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Reading Time:

5 minutes

Published:

07 August 2008

LKM CAPITAL LIMITED

Who cares?

Rolf Koops, director of LKM Capital Limited
Rolf Koops, director of LKM Capital Limited

Message from Neil Jenman. UPDATE & SORRY – The reader who sent this piece to us has just pointed out that he is NOT the author. It is written by finance journalist Michael Pascoe and appeared in yesterday’s edition of Crikey. I should have spotted it because I get Crikey every day and love it. Hope the Crikey team don’t mind. I strongly suggest that all who are interested in business and finance take out a trial subscription to Crikey. It’s excellent – thanks to journos like Michael Pascoe.

A Reader writes…

With banks reporting losses measured in billions, who’s going to care about another little “secure” debenture company going under with $63 million owed to 1,180 investors? Aside from those doing their dough, the answer seems to be “nobody much”.

Sandhurst Trustees appointed Ferrier Green Krejci Silvia as receivers and managers of LKM Capital Ltd on Friday, but perhaps didn’t feel an urge to publicise that. Sandhurst – owned by Bendigo and Adelaide Bank – was also the trustee for Fincorp, among others. Ferriers put out their own media release yesterday and it seems only businessspectator.com.au bothered to mention it.

There is more at stake here though than just the unfortunates who took up the invitation for “investment debentures with a trusted company”, as LKM’s website inevitably puts it.

“LKM is part of the Koops Martin Group, we’re told, as if that’s supposed to mean something – a couple of regional lawyers who decided to expand into the asset management business, now claiming revenues of more than $50 million a year while managing $700 million worth of other people’s money.)

There are two other angles to consider:

1. There are more to come. Remember that our initial wave of Fincorp/Westpoint/ACR happened before the credit crunch, back when money was still easy to come by. I’ve been waiting for the traditional series of developer collapses that tend to accompany tighter money in Australia, but that series of storms is still brewing. I’m told there’s no shortage of smaller developers in trouble in the more distressed areas – south-west Sydney – but the likes of LKM going under is an indication that the people they borrow money from are going under as well.2. As Crikey reported at the time, the then-newish ASIC chief Tony D’Aloisio made a very brave, very hairy-chested statement to a Senate committee in May last year when asked why the watchpuppy hadn’t been serious about that earlier series of dodgy debenture company failures. “Because I wasn’t there,” said Big Tony.

Bad move that, because once you claim the first of the Bart Simpson defences, you are by implication on the job thereafter. And, well, Tony has been there for quite a while now and it’s still happening.

Particularly pointedly, Tony’s ASIC dropped proceedings against five Fincorp directors last month after Sandhurst said it would not fund insolvency claims brought by Fincorp’s liquidators. So much for using some of the rich profits ASIC reaps from honest Australian businesses to fearlessly pursue those accused of trading while insolvent.

And most obviously – at least to regular readers of Crikey and The SMH – is the way Tony’s ASIC stood by while the Firepower conmen shouted to the skies that they were running a massive scam.

Only now is ASIC pottering about, looking to remove a little of the horse manure from the empty Firepower stable to toss on their petunias.

So don’t worry if you missed the LKM story – there will be more. Tony’s on the job.

Charlie Keene

Neil Jenman replies…

Well, I care and I did not lose any money in this company. It makes me feel sick, literally, to see decent people losing their savings.

This time last year, this company was telling investors that it had been going for “over 30 years” and that investing with it was “prudent”. I hope the investors get some money back. The director, Rolf Koops, looks like a nice guy. This will test him.

Yes, there are going to be more of these “minor” collapses that have a MAJOR impact on the investors who trusted these companies.

Right now, I am working with some investors who are terrified that they are going to lose their money. Trouble is, if I speak out publicly and warn investors then I get all sorts of threats raining down on me and my family.

I do the best I can but am sadly aware that my best was not enough to stop this loss and it will not be enough to stop other looming losses. All I can say is that investors need to be extremely careful. I can’t even tell them to go to licensed financial advisers because that’s how so many of them lose their money.

I can tell them, though, to do lots of research, follow this web site and look at the clues on other sites – such as the Fido site (and, yes, I know you’ll say that it’s ASIC, but it does have some good advice – and there are some good people in ASIC. Even if they are usually gagged).

I was optimistic about Tony (the current ASIC boss); and, while he has not been able to stop some of these collapses, it is now a lot harder for these sorts of companies to raise capital from mum-and-dad investors. I hope the future will be better for investors.

I believe these financial products should be banned from being offered to mum-and-dad investors.

Neil Jenman  neilj@jenman.com.au

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