ASIC to take former Banksia Boss to Federal Court in August

The founder of the failed Banksia finance company will face the Federal Court in August after the Australian Securities and Investments Commission commenced civil penalty proceedings last month.

The former Banksia shopfront on the corner of Sturt and Doveton Streets.

The former Banksia shopfront on the corner of Sturt and Doveton Streets.

Former Banksia managing director Patrick John Godfrey will front court in Melbourne after ASIC alleged that Banksia’s financial reports for financial years ending Jun 30 2011 and June 30 2012 and the half-year financial report ending on December 31 2011 did not comply with relevant accounting standards. 

ASIC also alleged Mr Godfrey did not have, or failed to obtain, the proper understanding of the relevant accounting standard.  

“Mr Godfrey calculated and approved the impairment of receivables for Banksia and, as a consequence, Banksia’s financial reports failed to give a true and fair view of Banksia’s financial position,” an ASIC statement read.   

The Kyabram-based business went into liquidation in October 2012, leaving more than 50 employees out of work, including in Ballarat.  The business’ Ballarat branch was formerly based at the corner of Sturt and Doveton streets.

About 1450 Ballarat investors lost money when the company went into receivership owing more than $660 million.  

Ballarat Banksia Invester and Supporters Group member Keith Pitman.

Ballarat Banksia Invester and Supporters Group member Keith Pitman.

So far the 15,600 investors, mainly based in regional Victoria, have managed to acquire returns of 82 cents in the dollar.   The business also had branches in regional South Australia and New South Wales.   

Ballarat investor Keith Pitman said the investment company’s downfall had a major impact across the city, with hundreds of individuals and groups losing heavily from the fall-out. 

Mr Pitman is part of the Banksia Support Group which has been actively campaigning for the rights of investors since the company folded five years ago. 

“It’s had a significant effect on people and clubs, church groups and others who all had money involved,” Mr Pitman said.   

Mr Godfrey founded Banksia in 1966 and led the organisation for 46 years before stepping down in 2012 when it went into voluntary administration.   

ASIC is seeking a penalty against Mr Godfrey as well as his disqualification from managing corporations.   

A class action being led my liquidators Ferrier Hodgson is also underway against the trustees Trust Co. in an effort to reclaim the remaining 18 cents in the dollar for investors plus interest.  

The case relates to the takeover of Statewide Secure Investments by Banksia Securities in 2009, which saw the company almost double its loan book. 

In 2016 Banksia Support Group co-founder Don McKenzie labelled Trust Co. as the must culpable party in the collapse of the business due to a breach of duty. 

The matter is set to go before court in February next year.