A LISMORE bank is caught up in a dispute over almost $30 million between two Australian investment managers and the Papua New Guinea Government.
Woodlawn Capital is registered as a Lismore-based investment management company under owners, Timothy James McNamara, 43, and Timothy Patrick Breen, 40, who work from Sydney.
They linked up with state-owned PNG company Motor Vehicle Insurances Limited in 2009 and were entrusted to invest $43 million of taxpayer funds.
The PNG Government moved to end the relationship in 2011 and Woodlawn Capital repaid $4.2 million.
However, they also sent a $23 million termination bill to the PNG Government even though the investment kitty had bled about $10 million under their stewardship, according to court documents.
What remains of the original $43 million investment is kept in Woodlawn Capital's account, listed at the Lismore Commonwealth Bank.
The PNG Government, through Motor Vehicle Insurances Limited, has taken legal action in the New South Wales Supreme Court to have the money returned with interest.
Mr McNamara took responsibility for the $10 million losses in a sworn affidavit, saying he had invested "because I had confidence in the strength of the Australian economy and its markets at a time of global weakness".
"If I had had the benefit of hindsight at the time, I would have taken reverse positions and been hailed as a hero," he said.
"In the events which happened, my confidence in the strength of the Australian economy and its markets was not justified and I lost my client money."
Justice James Stevenson handed down part of his judgment, finding Woodlawn Capital had breached its contract and had engaged in "misleading or deceptive conduct" by operating without an Australian Financial Services Licence.
The court also heard Woodlawn had "co-mingled" funds with its own on several occasions, including a single $32,135,206 transfer from its client's account to its own in August, 2011.
On the same day, another $5 million was transferred, followed by an extra $5 million the following day.
The money was returned to the original Motor Vehicle Insurances Limited more than a month later.
Justice Stevenson did not accept Mr McNamara's evidence the transfers were due to "banking errors".
Motor Vehicle Insurances Limited enlisted expert financial assets trader Robert Risk, who gave evidence Woodlawn Capital's trading strategy was "not one of competent or careful trader".
"The potential was for the market to go down even further than it did, because in my opinion, the market was nearing pressure points similar to during the GFC," he said.
"Justice Stevenson said Woodlawn had no entitlement to the $23 million in fees it had demanded, other than those which had already been accrued by the time the contract was terminated.
The case is ongoing.
- APN NEWSDESK
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