Groves' assets corralled
The Age
Tuesday July 28, 2009
THE corporate regulator has succeeded in its attempt to freeze millions of dollars of assets held by a mysterious discretionary trust it believes is the "alter ego" of former ABC Learning Centres chief Eddy Groves.The move comes as part of a settlement in the Federal Court in Sydney of a legal dispute between Mr Groves, his wife Viryan Collins-Rubie and the Australian Securities and Investments Commission.The court had been set to hear evidence about whether Mr Groves was behind the trust, but this was postponed when lawyers for ASIC and Mr Groves reached an agreement.ASIC told the court it no longer needed to argue about who was the true owner of the trust because it was now satisfied that the trust's assets were safe from sale or transfer.It was comforted by Ms Collins-Rubie's decision to stand down as the sole director of the trust on July 16.In her place, two independent directors €” Nick Combis, 40, and Paul Vincent, 52 €” were appointed.The two men yesterday agreed to abide by orders preventing the sale or movement of the trust's assets.The trust owns three Queensland properties, including a five-bedroom beachfront property at Palm Beach. Two of these, including a property in the Currumbin Valley, adjacent to where Mr Groves lives with Ms Collins-Rubie, are mortgaged to BankWest. The mortgages are set to be renewed on Friday.ASIC counsel John Halley, SC, told the court that the commission had had good reason to fear Mr Groves was selling his assets rapidly, because he had given the trust $12.6 million in recent months.He said ASIC had had "grave concerns" about the fall in value of the trust because it had slumped from $15.8 million in June last year to $3.9 million last month.ASIC moved to freeze Mr Groves' and Ms Collins-Rubie's assets last month after it became aware that he had transferred his rural retreat in the Currumbin Valley to his former brother-in-law, Frank Zullo.Mr Zullo has since agreed not to sell, transfer or mortgage the Currumbin Valley estate. ASIC told the court it believed Mr Groves controlled the trust legally and financially because he had the power to transfer its sole share.Mr Halley said Mr Groves treated the three properties owned by the trust "as his own", making all decisions over their purchase and sale. Mr Groves denies he controls the trust.ASIC is seeking to ensure Mr Groves' assets are not whittled away, in case it later chooses to pursue him to recover money for creditors of his failed company ABC Learning. No action is now under way.ASIC is also investigating whether Ms Collins-Rubie may have breached the related-party provisions of the Corporations Act because deals she did with ABC Learning were not considered to be at arm's length.ASIC is probing a deal in which her toy company sold ABC Learning $500,000 worth of teddy bears for it to use in its centres and as gifts.It is also investigating her alleged improper receipt of rent from ABC Learning Centres.Mr Groves stepped down as chief executive of ABC Learning just weeks before the childcare operator collapsed in November last year with debts totalling $1.6 billion.Statements from ABC Learning just before its collapse indicated losses for the year ending June 30 last year would easily wipe out any profit the company ever made.
© 2009 The Age
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