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Credit Sails deal too late for some

December 18, 2012

Credit Sails deal too late for some

Otago Daily Times

By Dene Mackenzie 

Greg Marshall.

Greg Marshall.
The $60 million resolution of the Credit Sails debacle had come too late for some investors, Wanaka finance professional Greg Marshall said yesterday.Mr Marshall, of Logic Fund Management, has spent three years chasing a resolution of the fund. Credit Sails were sophisticated debt securities marketed and sold to the New Zealand public in 2006 with the prospect of 8.5% interest income and capital protection.

The Commerce Commission said $91.5 million was raised through the offer. Credit Sails failed in 2008 and the notes were now virtually worthless, it said in a statement.

”The $60 million resolution has been very much welcomed by Logic Fund Management and the investors for whom we have been fighting for over the course of the last three years,” Mr Marshall said.

”However, this has not happened quickly enough for those victims of one of the dodgiest deals in recent history.”

Some investors had died and others had been ”significantly impacted” by the loss of life savings, he said.

”This will always leave a lump in our throat.”

Following an agreement with the Commerce Commission, Credit Agricole CIB (formerly Calyon) and Forsyth Barr had paid $60 million which would be held in a trust account from which payments would be made to eligible investors.

The companies had not admitted liability and did not accept the commission’s views on the matters.

Mr Marshall said the manner in which the parties had been ”dragged kicking and screaming to a resolution” should, in the opinion of Logic Fund, result in additional damages.

”They had ample opportunity to ‘fess up. But instead, in the case of Forsyth Barr, they advised their preferred customers to get out in July and October 2007, and subsequently in our opinion were active in hindering our campaign to redress investors.”

Asked why his firm had carried out the campaign to get the money returned to investors from the failed fund, Mr Marshall said the work was carried out pro bono because he and others in Logic Fund had the ability to understand the issue and the tenacity to go after a resolution.

Questions remained unanswered, he said. They included why Credit Sails notes were removed from customers’ accounts for ”nil value” in 2010 and whether or not those notes were being returned to customer accounts now, he said.

Online criticism about Forsyth Barr was harsh and unmoderated. Mr Marshall said there was no surprise in that. He was particularly angry at Forsyth Barr claiming it had worked hard for three years to get the money back when he believed the firm had done nothing at all.

”People will see through that for what it is. We had clients who were told nothing would ever come from that investment and those `guys in Wanaka’ had no show.”

Many people had lost their life savings. There were big losses from investors such as the Dunedin Orphans Club, the Taieri A&P Society, the Southern Hospice Trust and the Methodist Community Trust, Mr Marshall said.

Smaller investors, where $5000 to $10,000 made all the difference to their lives, had lost their money.

Two Dunedin women had lost their entire savings through Credit Sails and had ended up in psychiatric care. An elderly woman in Balclutha had lost her money and was told there was no hope of seeing any of it again.

”And I have lost count of the people who died. People blamed themselves. They wouldn’t go out or meet people. They just holed up at home.”

Logic Fund was now turning its attention to the collapse of South Canterbury Finance and the loss of $120 million of investors’ funds in the SCF preference shares.

”It seems to be a stunning coincidence that the company that promoted and sold these preference shares is the same one who organised Credit Sails. We will be shortly reaching out to the SCF investors to commence a campaign for redress,” Mr Marshall said.

He paid tribute to the Commerce Commission which he said showed tenacity and courage to achieve the result on behalf of Credit Sails investors.

2 Comments leave one →
  1. Dave Smith permalink
    December 18, 2012 9:43 PM

    With his tenacity and belief in what was right Greg has held together the lives of so many people this last few years. We all takes our hats off to him. A wonderful guy.The Commerce Commission has also been just brilliant.

  2. Arie Kleinjan permalink
    December 20, 2012 4:11 AM

    Extremely happy with the result LogicFunds has achieved for us investors of CreditSails Bonds to settle this issue for 60 million dollars.
    Looks like a generous settlement to get 85 cts for every dollar invested in CreditSails Bonds, which were capital protected , AA rated and with a fixed interest of 8.5% , promoted by Forsyth Barr’s advisers as “being as good as Term Deposits with a Bank , but with a much better yield”.
    So for an investment of $100.000 an amount of $85.000 will be reimbursed through the settlement fund.
    However since the last quarterly payment in June 2008 no interest has been paid , which leaves an interest deficit of 18 quarterly payments till maturity of the bonds in December 2012 ,equating an amount of $ 38.250.
    So the settlement of $85.000 is on a total write-off of $ 138.250 , which equates to 63 cents for every lost dollar in stead of 85 cts.
    So far the media only seem to have provided a platform for the mouthpiece of Forsyth Barr Neil Paviour-Smith to give his view on this matter , which is to say the least misleading to the general public.
    The only feedback from Forsyth Barr since the default of the bonds in 2008 has been an advise to investors ” to stay away from LogicFunds , which would cause only trouble ” and deleting the held number of bonds from the Investor Investment Portfolio , although the bonds were still “alive” at 4 cts in a dollar.
    Hopefully there will be Media interested in the in-depth story , so the whole truth emerges eventually and Greg Marshall ,Colin Boyd and Team of LogicFunds will get all the credit they deserve.

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