illawarra investors should now be eligible for compensation.
Mr Jones acknowledged "a sophisticated fraud" was to blame for the disappearance of $176 million but said "the fact remains the Illawarra victims would not have invested their money in the funds had it not been for the enthusiastic recommendation" of banned Wollongong adviser Ross Tarrant.
He said the Parliamentary Joint Committee observed: "There are clear 'regional clusters' of victims of Trio based on the locality of operations of particular financial advisers, including Tarrants in Wollongong, Seagrims in regional South Australia and Mr Paul Gresham on Sydney's North Shore."
However the bipartisan inquiry held in 2011 pointed to the failure of regulators to take appropriate action to protect investors and the failure of the government to pursue the masterminds behind the Trio fraud.
A Parliamentary Joint Committee inquiry found advisers could not have known about the fraud, while a NSW Supreme Court judge noted "even a competent and responsible financial adviser would have heard no warning bells sound for the scheme".
Illawarra investors were victims of fraud and, according to the inquiry, the failure of relevant authorities to act in a timely and appropriately coordinated manner allowed this fraud to happen.
A spokesman for Opposition Leader Bill Shorten said on Tuesday: "It's a tragedy that some people on the South Coast lost their hard earned savings because of the actions of their advisers.
"If new evidence about the Trio collapse comes to light, investigations should be reopened," he said.
"The Labor Government introduced stronger laws to protect people from dodgy financial advisers. It's a disgrace that the Liberal Party are now trying to roll back these protections."
Finance Minister Mathias Cormann said on Tuesday the Government was "continuing to consider the issue".
In May last year Senator Cormann said "there would be some justification for a level of compensation" for the Trio victims as there were "a series of unique circumstances" in the Trio Capital case which could allow the Government to do more for victims.
Mr Jones said this week that Senator Cormann "promised the investors all sorts of things before the last election - it is now more than 12 months and they have taken no action".
"There was no provision in the May Budget for compensation," he said.
Twelve months ago, however, it was Mr Jones and his government in the hot seat.
Victims were critical of their Labor representatives, claiming there was a general lack of support for affected constituents, with the blame being put back onto advisers and investors.
Voters from the North Shore however were granted compensation and in July last year their Liberal representative Paul Fletcher called on then Treasurer Chris Bowen to immediately review the Labor government's "highly inadequate response to the Trio collapse".
"The fraud began in late 2003 when its perpetrators took over an existing funds manager - but it took almost six years before the regulators APRA and ASIC intervened, only when notified by an alert industry participant," Mr Fletcher noted.
He said Mr Shorten showed a "troubling lack of urgency and engagement on this".
"He awarded compensation to some investors with losses totalling $55 million, but criticised other Trio investors, who lost over $120 million, for 'swimming outside the flags'."
Mr Fletcher said that in taking that approach, Mr Shorten "completely ignored the unique circumstances of the Trio collapse".
Mr Fletcher called on Mr Bowen to re-consider all the recommendations of the Parliamentary Joint Committee in relation to Trio.
"He must ensure that proper investigations are conducted into the key figures responsible for defrauding investors in Trio and explore whether the unique circumstances surrounding the Trio collapse justify at least a level of compensation to victims so far left out in the cold."
Responses from readers
- Congratulations for the bold move to go ahead with the Trio story. Congratulations for getting on top of what is a complex story. Congratulations for stirring the coals.
- Good to see the real story, well done. I can’t believe we got caught by this in the modern day?
- Just a quick email to thank you so much for your series of articles regarding Trio fraud. My wife and I were caught up in this debacle and lost approximately $150,000 in superannuation and non super investments.
- I was born and bred in Wollongong and consequently had to relocate away from my family to work in the mines there in order to try and regain the loss. My only hope is to win a fight for compensation so I can return to Wollongong and retire comfortably. Keep up the good work and thanks again.
- I am just an ordinary blue collar worker who, when the threat of no job had me consult some financial help, cost our retirement future approx $50,000. I am now living 3 and a half hours away from my family who are still in Wollongong so I could keep a stable job.
- I have no idea about money and was hoping to be able to sustain my family’s future by doing this with my super. Now what I really cannot understand is why the government can pay back lost super to most people and say that I am swimming outside the flags by trying my hardest to pay for my retirement.
- To say I have any idea about making money through super is a load of crap.
- This is why I asked for help.
- My wife and I lost a significant amount of our hard earned superannuation funds in the collapse of Trio Capital and have been fighting for years to bring the people associated with this to justice.
- I thank you so much for having the courage to take on this project and at last bring this sorry saga to the attention of the public in the hope that justice will be served.
- As an SMSF (self-managed super fund) person who lost money in Trio/Astarra keep hounding the government to help us SMSF’s who lost and weren’t compensated for no fault of our own.
- The union super funds had multiple advisers who were duped we only had one – how are we supposed to know better than the advisers?
- My husband died waiting for compensation.
- As the true representative body of the Trio Capital ‘Victims of Financial Fraud’, we congratulate and thank the Illawarra Mercury for the current expose of the transnational fraud. As you are clearly outlining, there is much to this story that is continuing to come to light.
- Keep hounding the government.
- Thanks for getting people talking about this again.
In Friday's Mercury: advisers unwittingly led clients down path to financial ruin.