Mysterious assets in ABC Learning case put on ice
Sydney Morning Herald
Tuesday July 28, 2009
THE corporate regulator has succeeded in freezing assets worth millions of dollars that are held by a mysterious discretionary trust it believes is the "alter ego" of the former ABC Learning chief, Eddy Groves.The move comes as part of a settlement of a legal dispute in the Federal Court in Sydney between the Australian Securities and Investments Commission and Mr Groves and his wife Viryan Collins-Rubie.The court had been set to hear evidence yesterday about whether Mr Groves was behind the mysterious trust, but this was postponed when lawyers for ASIC and Mr Groves were able to reach 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 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 trusts assets.The trust owns three Queensland properties including a five-bedroom, beachfront Palm Beach property.Two of these, including a property in the Currumbin Valley, Queensland, adjacent to where Mr Groves lives with Ms Collins-Rubie, are mortgaged to BankWest. The mortgages are set to be renewed on Friday.Counsel for ASIC, John Halley, SC, told the court 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. Mr Halley 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's and Ms Collins-Rubie's assets last month after it became aware that he had transferred his luxurious rural retreat in Currumbin Valley to his former brother-in-law Frank Zullo. Mr Zullo has since agreed not to sell, transfer or mortgage this estate.ASIC told the court it believed Mr Groves controlled the trust both legally and financially because he had the power to transfer the trust's 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's assets are not whittled away, in case it later chooses to pursue him to recover monies for creditors of his failed ABC Learning. No action is currently underway.ASIC is also investigating whether Ms Collins-Rubie might 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.The evidence against her is contained in a report by the forensic accounting firm FBIS International. ASIC is investigating a deal in which her toy company sold ABC Learning $500,000 worth of teddy bears for use in the 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 it collapsed in last November with debts of $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 profits.
© 2009 Sydney Morning Herald
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