Human Evil Exposed –
(CEO-ARU) … Part 13
Definitions of Allegations alleged against Mr John O’Neill and his cohorts …
Part 13 commences … The SBS AGM 22nd Aug 1988 …
[You can use the in-page links below to navigate up and down the page – return links back to menu provided.]
Timeline of events thus far and since O’Neill’s appointment:
In the period since O’Neill had taken over the SBNSW in July ’87 – his rap sheet of acheivements read as follows: [you will note that there are no real positives or good stories – only examples of his corrupted responses to market pressures.]
… and another SMH article …
Evidence confirming this time line of events and the power plays involved have been presented in past uploads 1-12 – what continues hereto is the final chapter in the demise of the SBS, its Management team, and the rightful entitlements due to the SBS members ripped apart by O’Neill and his evil lust to protect his own career. The final chapter leading into the 22nd Aug ’88 SBS AGM begins …
The PR Media Campaign:
Click on the Newspaper image below to enlarge and read in a separate window the lead story in the SMH Business section published on the 16th Aug 1988.
This was the beginning of the SBNSW’s PR media campaign to discredit the previous SBS Management over the SBS Treasury operations in the lead up to the SBS AGM, and membership vote on the ‘transfer of engagements’ to St George Building Society. O’Neill was using his fraudulent constructured ‘Treasury Audit report’ and using it to manipulate public opinion in support of a ‘Government Sanctioned theft’ to suit his own needs and wants.
Those ‘need’s were the value attached to the $60 million of SBS reserves and the ‘goodwill value’ St George were prepared to pay – his ‘wants’ were to save his own Bank from the ravages of the aftermath of the Oct ’87 crash, and his own career flashing before his eyes. This was m otive enough for him to risk everything.
This ‘slanderous’ newspaper article full of false accusations offered up by O’Neill and his partners in crime – served its purpose. There was no right of reply asked for by the Newspaper owners – just the telling of a corrupted story by eager publishers wanting a headline. [Click on the image to open in a separate window and enlarge.]
[Click here to read the rest of story – also in a separate window –]
This leak of information to the Sydney Morning Herald was pure ‘spite’ on O’Neill’s part – he was a man under immense pressure when he did this. His Bank was tinkering on insolvency – he inherited the SBS end-game from his predecessor Nick Whitlam and had fumbled the ball badly with the responsibility. This had been a 10 year plan and had gone to script until O’Neill took over.
The SMH newspaper story above emanated from the ‘SBS Treasury Audit Report’ conducted by the SBNSW Treasurer Phil Gray on the SBS Treasury in April ’88. The headline used in the newspaper story – “State Bank Treasurer slams society over Risks” – arose from the context of that Audit Report designed to tarnish the creditability of the SBS Management. It was leaked with direct intent and purpose to sway the SBS members against the previous SBS Management. The headline was slanderously false, inaccurate and completely mis-leading.
It was career ruination and O’Neill was hell-bent on ‘crapping’ all over careers of SBS staff. This is proof positive of the ‘evil’ with John O’Neill. He was not just content to take the $25 million spoils the SBS Treasury had created – he refused to honour a previous management ‘Treasury Bonus Pool’ agreed to – he put those funds back int the SBS reserves and further inflated the St George price tag to directly benefit the SBNSW asking price.
The SBNSW Treasurer’s report that this media story ran on was highlighted in Part 6 of this expose – [linked here] – It has been proven to be full of baseless assertions and accusations where no right of reply was allowed. O’Neill’s and his Treasurer who conducted the audit – used the report to stage a Board room coup that returned control back to the State Bank. This media story did untold damage to the creditability of the SBS Management and to the SBS Treasurer in particular.
O’Neill gave no thought to what harm and damage his media campaign would do – in fact is was premeditated and deliberate – he was only interested in end result which all hinged on getting the best possible value for the fixed capital own by the SBNSW. Money O’Neill needed to help bail out his own Bank facing challenges bought on by his decisions prior to, and in the aftermath of the Oct ’87 global equities crash.
Key Personnel sent on Administrative Leave:
The SBS caretaker GM – Tony Howarth – and serving in that role since Cleary’s dismissal in early May – was acting under instruction from O’Neill when he sent the SBS Treasurer on Administrative leave for near two weeks at the end of July – [click here to read the letter sent to the SBS Treasurer by the caretaker SBS GM Tony Howarth – opens in a new window.]
What was O’Neill’s purpose in sending the SBS Treasurer on leave?
Tensions were high as the SBS staff rebelled against all things SBNSW – the intent was to prevent any devaluation in the SBS’s liquids – in other words – the SBNSW feared sabotage – in that the SBS Treasurer would create deliberate losses in the SBS Liquids portfolio.
It was insultive to think this – and given what the SBS Treasurer had created as a Treasury operation in the time he had been there – and having his and his staff’s promised bonuses gazumped by O’Neill – this was a final humiliation the SBS Treasurer had to endure.
The SBS Deputy General Manager – Len Thompson was also sent on Administrative leave shortly after the May 5th Boardroom coup – he was away for almost two months …
Independent Directors Favour:
The SBNSW Management had already swayed SBS Independent Director Alwyn Thomas – O’Neill needed his vote to regain control of the SBS Board at the 5th May meeting where he staged his coup – among Mr Thomas’s rewards was a Board seat on the St George Board after the ‘transfer of engagements’.
It was not just Thomas who spoke in support at the SBS AGM – the holdouts Treloar, Osmond and Cribb did not speak against the motion – Treloar and Cribb and were paid $12,000 Directors remuneration fees for the loss of their position – Osmond was to receive a St George Director appointment as was Thomas.
Somehow the SBNSW managed to get the three holdouts – Messes Cribb, Treloar, and Osmond on-side to hold their tongue against the merger. According to media reporting on the AGM meeting – none of these spoke on the motion before the meeting.
O’Neill had though of compensating everybody who stood in his way. Documents are held confirming the Department Co-Operatives confirmed the approval of the Director payments –
Letter to SBS Staff Re St George including Proxies arrangements:
The SBNSW caretaker SBS Management had instructed the SBS branch staff to try and obtain SBS members proxies in support for the merger when they came into the branches to transact business.
The caretaker Management sent a letter to this effect to all Branches on the 5th Aug 1988. That letter appears below – the ‘proxies’ are covered on page 1:
The SBS GM letter to SBS Staff – 5th Aug ’88:
This letter was signed by the Deputy GM Len Thompson – now returned from Administration Leave – and as can be understood – Mr Thompson was in a difficult position. The deal was already done – what could he now do to prevent the merger?
Given Mr Thompson’s length of service with the SBS and the former Tamworth Building and Investment Society from the mid 70’s – and the entity that the SBS was formed from – Mr Thompson had almost 15 years invested in the SBS. He even owned shares in the original TBPS. To now sign a document to formally acknowledge his acceptance of a merger he had fought against for so long during late ’87 and up until the May 5th ’88 SBS Board meeting – signing this letter had to be worse than swallowing razor blades.
It would be interesting to hear Mr Thompson’s side of this story … he went on to work for St George until the early 1990’s – resigning as a General Manager of Retail Operations. He has never worked again in any paid employ according to a web story that can be read here.
The other signature is the SBNSW ‘caretaker’ GM Tony Howarth – appointed after Cleary’s dismissal at the 5th May Board meeting – and now residing in Perth and the Chairman since 2006 of a Public Listed Company called ‘Mermaid Marine Australia Ltd’ – he was the CEO from 2001 – and has served on several Boards during his career. His profile can be read here.
Mr Howarth has assisted with the research undertaken on this project – in one of his e-mail responses he acknowledged that – ‘SBS staff got screwed’ – his reference was referring to the SBS Treasury Bonus Pool payments to all SBS staff he was informed about when he took over the SBS. He was John O’Neill’s puppet in the position and was acting under instructions.
Recent messages and attempts to contact Mr Howarth in Perth since this expose has been published – have gone unanswered.
The Regulatory Capitulation:
The merger could not go ahead until the Minister had signed off on the Takeover Review Committee’s involvement. Greiner’s letter to the Minister (Peacocke) dated 5th Aug and included in Part 12 – linked here – was Greiner’s helping hand to get the SBNSW over the line. Peacocke’s non response nor the Registrar’s was a problem discovered after the 22nd August AGM was held. The Ministers approval had not been given.
O’Neill and Greiner or someone on their staff somehow arranged for the Deputy Registrar to sign submission/approval letters dated 12th Aug to confirm the ‘transfer of engagements’ – linked to document here.
Where Minister Peacocke and Registrar Baker were during this period is still a mystery. As presented in Part 12 – linked here – the letter from the Minister was not on Department Letterhead – was not signed – and was undated other that a file reference that includes the date measure – “88/25-08”. This was completely inadequate given the $1.6 billion SBS was at stake on the say so of this letter.
A 60 odd minute discussion with Mr Windt – the Deputy Registrar a few weeks ago shed no light on the matter – he had no comment to make about the documents sent to him and he was asked direct questions. On these matters he had no recollection – yet on other unrelated matters he had significant recall of events – i.e he retold the story of why Minister Peacocke sacked him at a later date – he told of his involvement in several matters after this event – and gave over a story that at the time this went down the Department was in a complete mess because of the amalgamation of several other Departments in the early period of Greiner’s Premiership.
He told of a special SBS folder that had a great deal of correspondence mostly signed by the previous Registrar Mr David Horton who served during the formation and amalgamation of the three Building Societies to from the SBS. His recall was interesting – remembering specifics all around the specific question – but nothing relating to why he signed the most important documents and under the cloud of a Takeover Review committee having been formed but not engaged to oversee the SBS/St George merger.
This was despite all the legal advice held advising the Dept of the ongoing ‘conflict of interest’ positions of the SBNSW appointed SBS Directors.
From the May 5th Boardroom coup onwards, the SBNSW appointed SBS Directors acted in their ‘conflict of interest’ positions making financially advantageous decisions to sell their fixed-capital using the SBS reserves as leverage. Their decisions financially disadvantaged the SBS members and this is the ‘fraud crime’ committed by these Directors.
This was made possible by the way the SBNSW was structured with influence from Premier Wran and his Special Minister and Minister for Co-Operatives – Minister Terry Sheahan. Mr Sheahan is now a Justice of the NSW Land and Environment Court and with this on his record – the court appointment has to be questioned on many levels. Both he and Premier Wran influenced the formation of the SBS under rules that were questionable at the outset and with a motive to suit the SBNSW in their cause to overturn the 1931 Agreement with the CSB.
In the final decision in determining the fate of the SBS, its members had no say in the matter – they were only ever given the choice to vote to accept the St George ‘transfer of engagements’. Had the vote failed then the SBNSW were screwed and the SBS would have remained independent. There was much incentive for the SBNSW and NSWG to win this merger vote.
It seemed that nobody wanted to put up a fight to protect the interests of the SBS members – all resistance had disappeared except for those SBS members who showed up at the AGM.
The Media Responses:
The media attended the AGM meeting and reported the events in their newspaper publications as presented below:
The Sydney Morning Herald SBS AGM story:
The SBS Chairman Paul KEARNS – (also Legal Counsel for the SBNSW – and part of the SBS and its formation since the late 70’s) – gave several misleading statements throughout this meeting – his comment about ‘negative responses to the merger’ had some truth – however it was far from the real reason the SBNSW abandoned its merger agenda – as has been described in detail in previous EYE-BALL Zombie-Leaks uploads …
As with any takeover/buyout’s these meetings are controlled from the Chair. Of the 250,000 SBS members – around 300 made the effort to show up at the meeting – many were SBS staff and they and the members were all against the merger.
The total votes cast numbered 1400 according to the report above – proxies made up 80% – all that was needed to carry the ‘transfer of engagements’ resolution was two-thirds majority of votes cast – it was a done deal before the meeting started – as is generally the case in these types of scenarios – no unexpected surprises – the SBNSW had controlled everything …
One of the crimes exposed was not in this final execution – but in the comment attributed to the Co-Operatives registrar – “… the Registrar of Co-operative societies had gone – “out of his way to assist” … Mr Baker the Registrar at the time – has refused to talk about this and other related matters when recent attempts were made to contact him. Mr Baker was against the merger between the SBNSW and SBS from the outset – why he was now being reported as being in favour and supporting a merger with St George and SBS – a merger he advised his Minister some months earlier would sound the death-knell of the Building Society movement in NSW – is for him to answer when he decides or forced under oath to tell his side of the story.
What was the SBS Chairman’s – Paul Kearns – motive to draw attention and raise this at the AGM when all the evidence was to the contrary? Two odd years ag when this was first discussed with Mr Baker he told of a promotion he received at the time – he had been moved from Parramatta to teh Sydney CBD and his Registrar duties were now only part of his responsibilities. When pushed further on this he elected to and advised that he did not want to discuss the SBS merger anymore – his parting comment was –
‘… I don’t want to be responsible for others being exposed over these events …’ he also said … ‘… what this research was uncovering would hurt a lot of people …’ – when pushed further to explain what he meant – he said broke contact and said – ‘ … I don’t want to be contacted on this matter again.’
Clearly Mr Baker has plenty of information to offer if asked by the right people …
The Minister and Registrar were on record some weeks prior as wanting the Takeover Review Committee involved – the Minister had also put forward an Amendment Bill over the ‘conflict of interest’ issue when the SBNSW/SBS merger was on the cards.
Why was this ‘conflict of interest’ issue now any different and diminished on any number of fronts because of the ‘sale’ to St George –
This ‘end-game’ resolvement of the SBS began in early May ’88 when O’Neill staged his Boardroom coup –
All the SBNSW wanted after the merger was sunk by the SBNSW’s own incompetence in not having the State Bank Act amended after the 1931 Agreement was rescinded – was a financial outcome from their involvement with the SBS.
The $330 million they extorted via court action from the CSB wasn’t enough – O’Neill wanted more – he needed more – given the financial armageddon knocking loud and clearly at his Bank’s door in the post October ’87 global equities crash meltdown.
The SBNSW never had an alternative or back-up plan should a merger between the SBNSW and the SBS prove out of reach. They made so many mistakes in the closure of this deal.
The ‘conflict’ allowed and served the SBNSW interest’s in that any sale of the SBNSW owned ‘fixed-capital’ was priced on the basis of control over the SBS – not its ownership – but with that control came the SBNSW’s own held perspective that they did own the SBS.
This was at the base of their criminal intent – the SBS members owned the SBS – not the SBNSW. fTere were 1.6 billion withdrawable shares and fixed shares on issue- the SBNSW owned 600,000 of those shares – (fixed-shares) – hardly any representation of ownership.
The SBNSW were now looking for an end-game deal/price that best suited the SBNSW and not the SBS members – this again proves the ‘conflict of interest’ intent and the FRAUD that the SBS members were subjected to – this was acheived via the SBS Board’s actions – again proving that the SBNSW Directors appointed to the SBS Board were acting against the SBS members interests in favour of the SBNSW – their employer. Everybody knew of this ‘conflict’ position but were turning a blind eye.
Why did the Minister and Registrar weakenin their resolve to protect the SBS Members when the sale to St George was advised?
Why did they withdraw their legislative mandate to protect the SBS members when they were aware of the ‘conflict of interest’ issues at play?
Who enticed them to withdraw their objections and protection of the SBS members – their rights and entitlements?
This was a crime – a serious crime involving a very large amount of money – $75 million. It happened 24 years ago – and it happened with all the NSW Government, the Regulatory Departments, and all their Lawyers and advisors watching and knowing what was happening was wrong.
Why would the current NSW Government not want to bring this matter out into the open and have it investigated?
For this matter to be investigated by the NSW Governemnt – someone would have to have an agenda. This was a crime of some significance carried out by men who are still serving the public in high-profile positions – yet unless someone sees mileage for themselves – it will never be investigated. Nobody wants this dirty linen aired …
This crime spans three NSW Premiers – their Ministers and staff on both sides of politics – what can the current NSW Premier Barrie O’Farrell hope to achieve if he were to have this matter further investigated? … and yet – it must be done – you cannot let crimes like this go unpunished – and especially when heads of Governments and Ministers are involved.
The NSW Treasury has had the use of the defrauded $75 million SBS funds for some 24 years – their agent John O’Neill added another $1.8 billion in 1995 value terms to the NSW Government’s Debt burden when the SBNSW was sold to Colonial Mutual minus the ‘bad-debts’ accumulated under his term as its MD.
What could be a reasonable outcome if a Royal Commission investigated and found enough evidence to pursue criminal charges against Greiner, O’Neill, Sheahan, Wran and the other Government staff involved?
Unsworth escapes the serious charges – all he is guilty of is complacency in not stopping what had been put in place by Wran … To quantify the values on the monies stolen and defrauded – the following list is presented as potential ‘class action’ damages –
The Australian Financial Review SBS AGM Story:
Again Mr Alwyn Thomas – the turncoat who sold out on the SBS Members when he accepted O’Neill’s invitation/offer to help him get rid of the SBS GM Denis Cleary from the SBS Board shines in his statement presented below and as reported by the SMH above –
… and again as reported in the Financial Review above –
In fact what Mr Thomas stated was exactly what did happened – the Co-Operatives Dept deserted the SBS members – and the SBNSW put their hands in the pockets of the SBS members and took out $75 million – the value attached to the reserves and goodwill of the SBS that SBNSW were prepared to sell out the SBS members for.
Obvious crimes like this don’t happen very often – not in full sight of everybody – it could only have happened with Government intervention and sanction. Why this was never questioned by Minister Peacocke after the fact is also a question worth an answer.
Lawyers working in the Business and Consumer Affairs, Co-Operatives, Solicitor General’s office, Attorney General, and all the external lawyers connected – they all stood back and allowed this fraud to happen …
In 2010 – the NSW Premier, ICAC, the Premier and Cabinet Dept, the NSW Attorney General – and the Minister for the Office of Fair Trading – were all given the opportunity to have a look at all the evidence presented in this expose – they all said – “TOO HARD” … “TOO Long ago” – and they all wanted to pass it on to the NSW Premier’s office …
Part 14 continues … this installment covers the NSW Governments responses and inaction during 2010-11 when these matter were bought to their attention.
Part 15 – this installment is about the SBNSW’s bad-debts legacy left upon the NSW taxpayers – its current value – this research is currently under way with NSW Treasury …
Part 16 – the conclusion … including an update on tfe current NSW Governemnt’s willingness to investigate this matter – if you think that the allegations made during this expose are worthy of an investigation with a view to pressing crimonal charges if the allegations are proven to have validity – please write your Local NSW Parliamentary member – their e-mail and postal address can be found using this link:
“Register support for an investigation into John O’Neill’s activities as head of the State Bank of NSW during 1988 through to the sale of the bank to Colonmial Mutual in 1995.”
‘Andrew CONSTANCE (firstname.lastname@example.org)’;
Part 14 – 15 continues … see link below …
Link to all previous chapters for –
The EYE-BALL Opinion … Without Prejudice …
Human Evil Exposed –
(CEO-ARU) … Part 12
Definitions of Allegations alleged against Mr John O’Neill and his cohorts …
Part 12 commences … The Sale to St George Building Society …
The date is now early July ’88 and in the two months since the May 5th Board meeting – the SBS is now all bundled up and ready to be dealt with as the SBNSW wants.The AAPBS Advisory Review Committee handed their decision down re whether John O’Neill was serving two masters on the 24th June – the AAPBS decreed his first master was the SBNSW – and their decision for him to vacate the Chairmanship of the SBS Board was symbolic at best.
He was replaced by Paul Kearns – the SBNSW employed Legal Counsel for the Bank and someone who helped instigated the plan to form the SBS back in 1976 …
He had been O’Neill’s boss for a number of years as O’Neill completed his Law degree under a SBNSW sponsorship – his loyalty to the SBNSW and O’Neill was un-questioned and what O’Neill now wanted after his exit was what Kearns would deliver. Kearns was as much a part of this end-game plan as any of the SBNSW Executives who had been a part of this deal since its inception.
In this same two month period since the Boardroom Coup – and whilst this banter between the Regulators and the SBNSW kept everybody but the SBS members and its staff mildly amused by the ‘game’ being played out – O’Neill was still allowed to continue to serve in the legally recognised ‘conflict of interest’ position – and without any direct interference into what he was doing by any outside agents.
During this elapsed time-frame – he had the time to ensure and cement the sale/merger deal with St George to the exclusion of all other interested parties. Of course there were discussions with Premier Greiner about other interested SBS bidders, and his advice to Premier Greiner – ‘there was no better deal on offer than the one with St George’.
What private deals were done between St George, Greiner and O’Neill to so discharge O’Neill’s fiduciary responsibilities as the SBS Chairman is not known – if any – but to so disregard the SBS members and staff and their rights according to NSW Statutes, had to have taken some tremendous incentive. To name some of the already raised issues that could be considered motive include:
On these last two points – at this time the SBNSW was near enough to being technically insolvent – and were not the only Australian Bank to be in this position during this period. Whether O’Neill’s subordinates were fully cognisant of the diminishing values on securitised assets and marking them down accordingly is conjecture. There always was and still is a lag in Banks reporting such occurrences … all the while hoping that market corrections are a temporary thing and that valuations will recover.
The SBNSW was a special needs Bank – they were not Governed by Australia’s Central Bank – the RBA. They had a State Government mandate to operate and carried their guarantee. The reporting requirements by Banks operating under the RBA auspice had different reporting procedures than the SBNSW and all the other State Banks. It can be said this was a determining factor in why all the State Banks ended up on the scrap-heap in some form or other.
The SBNSW held out the longest – and that is not to say that the SBNSW was not insolvent for a very long time before they were able to sucker up to someone to buy them out – i.e. Colonial Mutual in 1995. More on this in a later post.
Now back to the July ’88 period – it is not known whether O’Neill as a nondescript Banker had any understanding of what was happening in the Australian Banking sector during this turbulent period. He would have been aware of the same rumors circulating the markets about the State Bank’s of Victoria and South Australia were now talking about the SBNSW. This pressured O’Neill even more to get a successful outcome from the SBS and how the SBNSW disposed of the SBS after the merger came unstuck.
O’Neill needed the SBS reserves in his Bank’s pocket to boost his own Bank’s solvency. This is the FRAUD, SWINDLE, whatever you want to call it – the SBNSW and NSWG via their Premier in Nick Greiner involved themselves in a conspiracy to defraud the SBS members and staff out of the SBS reserves and goodwill value and to the tune of $75 million.
In O’Neill’s singular and catharsis type mindset – and together with all the other SBNSW Executives who were a part of this conspiracy to commit a crime – to them this was a simple exercise of transference – they had genuine belief in that they owned the SBS, and they thought any reserves the SBS had belonged to them.
In their stupidity and utterly hubris contempt for due process – and following the corrupted path nourished by Premier Wran and Minister Sheahan who structured the SBS – they were not prepared to accept any umpires decision that did not agree with their purpose. An to that end – they collectively chose to ignore and absolve themselves from their fiduciary responsibilities as SBS Directors to ensure the SBS members received fair value in any SBNSW exit from the SBS.
The SBNSW had every right to sell their fixed-capital in the open market-place – but as serving Directors of the SBS Board – did they as a block of votes, and who controlled the SBS Board – do so in the interests of the SBS members – or their employer the SBNSW?
O’Neill could not get the SBNSW over the finish line all by himself. Any sale of a $1.6 billion entity would under normal circumstances be put to stringent and exhaustive due-diligence valuations. Under the NSW Statutes the SBS was answerable to – such a sale option would require advice and consent from the members about what was being proposed and undertaken before any deal could be struck. The SBNSW appointed SBS Directors elected to ignore these rights and entitlements … and were doing so against the Business and Consumer Affairs Minister’s advice. This was still the ‘sticky’ part of the deal O’Neill had struck with St George.
Since May 5th – O’Neill had control over all the Board decisions made in how to dispose of the SBS. He also had operational control through the appointment of the SBNSW employed Tony Howarth as Cleary’s replacement. All the previous SBS Management had either been sacked, were on or about to be sent on administrative leave, or had been sufficiently intimidated that they were acting as if – ‘dead men walking’.
The evidence trail continues …
The continuing document trail of evidence for July/Aug is presented below with internal page links to help navigate around the post. They again represent the ongoing letter exchanges between the SBNSW and the Regulatory authorities as the countdown to the Aug 22nd vote by the SBS members on the St George merger/transfer of engagements – [return links provided]:
1st July: Prepared as at the 26th June – but signed 1st July – Internal submission from Registrar to the Minister – Gerry Peacocke – re outcome of the 24th June AAPBS hearing ..
Summary information on data already presented in past uploads …
AAPBS Members – Jack and Shields – were the CEO’s of Illawarra and St George Building Society’s … their exclusion was demanded by John O’Neill … he claimed they would have been serving in a ‘conflict of interest’ position as both were bidding for the SBS … [click here to read O’Neill’s demands – Page 1 – Page 2 – O’Neill’s demands appear on page 2 – opens in a separate windows.]
A tricky argument considering the reason O’Neill was fronting the AAPBS was because of his own ‘conflict of interest’ position – and he was still holding onto the secretive information about having already done a deal with St George in principle to buy the SBS ‘fixed-capital’ ownership from the SBNSW.
This presentation to the Minister highlights the successful mis-direction game the SBNSW and NSWG were playing with their own Regulatory Authority. There is no way O’Neill would have signed off on the deal with St George [Shields] – without having Greiner’s OK to do so … that meant the Premier was not talking to his Co-Operatives Minister about the St George deal at this stage. That may have been a payback for the Amendment Bill Minister Peacocke put up in late May to prevent the merger.
This pretty much makes the Regulatory Authorities look ineffective and lame when it comes to protecting the rights and entitlements of the SBS members as was their responsibility to do.
Again this is summarising the history for the Minister up to the Meme Heading – ‘The Committee’s Determination’ …
Mr Baker has shifted his position from that of the 11 May letter to all the SBNSW appointed SBS Directors to now focus on Mr O’Neill and his dual Directorships – …
… – this was a massive fumble under Baker’s responsibility – his Co-Operatives Investigative Report dated 16th May into the conduct and proceedings at the SBS May 5th Board meeting highlighted the way the SBNSW Directors were appointed – that they had to hold in their name at least 10 fixed-capital shares to be eligible to be nominated as a Director representing the SBNSW – …
It was not revealed that each of these Directors had signed a transfer of those fixed-capital shares back to the SBNSW as a part of the deal of becoming a SBS Director – to get rid of the SBS Chairman Ken Dennewald – he had to have signed over his shares at the time of his appointment – else the SBNSW would have had difficulty in trying to sack him just prior to the SBS May 5th Board meeting.
This has been confirmed by third-party statements in that the SBNSW did hold signed transfers for the fixed-capital shares held by the appointed SBS Directors.
This was a big revelation in the Regulatory investigation Report – in effect these appointed SBNSW Directors sitting on the SBS Board did so with a gun pointed at them to ensure they voted in-line with the SBNSW wants and wishes. This further attests to the conclusion that there was no independence in their decisions’ that purported to represented the interests of the SBS members.
There was a reason, perhaps many reasons O’Neill did not front this AAPBS Advisory Review committee. He would have been grilled about this and several other matters raised in Registrar Bakers exchanges with O’Neill leading up to this meeting.
To be specific on this point – Registrar Baker had raised and asked O’Neill during their letter exchanges during late May through to the 24th June, to provide information on this particular aspect of the fixed-capital holdings by the SBNSW appointed Directors. O’Neill never answered the questions asked in any of his responses.
Had this information about the pre-signed transfers been raised during the court battle between the Commonwealth Savings Bank and the SBNSW and NSWG – the whole question about control of the SBS would have disfavored the SBNSW and NSWG. They went to great lengths to present evidence of an independent Board and a distance between the SBNSW, its appointed Directors and the Operational control over the SBS. This revelation had it been produced at trial – could have quiet possibly altered the outcome of the $330 million verdict.
O’Neill did resign his SBS Chairman/Director position on the 8th July – and so advised the Registrar on the 15th July via correspondence from the SBS Secretary. That time delay – some 25 days after the Advisory Committee advised him of their decision gave O’Neill more crucial time to prepare the game-plan for the St George sale which had to be voted on by the SBS members.
The stark reality in all this was that O’Neill decided the fate of the SBS and not its members – he decided on the sale of the fixed-capital to suit the SBNSW interests and not the SBS members interests. This is basic corporate criminal behaviour and he should serve time because of it.
Some 24 years after the event – who is going to make sure he and his accomplices account for their actions?
15th July: SBS advice to Registrar of O’Neill’s resignation from SBS Board and Chairman position.
SBS Secretary advises O’Neill’s resignation …
3rd Aug: New SBS Chairman (Paul Kearns) letter to Registrar re Sale to St George arrangements …
Mr Paul Kearns was appointed the new Chairman at the 22nd July SBS Board meeting – he had been a part of the SBS deal since 1976 … he was the legal counsel for the SBNSW and served as second chair all during the CSB court battle. His hands were all over this flawed SBS structure and his legal dealings in bringing it about suggest opinions about his legal credentials and ethics. He was also the most probable person responsible for not having the NSW State Bank Act amended after the Dec ’87 decision to rescind the 1931 Amalgamation Agreement … this oversight prevented the SBS merger from the SBNSW and NSWG perspective –
The Kearns letter above is the first public announcement of the St George deal in any format – some 2+ months after a ‘in principal’ deal was struck and held secret all this time from the Regulatory authorities and the SBS members. Up until this point the Regulators and the public were still awaiting a merger deal between the SBNSW and the SBS and all defenses to prevent this merger were prepared in this regard. The St George deal was done in secret – and without the Regulatory authorities informed – the Premier was aware – but he did not update the Minister whilst these negotiations were in progress. If he did in an unofficial capacity – a whole lot of other measures should have been taken by the Minister and his staff.
The SBNSW and the SBNSW appointed staff overseeing the SBS daily operations all knew the merger was off … but they never advised the Regulatory authority.
From the SBNSW perspective this St George deal was all that mattered – this Kearns letter is pure courtesy to what the SBNSW was intended to do – arrangements had been worked out with St George in how to get the deal done and get around the SBS staff supporting such a merger … Kearns makes light of this issue.
Nowhere in this letter are the SBS members mentioned …
Kearns is holding a gun to the head of the Regulatory Authority and what did the Regulatory Authority do … rolled over and let it happen just as Kearns set out in his letter.
From this point onwards – the Regulatory Authority went missing – on all the correspondence that follows Mr Baker – the registrar – and the Minister – Mr Gerry Peacocke – even though their names are printed on the letters – they have not signed them – they are all signed by a single person – the Deputy Registrar – Uri Windt.
In discussions with Dept Consumer Affairs – it was thought that the Deputy Registrar had no authority to approve any of the decisions he made. This is a moot point some 24 years later and in view of what happened – the question still hangs there – where were Peacocke and Baker when all this went down?
Had Greiner got to them – evidence given by Registrar Baker when contacted two years ago told of his promotion and move from the Parramatta offices to the CBD …
This is when some of the the serious ‘crap’ really went down …
Read on …
4th Aug: SBS Secretary requesting Registrar’s determination re financial interests of SBS Members …
On the 3rd Aug SBS Chairman Paul Kearns writes to Registrar Baker telling him what the SBNSW are going to do with the SBS – on the 4th Aug the SBS Secretary follows up with the above letter.
The SBNSW needed something from the Minister – a letter approving the deal and a bypass of the Takeover Review Committee investigation into the sale of the SBS and whether it is in the best interest’s of the SBS members. This was intimidation … the SBS Secretary Paul Gibbeson was a SBS employee – he joined in late ’87 and when the SBNSW swooped in on the 5th May he was caught in the middle of that Board meeting.
Everybody at the SBS were now singing to the SBNSW employee Tony Howarth appointed as Cleary’s successor – and the SBNSW run SBS Board. You do not have to be too clever to understand Gibbeson wrote this letter under instruction. The SBNSW were all about cleaning up the carnage before the merger vote. They wanted to present as clean a slate to the SBS members when they went public about the proposed merger with St George. This letter and the Kearns letter the day before were a part of that clean-up.
But there is more … read on …
5th Aug: Greiner request/Plea to Minister Peacocke to have him over-ride Takeover Review Committee look into sale of SBS to St George …
This letter again puts Greiner right in the middle of the ‘swindle’ … he writes to the Minister telling him that the deal struck with St George is in the interests of ‘all parties involved’ – not the SBS members – but ‘all parties involved’.
This statement alone shows his ignorance to what was afoot – or if he did – he was as complicit as O’Neill and everybody else who put this FRAUD together. The first responsibility of the Department of Business and Consumer Affairs – including the Co-Operatives Department to whom the Premier was writing – would be the financial interests of SBS members and their reserves. Greiner had been advised about the Takeover Review Committee in the John Down Attorney General advice sent on the 25th May in response to the Peacocke Amendment Bill. Greiner was putting his weigh behind O’Neill’s need to have the Peacocke sanctioned Takeover Review Committee abandoned.
Greiner was aware that the SBNSW were set to receive $75 million for their $3.049 million of fixed-capital … yet the deal had placed a total $75 million on the SBS as a going concern by the SBNSW. Where was the due diligence … how were the SBS members being protected – how were they given a choice in their self-determination – who valued the SBS at $75 million?
The SBS members were about to be offered – and remember at this stage the St George deal was not public in any formal way – the option to vote on a ‘transfer of engagements’ with St George – there was no other offer made public – yet Illawarra Permanent Building Society and the R&I Bank of WA had and were in the process of placing bids for the SBS.
This deal being served up to Minister Peacocke served only one party – the SBNSW and their owners – the NSWG – who again did not have the capital to inject into the floundering SBNSW.
This was the SBNSW’s exit strategy for an entity they formed as a prod to get the CSB into court over the 1931 Amalgamation Agreement – they won that case and a $330 million settlement – which now looks pretty sick given the evidence produced hereto about the ‘control’ the SBNSW had over those SBNSW appointed SBS Directors. Further – the merger had to be abandoned when the SBNSW stuffed up big-time in not having the State Bank Act amended. This was the next best deal – to strip the SBS of its value in exchange for selling the $3 million fixed-capital. Exactly as SBS Independent Director Bruce Treloar stated in a press conference shortly after the May 5th Boardroom coup.
And there was another windfall – all the $25 million SBS Treasury profits made during ’87-’88 were now nesting in those SBS reserves and the SBNSW wanted them as well – they did not honour the SBS Treasury Bonus pool authorised by the previous SBS Management. O’Neill knocked it down and added the Bonus pool to the existing SBS reserves. He was a greedy nasty little Lucifer and ‘evil’ only goes part way to describing his persona.
And now we can sit an wait for the penny to drop … who cares some 24 years later … crime is crime right … and these persons – Greiner, O’Neill, Kearns, Thomas, Turner, Fraser, Humphries, Wran, Sheahan, Peacocke, Baker, Windt, and the many others involved should all be under investigation for their part and the role they played in allowing this to happen.
O’Neill holds an ‘AO’ – and it is an insult to all Australian’s who hold this same honour to have someone like John O’Neill on that same list.
What are the current NSW Government going to do about this expose? That is a question that can only be answered with the passage of time.
This letter from Greiner [above] – meant three letters in three days to the Regulatory Authorities – from the new SBS Chairman acting as john O’Neill’s lap-dog, the SBS Secretary acting under duress, and now the NSW Premier – all wanting the same thing – a rubber stamp to their proposed sale of the fixed-capital to St George – and the second prize – the $1.6 billion SBS transfers its engagements to St George … and O’Neill then gets to strut and brag his success to an end-game where he seals his own rewards for getting the deal done.
8th Aug: Deputy Registrar Business & Consumer Affairs to SBS Chairman [Paul Kearns] – re: ‘Transfer of Engagements’ …
This is the first of the Regulatory responses – note the signing by the Deputy Registrar … did he have authority to grant the approval – the attachments referred to are still under a GIPA recovery application …
To read the section 115(6) of the 1923 Act referred to in the letter – click here – [will open in a new window] …
It would appear that Registrar Baker and the Minister were absent/away from work – either due to illness or some other necessity … the biggest ‘swindle’ of public monies in NSW Government history is about to go down and the Minister and his Registrar – who both know what is happening – decide to send in the Deputy to do what the Minister and Registrar were not prepared to do.
Nobody is prepared to say what actually happened during this period for the moment – Mr Windt has not returned a call about these and other letter signings – Mr Baker has asked to be left alone and Mr Peacocke is suffering serious health issues … the legal advisor mentioned earlier – J.M. – has also not returned messages.
Mr Windt would not have signed this letter of approval unless instructed to do so – who gave him that discretion and what favour changed hands for it to have been done … are all questions for a Public Prosecutor or a Royal Commission enacted by the now Premier of NSW into the affairs of the then Premier Greiner and the conduct of the SBNSW Executives acting as agents of the NSW Government.
This evidence of wrong-doing has been sitting in the Co-Operatives Dept files all this time and nobody turned a page to look into it.
This is testament to a number of things – within Government there are always shortcuts taken – there are always corrupted actions – there are only degrees of corruption – and for 1000’s of years these varying degrees of corruption have made history …
Are State Governments corrupted – of course they are – are they worse than Federal Governments – that is not the question. The question is the evidence produced hereto – nobody can read all that is presented hereto and not believe that Greiner and O’Neill committed a FRAUD.
Premier Greiner himself faced an ICAC corruption inquiry that ended his term in office – the same term he was serving when this SBS deal went down. The SBS deal was a separate issue to the ICAC inquiry.
An extract from the ICAC website had this to say :
These three reports can be read using the links below:
In 2010 – an approach was made to ICAC to have the matter presented in these ‘Human Evil Exposed’ posts investigated. A summary brief running to 400+ pages was sent outlining in similar detail without the hard evidence as been presented here. It was explained that the evidence would be made available if an investigation was to proceed. After some months or prodding and poking – the ICAC came back with a response. In part that response read as follows:
You think when you take the time to set out in meticulous detail how a crime was committed – and that you have the evidence to back it up – you could reasonably expect that those responsible for Government corruption would at least want to look at the said evidence. This response above was completely inadequate. Even with the knowledge of a guilty history with Mr Greiner – they were not prepared to open an investigation. in further follow ups other explanations were offered – one was that Mr O’Neill no longer worked for the Government – and that ICAC only investigation current employees of the Government. At the time Mr O’Neill was a roving tourism ambassador for NSW Events.
ICAC’s reputation to deal with this matter failed to live up to their declared mantra –
No bloody wonder people have little faith in the ‘natural justice’ of how law is administered in this Nation … it all depends on who you are in the pecking order and whether you can buy your way out of trouble … ICAC have been getting these post updates – and to ponder how their responding to them now is of interest.
8th Aug: Deputy Registrar Business & Consumer Affairs consent to SBS takeover of SBS ‘Transfer of Engagements’ …
There are many Sections in the 1923 Corporations Act that have relevance to this clause and interpretation may be subjective – to download full copies of the 1901, 1923 and 1967 Acts that all had bearing on the fate of the SBS – click here and go to the 26th Jan uploads.
The Letter referred to as having be sent to the SBS Members is copied below – this is now just 14 days before the SBS AGM and vote of the St George merger … as yet the Members had not been formally advised other than some speculation in the media.
Undated: SBS Management Information Pamphlet to SBS Members re: 22nd Aug AGM and Sale vote to St George …
Paragraph 3 – Mr Kearns has presented a case that all SBS interests are being served by accepting the resolutions presented. This is an outright false statement – and can go so far as to say misleading and criminally negligent. Mr Kearns’ fiduciary responsibilities were non existent when he made this statement … and he represents himself as speaking for the whole SBS Board – yet that Board had only one master – the SBNSW and John O’Neill acting with the approval of the NSW Premier – Nick Greiner.
There was no disclosure of the deal struck to sell the SBNSW’s fixed-capital to St George for $75 million in this pamphlet – yet in a similar pamphlet sent to SBS staff Page 3 of the pamphlet read as follows. [This is in small print and by clicking on the image area below – the image will be displayed in a new window where it can be enlarged – use Control & ‘+’ key to enlarge if using Firefox or Explorer Browsers…. ]
The highlighted areas are of most interest – and present further evidence to the 1st June deal done with St George and other matters covered further hereto.
Back to Page 2 – as as also included in the Staff pamphlet …
Mr Kearns quotes the 1923 Corporations Act – Section 69(1c) – yet there are many other Sections that he has not quoted or abided by when seeking the Rules governing the SBS to sanction what was now happening. Both the 1901 and 1923 Acts can be viewed using these links: 1901 … 1923.
Clause 1(b) is interesting … ‘ … the setting aside of the SBS reserves …’ what it did not say was that St George had its own deal in how to recoup some of the $75 million outlay – is was selling shares in St George based on the deposit value of the SBS shares of each member – in effect the SBS members were being offered to buy back their own capital – i.e. the SBS reserves St George were putting aside in a reserve fund – were being offered back to the SBS members – not at par, but at a premium valued against the existing value of St George shares.
The clause 5 highlighted above reads: [again – click on the image to open in a new window to enlarge.]
The deal offered presented SBS withdrawable shareholders 100 St George shares for every $500 on deposit – at a price of $1.50 per share representing $1 par value and $0.50c premium.
To explain further – St George were offering SBS reserves back at 20% value compared with St George shares – and the SBS had to pay an additional $1.50 for each share – this was agreed to by the SBS Board as a fair an equitable deal for the SBS members with no Takeover Review committee to review the ‘fair-value’ attached to the St George bid.
For every $1 held on deposit with St George before they floated – St George members were entitled to one withdrawable share. For every $1 on deposit with the SBS – the SBS member held one withdrawable share. Yet when St George valued the SBS Members deposits – some $1.6 billion – if it were to be fully subscribed/converted – St George were only offering 20% of shares in number – and the SBS members had to pay an additional $1.50 for each St George share offered.
How could anybody look at this deal and think the SBS members were getting a fair deal. The SBS Board were criminally negligent in accepting this deal. In the wash – it was reported St George raised some $40 million from SBS members via this equity buyback scheme – How the Minister, his Registrar, and the Deputy Registrar who’s signature appears on the 8th Aug approval letters for these deals could have allowed it to happen – gives strong evidence that something illegal happened and needs to be investigated.
In the alternative – if the SBS Board had of gone to the SBS members and asked then to buy the SBNSW owned fixed-capital – as suggested as an option in the Macquarie Bank report – the SBS would have remained an independent entity. Yet the SBS Board – now in the firm grasp of the SBNSW appointed Directors – never gave the SBS members any other option other than to accept the St George offer. The SBS members were totally ‘done-over’ every which way by the actions of these Directors … and do you think those same SBNSW Directors did not know what they were doing?
12th Aug: Registrar submission to Minister re: Directors Compensation …
This is interesting – Director’s Alwyn Thomas and Warren Osmond were not to receive any Director’s termination fees – they were the nominated Directors to go on the St George Board.
22nd Aug: SBS Secretary to Registrar re: notification of SBS transfer of engagements to St George …
Within the wording of this letter – an interesting scenario comes forth …this letter talks about the withdrawable shareholder Directors – Messes Crib, Osmond, Treloar, and Alwyn Thomas – two are to be appointed to the St George Board – i.e. Osmond and Thomas and the other two to receive a $12,000 compensation package. The other interesting point is how the four SBNSW Directors on the SBS Board were paid out if at all.
They were each holding a minimum of 10 shares – in total there were 609,815 fixed shares – how these shares were divided and how held is not known – however if each of the SBNSW appointed Directors were holding their allotment of shares and the deal done with ST George was that St George pay $118 for each of these fixed-capital shares – did the SBS Directors employed by the SBNSW get to keep their portion of the $75 million?
These shares were controlled and monitored by the SBNSW internal registry – how wide were these shares distributed within the SBNSW Management – did any of the SBNSW Board own fixed-capital shares in the SBS – how about O’Neill after he was kicked off the Board did he still own any shares – these are very relevant questions that need answers.
Was this a private ‘swindle’ where only part of the $75 million proceeds went to the SBNSW and NSWG – and the rest divided up among those at the top of the tree and who helped get the deal over the line?
24th Aug: Documents confirming ‘Transfer of Engagements” …
The DEED is done and the SBS is no more …
25th Aug: Unsigned Letter from Minister Peacocke to Premier Greiner re: Takeover Review Committee position – [Possibly Fake] …
To see this Letter without ‘cropping’ effects please – click here – it will open in a new window.
This will confirm that there was no letterhead or date stamp on the letter. You will see the ‘File No: 88/08-25’ … this is the date stamp used on all Department files during this period – so it is safe to say that this letter was drafted on the 25th Aug 1988 – a full three days after the ‘transfer of engagements’ had happened and a day after the ‘Special Resolution’ have been sent to the Registrar for acknowledgment.
It is hard to understand why the Minister has not signed this letter – or anyone else for that matter on his behalf – perhaps this was even to ‘hot’ for the Deputy Registrar to weight into.
The last paragraph demonstrates the cheapness of the SBNSW to the end – in the 1982 merger and formation of the SBS they had Wran browbeat his Treasurer to waiving the Stamp Duty and now the Minister is giving the appearance of doing the same again – and again – the letter is unsigned.
25th Aug: Registrar submission to Minister re: Transfer of Engagements …
Now this is the ‘crowning glory’ in just how convoluted this event had become. This is an internal memo to the Minister – written by the Deputy Registrar under the Registrar’s name and from all appearances – it agrees with the SBNSW actions. This is a complete back-flip to the Minister’ and his Registrar’s position on this matter for the last three months.
Paragraph 2 – ‘in supporting the st George proposal…’ – there is no supporting evidence to suggest the Minister or Registrar support any proposed merger/sale previous to this memo … it’s a quantum step to accept the comments in this memo … and is further put under the microscope hereto.
Check out the initials that appear at the bottom of the above page … now click here to see Minister Peacocke’s initials and handwriting in a new window … this is page two to the 6th June Takeover Review Committee (TRC) the Minister wanted structured … [page 1 is further linked below] … as you can see they do not compare – this document was never initialed by the Minister … it is not known if it had any official validity whatsoever.
Further the names handwritten in the left margin indicate who was being approached to sit on the TRC – these names include:
This memo – also had the clause in the first paragraph:
‘ … The Committee would therefore be in place whenever events indicate the need for it to act.’
This clearly indicated the Minister’s position – that any move against the SBS would be subjected to the TRC procedures … yet this submission to the Minister above and 2nd page below – goes against all that the Minister has established to protect the SBS members … and signed by the Deputy Registrar – Uri Windt.
The plot thickens – this summary memo to the Minister was dated some three days after the St George ‘transfer of engagements’ went through – and 20 days after Premier Greiner’s letter to the Minister asking he not engage the TRC – the previous letter to the above and addressed to Premier Greiner with Peacocke’s name at the bottom and unsigned, and not on Dept Letterhead – also carries a date three days after the event …
Somebody within the Co-Operatives and the Business and Consumer Affairs was now window dressing on behalf of the NSWG and the SBNSW.
The intent was to try to make it look as if the Minister had averted the Takeover Review Committee (TRC) process/investigation that he had originally set up in June. Click here to see page 1 of the the Minister’s approval for the TRC proposed on the 25th May and signed on the 6th June – click here for Page 2.
The second page continues of the submission to the Minister’s continues …
Again signed by Mr Windt as the Deputy Registrar – on behalf of the Registrar … authorising the exemption of Stamp Duty and recommending the resolutions put forward be approved.
Mr Windt has some serious questions to answer … and here are just a few …
… and from these will come many more questions …
Contact was made with Mr Windt in 2010 – and he was helpful at the time. Further recent contact has been attempted and copies of some held correspondence has been forwarded with a request for him to respond – that response is still awaited. One can understand why.
Below are notes to this memo to the Minister … they contradict the approvals given by Mr Windt on the value of the St George offer offered to the SBS members – and again it confuses the issue given what Mr Windt signed his name to when he made his recommendations to the Minister. There also appear to be written after the 22nd Aug SBS AGM and vote on the St George merger …
This Fixed share deal make it obvious that there were concerns about the St George share offer – why was it not investigated further … if you recall Paul Kearns never advised the Registrar of this part of the deal when he wrote to him on the 3rd Aug … how could of the Registrar know what was afoot if the information was withheld.
And again – where was the Registrar and Minister at this pivotal time … why was the Deputy Registrar – Uri Windt signing and approving all that the SBNSW was asking for … when the Minister and the Registrar were so against the SBNSW Directors serving in ‘conflict of interest’ positions.
This was a crime with serious implications for the Building Society industry in NSW. St George had just taken over the 2nd largest Building Society in the State and now had assets in excess of $6 billion – their nearest rival was the Illawarra Permanent Building Society with $600 million – this merger crushes expansion opportunities for the other NSW Building Societies and this should have been a consideration for the Minister.
In fact it was if you have read the Minister’s initial comments made after the 5th mat Boardroom coup. This was made to happen and somewhere along the line – the Minister and Registrar moved aside. $75 million – the value of the SBS was stripped from the SBS members – a $1.6 billion profitable and thriving entity was crushed on the actions of one man – John O’Neill and he needed his Premier to help him do it – and all done whilst serving in a proven ‘conflict of interest’ legally acknowledged by the Crown’s own legal opinions.
You cannot get a clearer case for an investigation into the actions of O’Neill, Greiner and the rest of their ‘gang’.
Part 13 continues … there will be another short in posting of the next installment – the documents in the next upload include Media stories from the SBS AGM and other personal documents that form part of this continuing expose into the ‘evil’ that is John O’Neill… see link below …
Link to all previous chapters for –
The EYE-BALL Opinion … Without Prejudice …
Human Evil Exposed –
(CEO-ARU) … Part 11
Definitions of Allegations alleged against Mr John O’Neill and his cohorts …
Part 11 commences … The SBNSW Response continues…
An Update – The Reasons Why!
By now readers of this story will have started to believe that some serious corporate corruption and fraud happened 24 years ago. Events that changed lives – and within the story being told hereto there are another 1000 or so more sub-plot stories that remain untold.
For example –
The world is full of these repressed type secrets – just imagine what someone like Rupert Murdoch could do to history and its course if he were to tell all that he knows, and what he did in shaping Government’s and the political careers of those chosen and anointed.
For a century plus – perhaps even from when civilisation began and Adam ate the forbidden fruit – civilisation’s have lived on what people perceive to be the truth and integrity within leadership – all presented to gullible readers and viewers in modern times through the eyes of newspaper editors, and in even more recent times – the TV News and Current Affairs editors and producers.
What people see is the projected image of what politicians, editors and broadcasters want you to see – and the people of the world by and large accept and want to believe it to be so.
You ever think or stop and ponder why it is news when some high-flyer falls to a sex scandal or a corruption claim? The story breaks and it is news for a brief moment – it disturbs the equilibrium of all that sustains our daily processes – the gossip hour with friends – the work environment idle chatter – the latest news on the train ride home – it becomes an interesting part to our day that is not interesting to begin with.
It’s a reflection of us and the mediocrity we endure and tolerate in our leadership – it is also a base-line acceptance that current leadership is good enough. The gossip news and ‘did you hear about’ type telling of these stories in ever-increasing degrees of embellishment – makes our lives that little bit more interesting and above the dreariness.
John O’Neill if he is anything or anybody of importance is like Nick Greiner – ‘he does not even remember the SBS and what they did.’ Well they both do now – and like a spooky horror show sneaking up from behind – blinding their eyes and screaming – ‘do you remember what you did 24 years ago … ‘ – their lives might now also be altered. If there is justice in the world – they will hopefully be waking and thinking about what they did – trying to recall the detail – the conversations – the paper trail – pondering what will happen if this story gains traction and the ‘walls begin to fall down’.
Yet – this story is my story – it is what I have been forced to live with for a very long time – you see not only was O’Neill just after the SBS monetary reserves – he wanted to destroy the people who showed him up – Cleary, Thompson, the SBS Treasurer and anybody else who got in his way. He did it by leaking information to the press – calculated revelations to a greater aim – discrediting the SBS Management was his way to sway the SBS Members to vote for the St George merger.
He didn’t give a second thought to think what damage his actions might cause – he just blasted away and the people he took down had to try and pick up the pieces and move on. But even then he wasn’t done – he verbalised the SBS Staff at every opportunity – his own staff heard the stories during in-house rants, boasts and chatter and they also spread the word – his cancerous bile impacted in ways that even he could never imagine. He sent investigators to find out personal information he could use – he tried to obtain confidential documents by stealth and deception – his actions had ‘evil’ intentions written all over them – this is who John O’Neill was when he served as the MD of the SBNSW.
If you want an answer as to why this story is told – call it motivated revenge – call it retribution – call it trying to get justice for a wrong – or you can simply believe that it is the story of a broken man having given up on life because the struggle to survive in the wake of what he was force to endure – damaged him for life.
This is one life that was irreparable damaged – that damage lay dormant and hidden for a long time – pride and a previous lifetime of success and competitive instincts carried him for many years after the SBS experience. He never wanted to believe that the events of ’88 did him damage – and now some two and a half decades later, and after a truly honest look at the gradual slide into depressive oblivion – that journey yielded a cause, and a need to understand the ‘why’ and the ‘how’, and a scent of motivation from a long time ago self-belief in his abilities.
With the flickering flame of a life at the point of self-destruction – there has been but one thing that has sustained him – that was to tell this story and what John O’Neill was responsible for and why he did it. Call it a last stance of defiance to let O’Neill, Greiner and their ‘henchmen’ know that whilst 24 years have passed – someone knew what they did and was going to tell their story.
No amount of money could make up for the life that was taken away, or compensate the other SBS staff forced to restart careers and lives from the ruins of the once proud and robust SBS. What can give some solace is that the authors children now have some answers to why they grew up watching their father never being able to find any sustainable employ – why he existed as half the person they once knew.
This story is as much for them as anything else – to help them understand. Yet – it is only a single story connected to so many stories that can be told as a result of this FRAUD and CORRUPTED process by a Government, and the staff serving that Government. It is a similar story to millions of other untold stories that will never be heard.
This story is not all that important in the overall scheme of things – yes, laws were broken and the responsible parties did harm – and a small portion of a bigger community largely went on and lived their lives without ever knowing what really happened. But multiplied by the millions of similar stories out there – one does not have to look hard to find reasons the world is at the abyss – the cross-over point where realisation becomes an acceptance … that crime does pay. Everybody starts to believe that living a moral and ethical existence gets you nowhere in this world. That cross-over point starts and ends with the corruption within Leadership – and Global and Corporate Leadership is and has been found wanting for a very long time.
Greiner is a millionaire many times over – his political career ended by an ICAC investigation – several people connected with this story are similarly endowed. What if they were all to suddenly face charges arising from this FRAUD – what purpose would it serve? Would others who replace them stop – or would they look upon it as their time at the ‘pig-trough’ – to get their own fill and take their opportunity to line pockets?
his is what comes from discovery – a forensic discovery into the world of how our Leaders get away with crime and corruption. The Murdoch Memoirs – if he were to write them – they would be like the ‘J Edgar-Hoover safe’ – full of information about everybody. The strange thing about J Edgar was that he taught every generation since how to play the game of politics – and that is where the world is today – ‘dirty secrets’ and the evil they breed.
The SBS story continues … The SBNSW Response …
By the end of May ’88 the game had changed – O’Neill with his career one flush away from oblivion and his pride served on a platter he now had to face Greiner and tell him he ‘stuffed-up’. He tip-toed into a meeting with Greiner to ask for another crack at dealing with the SBS problem. He had Fred Shields from St George on the hook and this was the carrot he was dangling before Greiner. Greiner took the bait and agreed to do a deal with St George. Part of the new plan was to keep the Regulatory authorities thinking about the ‘merger’ between the SBNSW and SBS.
O’Neill’s plan was to keep the Regulators distracted and looking at ways to stop a merger between the SBNSW and SBS – whilst the SBNSW game plan re-focused on a sale option to St George. To keep up the façade – O’Neill engaged in a lengthy process of letter exchanges with the Registrar and the AAPBS Advisory Committee to keep the mis-direction alive.
Below are internal page links to letter exchanges between the SBNSW and the Regulatory authorities to this aim – [return links provided]:
2nd June: O’Neill letter to Baker re Advisory Committee meeting …
O’Neill and his fellow Directors first waiver letters were not satisfactory, and the Minister requested new waiver letters. In the above letter O’Neill refers to the 24th May letter from Baker – this was reviewed in Part 10 and this letter can again be viewed using the links below – [pages will open in a new window.]:
These waiver letters have some pretty convoluted wording and structured by some legal mind with intent to allow ambiguity and confusion … too smart by half …
As stated – the intent at this stage was to keep the Regulatory authorities thinking ‘merger’ – whilst all the while O’Neill was still serving as the SBS Chairman and able to control and direct all efforts toward the St George sale …
3rd June: Baker response to O’Neill re matters raised by O’Neill in 2nd June letter …
Mr Baker was getting to the heart of the matter – were the SBNSW Directors as nominated owners of ‘fixed-capital’ purely trustees and under some deemed allegiance to continue to vote the way of the SBNSW’s interests else the transfer fo the fixed-capital could be effected by an already held document duly signed and held by the SBNSW.
This goes to the convoluted arrangements the guaranteed the SBNSW held control over the SBS – and this was never raised during the CSB v NSWG and SBNSW court case … nowhere in the judgement transcript are these pre-signed ‘fixed-share’ documents mentioned – when it came to the SBS Chairman Ken Dennewald’s dismissal – the SBNSW were able to accept his share because he had pre-signed the transfer of his shares when he took the Director position.
This is very damning evidence and puts the whole 1985 decision by Justice Lockhart in some doubt if this evidence had of been produced.
6th June: Internal memo from Registrar to Minister
This is an important document in that it discusses the Takeover Review Committee (TRC) and who was to be appointed how it was to be engaged before any merger/sale of the SBS could be effected.
How the SBNSW and the NSWG negotiated their way out of this is still a mystery. But as at the date of this letter the 6th June – and already 5 days after the St George deal was ‘done in principal’ – some heavy-duty bargaining had to have take place to get the Minister to change his mind.
Th importance of this document cannot be overstated –
14th June: O’Neill letter to Baker re 3rd June Registrar Response …
O’Neill is dancing with Mr Baker – all around his 3rd June letter – note the delay in response – this letter is dated the 14th June – some 11 days after Mr Baker’s letter – and only nine days away from when Mr O’Neill was due to front the Advisory Committee on his ‘show cause’ over his Dual Directorship position.
O’Neill was answering Mr Baker’s questions with more questions – all to the purpose of stringing out the response process to gain more time to put the SBS sale to St George to bed …
14th June: O’Neill letter to Registrar re specific matters raised by Baker 20th May & 2nd June …
More obfuscation …
15th June: Registrar to O’Neill…
Notice that Mr F Shield from St George sits on this Committee – the ‘conflicts of interest’ become deeper and entwined with how the deal with St George would remain secret for a while longer. O’Neill as the SBS Chairman was taking no notice of the said conflict of interest and was dictating proceedings as if no conflict existed – his assurances given in his most recent waiver were concerned with a merger – O’Neill believed that a sale did not fall within his waiver assurances. It is a Directors responsibility to serve the SBS members – how O’Neill could think he was doing so is for him to explain.
17th June: O’Neill to Registrar…
O’Neill is daring the Registrar to bare his knowledge – if the sale to St George was known to the Registrar at this stage – O’Neill’s challenge has him floating down the river face first …
It is now six days to the Advisory Committee hearing and O’Neill has not answered any of Mr Bakers requests … this is standard operating procedure in any corporate takeover move – delay – delay and delay for as long as you can and then try to mis-direct any specific inquiry whilst appearing to answer the questions being asked.
Some 24 years later – all that can be said is that O’Neill’s tactics were those of a 35 yo out of his depth – his integrity had no bottom – his actions and responsibilities as a SBS Director were never toward the interests of the SBS members and this in itself speaks to the character and caliber of the man.
O’Neill is calling a double bluff – with Illawarra and St George represented on the Advisory Committee – O’Neill is claiming they have a ‘conflict’ which they do – but knowing full well that the deal with St George is already done – highlighting this mute point for show and posturing is again mis-direction …
21st June: Registrar to O’Neill…
Some of the secrets have filtered out – this last paragraph in confirmation of the SBNSW’s internal memos to try and convert as many SBS customers to SBNSW customers before the sale to St George is leaked or announced. The Regulatory authorities were operating in a vacume and had no information flow. O’Neill was not playing by the rules – his actions completely blindsided the Regulatory authority and they never saw it coming.
22st June: O’Neill to Registrar…
The guy has crocodile skin … he thinks he is untouchable – he is laughing all the way to the SBS reserves and the mounting SBNSW bad-debts are playing second fiddle to what is happening at the moment.
23rd June: O’Neill to Registrar… letter and Appendix – the nail in O’Neill’s coffin …
Just one great blow-hard – O’Neill puffs his chest out and dares the Committee to do its worst …
Paragraph 2 – O’Neill and all the SBNSW staff before him just don’t get it – the SBS was formed under a flawed arrangement – three legal opinions confirmed that natural ‘conflict of interest’ but the SBNSW had this mental block that arose from their court case victory where the structure of the SBS was upheld under perjured evidence – and the circumstances around the non disclosure of particular evidence.
O’Neill is behaving like a spoiled brat – believing that what he had been told fly’s in the face of contra opinions …
In Paragraph 3 – he is daring anyone to prove the SBNSW Directors have acted inappropriately – nowhere in this letter to date are the rights of the SBS members mentioned – O’Neill as the SBS Chairman exposes his conflict in that very omission.
From point 1 on this page O’Neill sets about explaining the history of the relationship between the SBNSW and the SBS according to his understanding –
O’Neill was never going to front this Advisory Committee personally – this essay on history invoking the Premier and Minster who approved the 1982 SBS formation with the ‘conflict of interest’ in tow demonstrated his time-warp like understanding of what the current Minister and his Registrar were invoking in the 1988 environment.
If this was all O’Neill was offering it is no wonder his pathetic pleas fell on deaf ears – but he was able to have the last laugh because he had given himself the time to oversee the bulk of the St George sale arrangements –
24th June: Registrar to O’Neill re Advisory Review outcome apologies for the quality of the reproduction –
This Advisory Committee were only considering the ‘conflict’ position as related to O’Neill’s dual Directorships – and the ‘merger’ between the SBNSW and SBS. This was naive of the Committee – the same conflict had existed and lay dormant ever since 1982 – and given the previous merger intent of the SBNSW and the court case victory – the Authorities remained asleep at the wheel when considering what other steps O’Neill would undertake to bypass the Committee’s focus.
27th June: Business and Consumer Affairs letter to O’Neill…
Kicking O’Neill off the SBS Board to only be replaced by another SBNSW appointed Director made no difference to the ‘conflict’. Having obtained waivers from all four Directors previously – they were indicating that collectively the SBNSW were serving in a ‘conflict of interest’ position.
Why would they think that kicking O’Neill off the Board would change anything. This was a real sign of weakness on the part of the Co-Operatives Dept and in review when the Takeover Review Committee was structured on the 6th June under memo to the Minister.
It is around this period where the Co-Operatives exhausted themselves and began to cave … now whether that was Greiner getting to Peacocke in the same way that Wran got to Sheahan – is still indeterminable. But as at the O’Neill dismissal – whilst informed to him on the 24 June his resignation was not advised to the Registrar until the 15th July – some seven days after the letter informed when the resignation took effect – the 8th July.
Part 12 – 15 continues … there will be a delay in the posting of the next installment – the next installments includes the July – Aug period and up to the sale of the SBS to St George. The SBS Treasurer is sent on Administrative leave – the sale to St George is announced – O’Neill’s slanderous behaviour targeted at the SBS Management – and the SBS AGM media reporting … see below for links …
Link to all previous chapters for –
The EYE-BALL Opinion … Without Prejudice …
Human Evil Exposed –
(CEO-ARU) … Part 10
Definitions of Allegations alleged against Mr John O’Neill and his cohorts …
Part 10 commences … The SBNSW Response …
The stakes in this stand-off were getting serious – Premier Greiner was on record as supporting the SBNSW/SBS merger – his Minister for Business and Consumer Affairs Gerry Peacocke was on the opposite side of the fence.
Minister Peacocke was preparing an Amendment Bill to prevent the merger between the SBNSW and the SBS – this Amendment Bill document was uploaded in Part 2 along with the Attorney Generals – John Dowd – response to Premier Greiner on the ramifications of the Peacocke Amendment Bill.
This was resistance the Premier was not expecting – nor was John O’Neill. Up to this point whatever O’Neill wanted – O’Neill and his predecessor Nick Whitlam were able to have their Premier make happen.
In the continuing NovelZone Zombie-Leaks uploads – the documents highlighted in this Part 10 cover the period from the 17th May through to the 31st May ’88. There is also commentary to additional events that took place during this period.
Below are internal Page links to the SBNSW responses and events that led to the change in plans:
17th May: Memo to Minister from Registrar re SBNSW/SBS Merger …
This internal Co-Operatives Dept internal memo fly’s in the face of everything the SBNSW were trying to implement and were now targeting – and all now within their scope since they had regained control of the SBS Board at the 5th May Board meeting.
19th – 31st May: The ‘Ticking Time-Bomb’ explodes …
You might recall the previous mention of a ‘ticking time-bomb’ awaiting O’Neill is this countdown in previous posts – that bomb went off some time after the 19th May and stopped O’Neill and his agenda in its tracks. The collateral damage completely derailed the merger agenda and a complete rethink was required. O’Neill had to go cap in hand back to the Premier and tell him that someone stuffed up.
The damage arose out of the ashes of the 1931 Amalgamation Agreement torn up by the NSWG/SBNSW and the CSB in Dec 1987.
In the victory celebrations, Christmas and New Year – and the furious forward planning O’Neill had sent his dogs onto – someone forgot to process the Legislation to amend the ‘State Bank Act’. In its current structure the SBNSW could only operate a Trading Bank operation – and to merge the SBS they had to have the ‘State Bank Act’ amended so as to allow the State Bank to operate a Savings Bank arm. This meant that in its current form – the SBNSW could not merge with the SBS.
This was a monster of cock-ups … and at the final hurdle in a methodically planned – but still a flawed 12 year plan – and with nobody in second place – the SBNSW fell on their sword at the last hurdle. This is an example of the style of Bank the SBNSW was – all politics and no real focus on the nitty-gritty stuff that ensure these types of mistakes didn’t happen.
O’Neill was on his knees to Greiner – he had promised Greiner it would all go smoothly when he first courted Greiner’s support when he won Government back in late Mar ’88 – if Greiner was now having second thoughts on the back of Minister Peacocke’s resistance and his proposed Amendment Bill – then he should have listened – but he again backed O’Neill …
By now O’Neill was off his well thought out game-plan – he was making it up as he went along – he couldn’t go back and undo the Cleary and Dennewald sackings – and he couldn’t go forward without Greiner pulling some strings. This is where the whole saga started to go pear shape and the cover-ups started and only got bigger as they all kept falling off the cliff.
Whether Paul Kearn’s – the SBNSW Legal Counsel made the error or whoever else at the SBNSW is not known. This ‘error’ threw everything into disarray – and on top of that – Greiner’s legal opinion from the Attorney General on Minister Peacocke’s Amendment Bill arrived on the 25th May and inferred that Peacocke’s Amendment Bill would prevent any merger happening between the SBNSW and the SBS.
This opinion was another disappointment for Greiner – his faith in O’Neill and him being able to do what he said he could do had to have been shaken. Greiner just wanted it to be off his plate – and in that moment his advisory team and strategists all had a brain explosion in how to deal with the problem.
O’Neill was ushered to find out whether he could get Legislation to amend the State Bank Act through in an emergency scenario.
To date he had not endeared himself to the Co-Operatives staff – and this now entailed some humble-pie and ‘egg on face’ posturing to try and get the Legislative staff on side. There was a female lawyer in the Co-Operatives Dept – J.M. – who was an advisor to the Co-Operatives Minister – she had a sit down meeting with O’Neill to discuss his Legislation requirements and possibilities. O’Neill was handed a blunt backhander and told in no uncertain terms that Parliament had broken for winter, and he would get no cooperation from the Co-Operatives Dept to push his Legislation requirements.
O’Neill was livid – not so much at the Co-Operatives staff but at himself and the SBNSW staff who got it wrong.
At this point the Illawarra Permanent Building Society had entered the game with an approach to the Premier intimating they were interesting in buying the fixed-capital off the SBNSW – their offer was a serious offer and was fairly targeted at the real value attached to the $3.049m face value of the ‘fixed-capital’ ownership.
But O’Neill was thinking of a much bigger return – he wanted all the SBS retained earnings ($65 million at this stage) – and the ‘good-will’ value attached to the SBS and he convinced his Premier to reject the offer. The Premier wrote to Mr Jack rejecting his offer.
The story continues …
19th May: Minister Peacocke’s Amendment Bill … this Bill was presented earlier in Part 2 and – [linked here] – but in the context of the flow of events – it is again posted hereto – comment on this Amendment Bill and the Attorney General’s response can be read using this link to Part 2.
The Attorney General response to this was uploaded in Par 2 – but can be downloaded using this link –
20th May: O’Neill’s response to Registrar’s notice of ‘show cause’ hearing …
O’Neill was sticking to his script – he had to have had contingencies in hand to play the Regulatory responses – this letter speaks for the hubris contempt the SBNSW had for due process – O’Neill needed time in the Chairman position to align all he had to do to have all the remaining SBS staff subdued and caged. The SBS Deputy GM was sent on administrative leave shortly after the May 5th Board meeting – the Head Office staff were well and truly heeled – he was now do the Branch’s and courting their favor.
This back and forth letter exchange with Mr Baker in his role as the Registrar and on the AAPBS Advisory panel – allowed O’Neill to use the system’s process’ to delay his appearance before the Advisory Committee hearing into his ‘conflict of interest’ set down for the 3rd June.
The above extracts from the ‘special’ 20th May SBS Board meeting make interesting reading – and again point to the hopelessness of the Independents in trying to thwart the SBNSW Directors controlling proceedings.
O’Neill by this stage had to have known he needed a backup plan. All these record of minutes do is confirm the structured and controlled environment the SBNSW was creating – SBS Director Alwyn Thomas was the turncoat – and now he was Chairing all the ‘merger discussion’ committee groups referred to. The make up of these Committees was included in a letter dated the 1st June and sent to all staff by the new GM – Tony Howarth – that letter is copied below – [this letter is not a part of the Index return links]…
The committee make-ups in this memo were decided upon way before the 20th May special Board meeting – O’Neill was delaying the public announcement of these Committee structures because he had a lot of other hurdles to overcome during this late May period – his letter dated 20th May speaks of these Committee’s yet they were not made public to the SBS staff until the 1st June.
This memo to staff was all mis-direction – O’Neill knew by now that a merger was impossible due to the State Bank Act not having been amended – but was still giving the illusion to the SBS staff, the media and the Regulatory authorities that he was still pursuing a merger agenda. This had them all watching ‘left’ whilst his right hand was wheeling and dealing to find ways to still get his hands on the SBS reserves.
There were a number of media reports released during this period – they can be read via the Word and PDF media files uploaded early in this expose – they are again linked below –
20th May: SBNSW appointed Directors sign letters re merger ‘conflict of interest’ …
These waiver letters were more ‘duck and weave’ than compliance – because the Regulatory authorities were focused on the ‘merger’ between the SBNSW and SBS – which was O’Neill’s original agenda – these letters address the specifics of a ‘merger’ – and all the while O’Neill knew that the merger was no longer an option –
Now – if the Regulators had of addressed the ‘conflict of interest’ issue head-on and said that the SBNSW appointed SBS Directors could or should not be involved in any decision relating to the SBS and its either – ‘sale’ or ‘merger’ – with any third party, then the SBNSW appointed Directors would have been ‘dunny-boys’ carrying out the dirty end of a losing strategy …
O’Neill was clever in a ‘Reggie’ style – but clever is not smart – having throw the scent in a direction he knew they would all follow – he set about trying to right the ship and he now needed a buyer of the SBNSW ‘fixed-capital’ that was prepared to pay a price that reflected the true market value of the SBS – and that was where he blundered badly in judgement.
How could he think that he had the right to determine the fate of the SBS without going to the members? The value of the SBS was not contained within the ‘fixed-capital’ ownership – that was the belief of the SBNSW and as they believed they had structured when the SBS was first formed. Yet now – the Regulators were not Messes Wran and Sheehan – but a different breed with a different resolve.
This is where integrity will always trump skullduggery – where and why those with criminal intent always trip themselves up – they see the prize and having tasted it – they’ll think they can do anything to get it. But to do that you have to get into bed with someone who also wants what you have to offer as badly as you do. That is when Fred Shields from St George Building Society entered the party.
But first – the SBNSW legal opinion they sent to Mr Baker and as part of O’Neill’s 20th May response …
20th May: Legal Opinion from Freehill Hollingdale & Page for SBNSW …
Clause 3 – mentions Rule 7 of the SBS Constitution: to see a copy of this Rule 7 please – click here – to open the page in a different window – no other comment just information …
Clause 7 in this Legal Opinion above is a most interesting interpretation – where the opinion states –
“… However these 4 Directors are elected by all members (being those holding fixed shares and those members of the public holding with-drawable shares) according to the franchise set out in the rules: see rule 85 especially. …”
…there is some conjecture here – actually more then ‘some’ – … [Rule 85 of the SBS Constitution states – click here – to real rule 85 in a different window.]
This Rule in isolation does not carry or cover what this opinion is trying to convey – be it that they got it horribly wrong to begin with – Rule 80 – Proceedings at Meetings begins and goes through to Rule 90. These rules are covered through pages 18-20 of the SBS Constitution and are presented below: [opens in a new window.]
Further SBS Rules relating to –
Not to try and distract from the SBNSW Legal opinion being responded to here – and sent with O’Neill’s 20th May letter to Mr Baker – this opinion has a date stamp on it of 19th May 1988. [see last page below.]
This seemed a bit odd at the time of discovery – surely O’Neill would have sought outside legal counsel well before this juncture – his in-house legal counsel and fellow SBS Board member – Paul Kearns – had been on this case since the late 70’s. O’Neill would have worked on the initial CSB setup court case through the late 70’s and would have an understanding of what was being put in place.
Yet – this Freehill Hollingdale and Page Opinion differs from that of the Mallesons Stephens Jaques opinion from the AAPBS, the Solicitor General’s opinion for the Dept Co-Operatives and Business and Consumer Affairs, and the Attorney General’s opinion delivered to Premier Greiner on the 25th May in response to Minister Peacocke’s Amendment Bill on the ‘conflict of interest’ issue.
These three opinions generalising and saying that a ‘conflict of interest’ did exist – stacked up against the SBNSW’s opinion saying they were sweet and were within their rights to do what they were doing – made for an interesting outcome. Mr O’Neill must like long-shots in a two-horse race … and Premier Greiner was now involved with a ‘wild-card’ nomination for ‘idiot of the decade’ – The SBNSW wanted it to be so – and badly – they had been so used to having their own way and having the politicians to carve the pathway – the reality of their creation was not being peeled from the inside out and the SBNSW executive were about to hit the panic button.
The SBNSW Legal Opinion continues …
Mainly history and no issues …
Clause 10 – relating to the Macquarie Bank Report (MBR) – is a fanciful interpretation of the wording contained in the report – it has the SBNSW want and slant but in actual fact the Report played down the merger with the SBNSW – the MBR has been uploaded in the past and can be downloaded using this link in PDF format.
Clause 11 – also goes a bit far in presenting factual commentary – reading the Regulatory Investigation report – click here for a PDF copy of the Investigation Report – these comments seem over stated … the comment – ‘unanimously voted…’ – that is more than splitting hairs and the thing right there is that the Regulatory authorities had the investigation report to refer to when these opinions were expressed in the SBNSW opinion – the SBNSW were feeding their Legal advisers the same pitch they had been telling themselves all along. Where was their objectivity?
This continuing preamble is setting up the pitch to follow – it is again misdirection and its import and relevance at the time had the Regulators drafting responses that were no longer relevant.
The opinion continues …
Clause 15: Well … the pitch floats ever so slowly up to and over the plate … the SBNSW Directors already knew that the merger was off the table …and using the words … ‘merger of the Bank and the Society …’ in its blunt honesty gave them all plausible deniable as to their real intentions, and all happening at the same time in the background and out of sight of the Regulators, the SBS Independent Directors, and the SBS members and staff.
The Clause 15 … continues
Read on – this gets better overleaf …
The 2nd paragraph above starting … “A further fact …” … appears to do a complete turn around on the earlier point made that the SBNSW Directors were elected by SBS members – see Clause 7 page 2 – which reads in part …
” … However these 4 Directors are elected by all members (being those holding fixed shares and those members of the public holding with-drawable shares) according to the franchise … “
Suddenly – the opinion becomes a ‘switch-hitter’ – the comments …
” … none of the Directors of the Society who hold fixed-shares has been appointed by an instrument in writing served n the society …”
These two clauses talk about the same thing – the second relates to …” … represent the Bank … ‘ and then some other ‘limb’ that nominates sub – s 46 (7) of the Act – …
The 1901 – Building and Cooperatives Societies Act reads in part as follows – click the linked pages below to read this section of the Act. [Click here for a full download of the 1901 Act]
Clause 14-2 makes it very clear and states in part –
“… that no disolvement of determination of the Society may be made without obtaining the votes or consent of five-sixths in number and value on the them existing members thereof.”
Clause 19 confirms this in another way … just what this SBNSW opinion was referring to or commenting on in relation to the 1923 Act is further expanded on below:
The Co-Operations Act of 1923 s 46 (7) reads as follows – click the linked pages below to read this section of the Act. [Click here for a full download of the 1923 Act]
Now – several people with Law experience have looked at these documents and come up with the same opinions as the Attorney General, Solicitor General, and the Independent outside Counsel Mallesons Stephens Jaques – a copy of the Schedule 2 amendment was not obtained.
The opinion continues …
The ‘hinges’ relied upon in the 2nd paragraph are a stretch – given the plan from the late 70’s – and it would be interesting if Freehill Hollingdale and Page had the whole history given to them prior to this opinion – but if they did – then the opinion that they could have acted without a ‘conflict of interest’ defies the total effort to structure the SBS the way it was and just plain logic.
That is to say further – if the Premier and Minister were not concerned with Board Control – why then did they structure the Rules of the SBS in such a way that all the control of the SBS rested with the SBNSW except when SBNSW appointed Directors voted in favour with Independent Directors. In this scenario – the SBNSW had the right to replace those Directors – i.e the SBS Chairman Ken Dennewald –
There is no legal basis for this opinion to exist and survive upon an opinion that – ‘in serving one master’ – you can also serve the best interests of others whilst serving a second master – and given how things were finalised – the SBS members were given no choice to make a decision on how they wanted to survive after the SBNSW sold its fixed capital.
For example –
In all scenarios – the members must have the vote – yet the only vote they had was an after the fact deal to rubber stamp approval to merge with St George based on a deal where the SBNSW SBS Directors directed all efforts to the St George deal – much of this will be covered in greater deal in future uploads …
The SBNSW opinion was largely ignored by the Regulatory authorities and given no weight on the Advisory Board hearing to adjudicate on O’Neill serving as Chairman of the SBS whilst holding a Director position on the SBNSW board.
23rd May: Minister memo re unsatisfactory Director’s Waiver wording …
The waiver letters from the SBNSW SBS Directors did not meet with the Minister’s and Registrar’s approval.
24th May: Business and Consumer Affairs response to O’Neill’s 20th May response …
The Registrar sets out the reasons why O’Neill and his fellow Director’s waivers are not acceptable. This was part of the cat and mouse game O’Neill was engaging in knowing full well that the merger was no longer the game plan.
24th May: SBS Secretary response to Registrar’s letter …
Rubber stamp stuff …
20th May: Attorney General’s response to Minister Peacocke’s Amendment Bill …
This letter was previously reproduced in Part 2 of this expose – comments made then –
” …Paragraph (2) clearly gives the Premier reason to question O’Neill’s undertaking and ultimate purpose. The above legal advice was received some two months after the NSW election – and after a meeting with O’Neill shortly thereafter when the merger agenda between SBNSW and the SBS was first discussed and agreed to by the Premier. If Greiner was not now concerned at the events unfolding – then his involvement becomes as premeditated as was O’Neill’s purpose.”
This was confirmation that Greiner and O’Neill had to come up with a new plan to get their hands on the SBS retained earnings …
Paragraph 3: Mr Dowd gives the Premier clear instruction as to the entitlements of the SBS Members – yet in the actions that were to follow – the SBS members were never afforded their entitlements as Mr Dowd so eloquently points out … Greiner helped O’Neill get around the Takeover Review Committee put in place by previous Legislation to protect members – this is clear criminal activity.
This Amendment Bill was listed – but it was never raised – O’Neill backed off the merger and went with O’Neill on a sale to ST George deal – again by passing the SBS members in negotiating this deal on the f$3.049 million fixed-capital ownership, and not in the interest’s of the $1.6 billion worth of members shares.
Greiner and O’Neill are both tied to this deal … as the evidence highlights.
19th – 31st May: St George Building Society enter the game …
Without evidence to support the timing of when St George entered the game – it is difficult to be precise of when a deal was struck between the SBNSW and St George to purchase the fixed-capital of the SBNSW. There is no doubt that such a deal existed as at the 1st June 1988 – and evidence of this is contained in the information document handed out to SBS staff and members ahead of the Aug 22nd AGM. As Clause from this document is produced below.
[Click on image to enlarge in a new window:]
The face value of these shares was $5 – the $118 being paid was the deal struck with St George valuing the purchase at $118*609815= $71,958,170. The additional interest payment is the clincher – 12.5% from the 1st June – and paid out of the SBS reserves – which in effect meant St George were making the payment. This amounted to – $3,049,075*12.5% for 83 days = $86,668.91. This made the total paid for the fixed capital – $71,958,179 + $3,049,075 + $86,669 = $75,093,914.
The telling in this deal was that St George did not want SBS merging with the Illawarra and the Newcastle Building Societies as suggested by the Minister in his review of the Macquarie Bank report. In fact the Minister warned against a merger with St George indicating that competition if such a merger went ahead would kill the Building Society industry in NSW.
For the $75 million – St George were getting a $1.6 billion loan book and depositor base – there was $65 million in retained earnings taking into the $5 million provision made in the ’88 accounts – and a floating $3 million that disappeared when the accounts were announced and whatever Treasury profits and revaluation adjustment to the Liquids portfolio. It is known that the liquids were prime CGS and with the ‘bull’ market continuing – St George made their purchase price back within two years.
It has been advised that the St George Treasurer received a $500k bonus after the SBS merger was finalised – indicating the healthy state of the SBS Liquids.
No to the 1st June backdate of the deal – why would ST George agree to a backdating of the interest component? The value of $86k is a pittance in the total construct of the deal – but why pay the face value of the fixed-capital and interest on that value unless a ‘deed or arrangement’ was entered into and dependent on the SBS members voting in favour of the St George merger.
This was O’Neill’s ‘get-out’ after he found out the merger could not happen. This sale to St George was not reviewed by the Takeover Review Board – it was not put to the members before the SBNSW had arranged the deal – other suitors made approaches and were turned away without any due diligence undertaken to establish the worth of the SBS as a going concern – all those decisions were made by the SBS Board where 4 SBNSW appointed Directors including Messes, O’Neill, Kearns, Thomas, and Turner – and Mr Ian Fraser from July ’88 who replaced O’Neill when he egregiously accepted his fate and resigned from the SBS Board – only a month out from the sale to St George vote.
This was an orchestrated FRAUD – and in the next installments – more evidence will be produced to confirm these allegations.
24th May: Greiner letter to AAPBS – [G Jack] – re SBNSW/SBS merger letter sent 2nd May …
This Greiner response to the Illawarra Permanent Building Society boss and also President NSW branch of the AAPBS – Greiner was telling porkies with this response. The Attorney General letter was already in on the Peacocke Amendment Bill – the revelation of the State Bank Act not having been amended was also known – the Government never reviewed with any seriousness offers that were made.
Part 11 continues … the SBNSW continues to send the Regulatory authorities on a wild goose chase – and in doing so O’Neill exposes his ‘winger whinny’ persona when things don’t go his way …
Link to all previous chapters for –
The EYE-BALL Opinion … Without Prejudice …
EYE-BALL’s Human Evil Exposed – John O’Neill (CEO-ARU) … Part 9 – The Regulatory Investigation begins …
Human Evil Exposed –
(CEO-ARU) … Part 9
Definitions of Allegations alleged against Mr John O’Neill and his cohorts …
Part 9 commences … The Regulatory Investigation begins …
The Legal opinions received by the Regulatory Authorities prompted immediate action – [see Part 8 for copies of Legal Opinions].
This post includes copies of exchange correspondence from the 10th May through to the 19th May ’88 – and between The Minister, The Registrar, The SBS Secretary, Mr O’Neill as the Chairman of SBS, and the NSW Solicitor General.
10th May ’88:
Mr Baker’s concern as the Registrar were at the events that happened at the May 5th Board meeting – his role was now to put a hold on any progress until the events surrounding the Chairman’s and General Manager’s sacking could be investigated.
11th May ’88:
This letter clearly outlines Mr Baker’s concerns about any ‘merger’ discussions. The last paragraph gives clear direction as to Mr Bakers intent.
12th May ’88:
The Minister is responding to his Registrar’s concerns and expresses his own interest in wanting the State Crown Solicitor to weigh in with an opinion.
13th May ’88:
This letter represents a formal notice to O’Neill – as the new Chairman of the SBS – indicating the AAPBS Advisory Committee wants to investigate the possible ‘conflict of interest’ issues arising from the events of the 5th May SBS Board meeting – as per the recorded minutes. This letter invites Mr O’Neill to attend an Advisory Committee meeting on the 3rd June ’88 to give his defence to the ‘conflict’ issue.
13th May ’88:
The ‘Legal Opinion’ attached to this letter from MSJ as presented in Part 8 – linked here –
16th May ’88:
Further evidence is presented here – [highlighter section] – confirming the Macquarie Bank Report was commissioned at the Jan ’88 SBS Board meeting. Mr Howarth’s comments entrap him with his ‘quote’ – “SBNSW had been contemplating the idea of a merger since 1976.”
This is a clear insight into a senior SBNSW staff member and his view on why the SBS was conceived and what was to be done with it after the Court battle with the CSB. This goes to the inferred and prior understanding that Mr Howarth had this opinion before the outcome of the 1982 – ’87 Court battle between the SBNSW/NSWG v Commonwealth Savings Bank (CSB) over the 1931 Amalgamation Agreement – was known. His comments on why he would have that opinion would prove very enlightening.
Further on this point – if the NSWG’s and SBNSW’s intent was to always merge the SBS as the Savings Bank arm of the SBNSW whilst the 1931 Agreement was still in force as far back as 1976 – and that Clause 17 of the 1931 Amalgamation Agreement states …
… then much of the testimonial evidence presented during the Court proceedings needs to be reviewed in this context and to whether such evidence may have been perjured, and prejudicial toward a verdict based on truthful testimony.
The research has uncovered several different heresy sources that promote the suggestion that some of the SBNSW evidence presented to the Court was perjured. Copies of witness’ testimony has thus far not been obtained – yet this Howarth revelation fosters this theory.
Reading this Clause 17 – and understanding that for the past 45 odd years the SBNSW had not been able to conducted a Savings Bank arm – Mr Wran’s election set about a plan to overturn that 1931 Amalgamation Agreement.
This part of the story is still far from complete – what is known is that Mr Wran believed he could have the 1931 Agreement rescinded and he set in motion a plan to that effect.
This is the heart of this matter – the NSWG and the SBNSW always believed that the SBS was their property and to deal with as they saw fit. In May ’88 when this all went down – the SBS was a $1.5 billion institution with shareholders/members owning all the issued shares to the same value. All the SBNSW owned were $3.049 million of fixed-capital shares and now the Regulatory Authorities were stepping in where Minister Sheehan should have been some six years earlier protecting the rights and entitlements of the SBS members.
This was now the ‘game’ in play – a flawed Society structure and determining whether the SBNSW appointed Directors had the right to dictate the fate of the SBS without the SBS members having any say in the matter.
This was Wran’s concept from the outset with help from the SBNSW legal counsel – Paul Kearns. Premier Wran wanted a State owned Savings Bank and he was doing it through a Building Society in defiance of the intent of the 1931 Agreement and Clause 17.
The 1988 Regulators – were now serving under a new Greiner Liberal Government and Mr Greiner had decided to give O’Neill his approval to pursue with a merger – backing up the Wran Plan.
In what context does Legal Opinion’s alter or change? Are we to believe that Laws of NSW can be obfuscated to avoid due process and the rule of Law?
Mr Baker was also serving as Deputy Registrar during the Wran Government when the SBS was first formed. His views on the original structure have not been disclosed – but for the moment he is indicating in his letter to O’Neill that he is against the merger intentions as declared by the SBNSW.
This was all heading to a ‘blowhard’ showdown … the investigation report continues …
The comments about the Dennewald sacking cut a little deeper than the context of the resignation letter – previous uploaded in Part 7 – linked here.
Mr Dennewald’s ‘gratuity’ payment was also raised a red-flag and it was noted that such payments are not permitted unless 10 years service has been completed. It would be most interesting to establish what Mr Dennewald’s payout was and who paid it? Both Mr Reg Watson – the SBNSW Chairman – and Mr Dennewald – the SBS Chairman are both deceased.
The last paragraph points out the ‘turncoat’ Mr A Thomas – [also deceased – 2011] – was appointment as Deputy Chairman as a formality – this was the first time that a non SBNSW employee or ex SBNSW employee had been appointed to the Deputy Chairman position. This reward was part of O’Neill’s reward payment for switch his support from Cleary – and largely based on the ‘frame-up’ attached to the Phil Gray Audit Report.
This ‘Director’ vote switch gave O’Neill the numbers for the SBNSW to regain control over the SBS Board – and allow the premeditated events – as already given to the Company Secretary before the Board meeting – to unfold as prepared. Without Mr A Thomas’s support – O’Neill would have been still cooling his heels.
Clause 3: This confirms the vote of Mr A Thomas and his changed allegiance.
The ’cause’ offered up for dismissing Cleary – “…that Mr Cleary had repeatedly usurped the function of the Board in matters of policy and seemed unable to differentiate between his duties as a Director and those of General Manager …”
… what does this really mean?
Most of us deal in reality and absolutes arising from those realities – i.e. black and white – true and untrue – these words mean something to somebody.
Claims that the rest of the SBS Independent Directors offered only mute support for Cleary during the meeting cannot be confirmed. Contact with the other Independent Directors i.e. Messes Cribb, Treloar and Osmond was attempted – they were all in their later stages of life – and the initial contact attempts were respectful and tried to find out whether they wanted to or could recall any of the events surrounding this meeting. Mr Osmond wanted to comment and did. After initial contact with Mr Treloar’s family his ongoing health issues were disclosed – similar advice was received about Mr Cribb. Those issues have been respected and pursuit of any direct information from them was abandoned.
However – and in all fairness, when the comments made in the Minutes of the SBS Board meeting relating to ‘Clause 3’ above are truly interpreted – it can only be said that Mr Cleary was acting as the SBS GM and did so in good faith whilst doing his job in representing the SBS members and their best interests.
Cleary’s view that the SBNSW’s intended merger was against the best interests of the SBS Members – flew in the face of the SBNSW appointed SBS Directors and had been for some months. O’Neill wanted Cleary’s blood for doing so – Cleary stuck by his decision and would not roll over and in the end – this was why he was sacked.
In the world of Directors and their fiduciary responsibilities – O’Neill and his fellow Directors are so far ‘up a creek’ and in the wrong here – it is hard to fathom how they were allowed to do what they ended up doing.
Cleary’s integrity on this issue trumps O’Neill’s ego and ‘evil’ intent by a country mile. O’Neill’s actions toward Cleary were not just about the merger – it was now personal and vengeful for having wrested Board control from the SBNSW in the first place when Director Treloar replaced Director Knowles at the ’87 AGM.
O’Neill’s own weakness of character and flip-flop integrity was again revealed by his actions at this Board meeting – his ‘evil’ disposition is evidenced further when it was revealed that a member of the appointed SBNSW Directors approach Mr Cleary and gave him prior notice to O’Neill’s intentions as far back as Feb ’88. The source further revealed the SBNSW had plans to do this at the February ’88 SBS Board meeting and having been forewarned – Cleary went on leave and was absent from the meeting.
This infuriated O’Neill even more – and with the massive March ’88 profit result for the SBS to come on top of his disappointments at his own Bank’s failings – O’Neill was throwing dummy-spit type tantrums … his vindictiveness then set about making it about discrediting the SBS Treasurer and getting Cleary on the issue that the breath and scope of illegal and mis-reported profits attached to the SBS Treasury activities happened on his watch.
The research has information, and from more than a single source that Mr Phil Gray – in a meeting with Mr O’Neill made a statement to O’Neill and to imply – “… the reported SBS Profits were not real …” – the source’s believed that it was this comment that prompted the switch of the point of the attack to the SBS Treasurer – from which came the SBS Treasury Audit.
To be fair – this does not sound like a statement Mr Gray would make blindly – perhaps he indicated he had his doubts about the profits – that given his own Treasury’s performance the SBS Treasury profits had to be overstated – the comment is for Mr Gray to renounce or correct.
Direct contact was made with Mr Gray some 18 months or so ago – and his selective response’s to a multitude of questions were reproduced in Part 7 – [linked here].
Mr Gray’s Audit Report disproved the SBNSW generated rumours about the SBS’s profits authenticity – this then meant that for O’Neill had to go out on a limb for ’cause’ to sack Cleary – and that meant the Audit report needed to incriminate Cleary in some way so O’Neill could sack Cleary.
The procedures in O’Neill’s plan for the Board meeting meant he could not get rid of Cleary without first having him sacked as a Director. Even with Mr A Thomas voting with the SBNSW the numbers still favoured Cleary if Dennewald voted with Cleary – Dennewald was Chairman – this meant getting rid of Dennewald before the meeting was paramount for the whole coup to work.
Like so much of this story – the paper trail can only take you so far – the real story is in what is not in evidence but in the heresy. Dennewald and Alwyn Thomas are not able to provide factual evidence – nor are Messes Cribb and Treloar and Mr Osmond who is almost 93 – only has limited recall of events. That leaved Cleary who had to sit out some of the meeting – and all four of the SBNSW Directors … not the most pleasant prospect if the truth lies in that ratio of 4-1.
This Regulatory Investigation does gives clear evidence that Cleary was sacked because he did not agree with the SBNSW MD – O’Neill on the future course of the SBS – Cleary was representing the SBS Members – who was O’Neill and his three other Directors representing – the SBNSW or the SBS Members – that is the moneyball question. On this matter – the mock court verdict reads – Mr John O’Neill – guilty – Mr Paul Kearns – guilty – Mr R Thomas – guilty – and Mr R Turner – guilty.
For O’Neill to sack Cleary for supporting the best interests of the SBS Members – and of the same view being expressed by the Minister, his Registrar, and the AAPBS – you would think O’Neill would be ‘up that creek’, capsized and about to drown. The manner in Cleary’s dismissal offered him a massive wrongful dismissal suit. Why he did not fight O’Neill on this is for Mr Cleary to explain further.
Page 5 continues …
Further evidence of the ‘gag’ order Cleary was placed under …
This summary can leave no other impression other than O’Neill’s actions were premeditated. The full scope of his collusive intent was not in the interests of the SBS members and this report skirts all around that issue. The function of the SBS Board is to serve the interests of the SBS members – were the SBS members the first priority given the events of this Board meeting?
There were not – and the Regulatory investigation whilst thorough in procedural matters – failed to investigate whether the members interests had been served in any meaningful way.
17th May ’88:
This opinion given in reference to the ‘proposed merger’ contained in the 5th May Board minutes clearly points out the ‘conflict of interest’ issue. It also expands the conflict to all the appointed SBNSW Directors.
There is a failing in the opinion – and the SBNSW picked up on it immediately. The legal opinions only concerned themselves with a ‘merger’ between the SBNSW and the SBS – what would happen if the SBNSW Directors changed the SBS status from SBNSW merger – to a SBS sale to the highest bidder?
This is where we go from here. The Regulatory Authorities became hell-bent in stopping a merger and when the SBNSW and NSWG had to reconsider their strategy – a whole host of new revelations began to hit the fan.
Things began to move very quickly from this point – not that they hadn’t been at a frantic pace since the May 5th Board meeting.
17th May ’88:
This is a ‘rubber stamp’ issue – Mr Jack – the boss of the Illawarra Permanent Building Society – and President of the AAPBS NSW branch, confirmed the ‘conflict of issue’ matter in relation to the impending merger agenda … this memo refers the matter to the Advisory Committee for a hearing at which Mr O’Neill will be invited to give his views on why the ‘conflict’ does not exist.
17th May ’88:
More investigative rubber stamping …
17th May ’88:
A response that comply’s but gives no real information … everybody is playing a ‘cat and mouse’ game …
19th May ’88:
Mr Baker is upping the ante in this response – he is trying to heel a ‘rabid’ dog off his leash …
This gets the exposé to the 19th May – much was to happen from this point onwards and over the next week or so – most of the documents presented in this upload expose the SBNSW Directors as having fiduciary responsibility conflicts – some 24 years later those conflicts are no less important – Kearns and O’Neill were both Lawyers – yet they came up with this plan whilst serving Directors of the SBS – they will both go for plenty when the time comes.
Part 10 continues … the SBNSW responds to the Regulatory Investigation … John O’Neill exposes his ‘winger whinny’ persona when he does not get what he wants … he also gets a womans ‘slap in the face’ – and he gets into bed with Fred Shields from St George Building Society to save his agenda … see below for link …
Link to all previous chapters for –
The EYE-BALL Opinion … Without Prejudice …
EYE-BALL’s Human Evil Exposed – John O’Neill (CEO-ARU) … Part 8 – The Regulatory Response to the SBS Boardroom Coup …
Human Evil Exposed –
(CEO-ARU) … Part 8
Definitions of Allegations alleged against Mr John O’Neill and his cohorts …
An Update to a previous Post:
Part 8 commences … The Regulatory Response to the SBS Boardroom coup …
The media response to the 5th May Board meeting was the first most people got to hear about what had happened. Both sides – the SBS Independent Directors – mainly Treloar – and the PM machine smoothing the waters for the SBNSW were in full swing.
Fallout was expected – but during the next few days a concentrated effort by the Regulatory Departments swung into action to get to the bottom of events that happened at the 5th May SBS Board meeting.
[The NovelZone ZombieLeaks Index of uploads for documents and comments relating to the Regulatory responses and their efforts are presented in DATE order below. The links in ‘black’ relate to internal page links – return links back to the Date Index are provided.]
[The ‘black’ links below are internal Page links with return links to this header … the [PDF] and [WORD] file links are for external files.]
[The ‘black’ links below are internal document Page links with return links to this header …]
The above story has Catherine Armitage as author – yet Paul Cleary the Sydney Morning Herald Financial Journalist had been covering the story since 1987. He had written a number of pieces about the ongoing SBNSW and SBS standoff. As investigative journalism goes – Mr Cleary and other SMH journalists who helped cover this story were mainly dealing in ‘headline’ journalistic credits. The quality of their reporting only managed to skirt the fringes of what was a really big story at the time given Minister’s Peacocke’s defiance of Premier Greiner’ public position in supporting the SBNSW and SBS merger – and why Minister Peacocke’s Department rolled over when the sale to St George was announced.
They may have had suspicions – but hard evidence and ‘on-the-record’ disclosures were needed. Anyway – this SMH story is what the 270k+ plus SBS members awoke to on the 6th May after their Building Society began to die a slow death.
The Australian Financial Review Response:
[Apologies for the quality of these images – they were printed in draft mode on used paper – when I went back to the AFR to get better quality copies – they had started to charge for archival stories … so this is the best quality on offer for free.]
Simon Lloyd was one of many Journalists covering this story – as with the SMS comments [above] – the story was not just a space filler at the time – none of the Journalist who covered did the extensive investigative work that a story like this deserves. They all had their suspicions – but whether was because of their Editors and the additional links up the chain wanting to crimp their slant on the story – the SBS members never got the benefit of the ‘free and independent’ press that the media is so proud to promote themselves as.
Both these publications favoured the SBNSW and NSWG’s PR pitch and ran them accordingly – the SBS side of the story came from SBS Director Bruce Treloar and silent phone calls trying to tip the scales in favour of the SBS and what was happening. None of those sources were ever given a great deal of creditability. O’Neill was walking his stage – and loving every moment of his ‘ego on display’.
Generally – Media owners don’t like to make hard enemies within Governments – to take a swipe without factual evidence would not have been a good move – it required Legal expert opinions – and an understanding of the 10+ year plan put in place by Premier Wran in the late 70’s to get a good grip on this story. The journalists reporting on this story were most likely still at journalism school when all this commenced.
You’ll find this absent and mindless style of Journalism littered all through this story – a half a clue here – an inflammatory comment with some intent there – but in the end it was really just a lame investigation into what was really happening.
The SBNSW Legal Counsel – Mr Paul Kearns called the media reporting – ‘colourful’ – in an e-mail exchange 15 odd months ago.
The Journo’s were always running to O’Neill’s Press Conference calls – any research questions were always off the top of the head – nobody had done any real homework and O’Neill only fed the ‘thundering horde’ crumbs he was happy to sweep off the table to appease any inquiring minds.
[All SMH, AFR and other Media copies of the SBNSW/SBS story through 1987 – 1996 have been uploaded previously, and can be downloaded using this link.]
The Department of Co-Operatives Registrar’s – Administrations Provision – Co-Operations Act:
Mr Baker – [Registrar] – gave a clear outline of the Legislative requirements for the Minister. His interpretation of the relevant ACT(s) – and other various connective Legislative hinges gave more than curious thought as to why Premier Wran, and his then Co-Operatives Minister Mr Sheahan, did not respect this Legislation – of if in the case they were acting out of ignorance – then why the then Registrar Mr Horton, and his Deputy Ron Baker, did not advise the then Minister that this would likely be a problem at some time in the future.
The immediate answer to all that preponderance is obvious – the Premier’s [Wran] intent was to circumvent the Legislative obstacles and re-write the rules for his own personal agenda in looking for a fight with the Commonwealth Bank over the 1931 Amalgamation Agreement.
Mr Horton as the Registrar was all over the back and forth trail of documents – he has named several times in the Judgement decision of 1985 by Justice Lockhart – he and Mr Baker will be star witness’s into this matter when their time comes. As mentioned previously – when contact was eventually made with Mr Baker some two years ago – and after he became aware what the enquiry was about via a third-party at his request, he made it clear that he wanted no further contact with the researcher. A note from that conversation reads:
Since that phone call – no further attempt at contact has been made with Mr Baker. In that interim period there has been further documents releases under FOI applications, and quite a number have Mr Baker’s name all over them. Some of those documents are to do with the sale to St George that have be signed by third parties under his title and name –
Efforts to date to find Mr Horton have been unsuccessful and are ongoing.
It does not matter where you go, or how you weigh the contents of the research documents up – this forensic investigation has but one conclusion. Even when trying to disprove the culpability of those involved out of sheer once held respect for who these people are and the positions they held – it is not possible to find error or evidence that can point in any other direction. There is just no excuses available or on offer.
A lot of time was spent in connecting all the dots – and the Regulatory staff who were knee-deep in trying to covering up this matter exposed their complicity in doing so. As with any type of Government cover-up, it can only be truly examined and/or exposed under direct cross-examination by those at the bottom and worked upwards from there.
Unfortunately Mr Baker cannot be left out of this story, he request for anonymity cannot be complied with. His testimony will sink Minister Sheahan who he served as Deputy Registrar, Mr Horton if found will do likewise, and their collective testimony will give a clearer insight as to why firstly – Minister Sheehan became Premier Wran’s point man in the formation of the SBS, and secondly why Minister Peacocke in Premier Greiner’s Government, withdrew his objections to a SBS merger and allowed the sale of SBS to St George to go through some three months later.
Registrar’s Submission to the Minister for Co-Operatives – Mr Gerry Peacocke
Mr Baker again is very thorough in his summarising of the Legislative issues – it again highlights why these matters were never seen as a problem in 1982 when the SBS was first formed.
There is plenty in his summation to suggest Mr Baker did not want to see the demise of the Building Society industry in NSW – and that he saw the demise of the SBS as such a occourance. There is also plenty of pointy suggestions that outline the entitlements of the SBS members to have their shareholding respected in any decision to merge/sell the SBS to outside suitors.
In the O’Neill end-game play – the members rights to self determine were never offered to the SBS Members – they had no real say in how their Society was to wound – they were corralled into a blind option that disrespected their entitlements and all to suit an expedient exit for the SBNSW, and a FRAUDULENT heist that saw them rewarded with a negotiated $75 million payment from St George.
This was a payment that the SBS members had better entitlement to under the Legislative Acts – as they also had in their rights to self determine whether they could have purchased back the SBNSW owned fixed-shares according to the Legislative rules available.
The Department of Co-Operatives Submission for Opinion from the Solicitor General:
This request sent to the Solicitor General and signed by Mr Baker – Dept Co-Operatives Registrar – It clearly outlines Mr Baker’s concerns and points to the Legislative Acts were he thinks a breach has happened.
This initial response by the Dept of Business and Consumer Affairs was not the only response. The Australian Association of Permanent Building Societies (AAPBS) – also weighed in – one of their member Building Societies was being attacked and it was now all hands to the rescue in thee first days after the Board room coup. The Solicitor Generals response was dated the 9th May – as was the independent opinion sought by the AAPBS – these appear below.
The Solicitor General’s response is conclusive in regards to the dual Directorships held by John O’Neill i.e. SBNSW and the SBS – having a ‘conflict of interest’ – this conflict had been in existence since O’Neill was appointed as MD of the SBNSW in July ’87. Why had this not been an issue then?
Mention is made about the other three SBNSW appointed Directors as well – they were all working staff at the SBNSW – and in any environment one could imagine – who could not think these three other SBNSW appointed Directors were there as ‘lackies in tow’ behind the John O’Neill show and serving in the same ‘conflict of interest’.
How anybody in the Regulatory agencies could think that the ‘conflict of interest’ would still not exist if O’Neill was forced to leave?
When Nick Whitlam was the MD of the SBNSW from 1980 – 87 – he held dual Directorships of the SBNSW and SBS from 1982 – why was this same ‘conflict’ not recognised then?
It is worth bearing in mind that this legal opinion [above] – had to be respectful of any previous Solicitor General opinions on this matter – this was most likely from the period when Mr Wran was Premier. Those opinions have been asked for – and it was verbally disclosed by ‘Premier and Cabinet’ staff that those documents were not available for FOI release at the time.
MSJ Legal Opinion Comment:
This was a concise response – refer to Clause’ 3 and 4 [Page 2] – these comments confirm the legal perspective held and the opinions expressed all through this ‘Human Evil Exposed – John O’Neill’ upload process. Examples of these opinions include –
This was a ‘brazen crime’ – pre-meditated and committed in full view of everybody – the Regulatory bodies, the Legal representatives of the Government, the SBS members, the media, and the Premier of NSW and his Cabinet – who collectively knew what was happening and stood by and let it happen – knowing all the time that it was more than a little bit illegal.
What does that say about a State Government and its Ministers, the Department Heads and the legal advisors giving their best advice to their employers?
There is no way possible that these legal minds did not know what was happening – yet – none of them did the right thing. That has to be a blight on all members of the legal profession employed by this Government.
That accusation is a large step – even if the legal opinions were ignored – to think that a Premier and some of his Ministers ignored the same advice that resulted in a $75 million theft of funds belonging to the SBS members – how could they have imagined they could get away with it? They had to have friends in positions to sway the debate – or even buy off the resistance in some manner.
In his life – John O’Neill has served in some very high level positions – if his behaviour in those positions was a reflection of his behaviour during his tenure with the SBNSW – it casts so much doubt on the integrity of all the organisations who hired him – these include the Australian Rugby Union and Australian Soccer – and the NSW Government as a Tourism Ambassador.
People have tried to ridicule him in the media and expose his faults – one such exposure ended in a suit when he defended allegations made by Alan Jones of ‘Radio 2GB’ fame, that O’Neill was a hopeless Banker … why Jones rolled over and settled that case out of court yields further opinions about Alan Jones – and into how much research he does before he uses his megaphone microphone to cast his ‘doubt net’ as wide as he does.
In any crime there is always a trail of evidence – the documents presented hereto and in other posts in this continuing expose – bare’s testament to the fact that this incriminating evidence had been lying dormant and waiting for someone to put the pieces together for 20+ years. How many other indiscretions lay similarly unexposed?
By this stage of the research period one just knew this jigsaw was gonna unfold like a banana – the FOI’s just kept coming and the staff doing the searches were very helpful – even notifying discoveries outside the FOI request – prompting more FOI requests – O’Neill will have nowhere to hide by the time this is done – Greiner will be in the paddywagon with him – and the question remains – who’s gonna have the balls to take this matter to court?
There have been three attempts to give this information to the previous NSW Labour Government – they all pushed the ‘too hard’ lever leaving it for the next guy …
The NSW Prosecutor has pursued the Andy Koval case for fraud over events that happened in 1986 – 87, do you think this case would yield a better outcome … Andy Koval was a civilian – Nick Greiner was the NSW Premier, and his Corporate profile these days is huge – can you imagine the fallout if he faced charges relating to his ethics and behaviour whilst serving as Premier? Hang on – he did face ICAC over allegations he did favours for some mates – cost him his Premiership and Fahey took over for the 2nd term.
He has been down this road before. How good a job did the investigators do way back then? Was it a case of letting it slide and accepting the ‘step-down’ as an informal form of self punishment – crime is crime – and these guys know when they step over the mark. They also know how to cover their tracks – you would think!!!
Unless they’re made an example of in full public view – it will just keep happening – if our leaders know there is one set of rules that sits above the law for them – what is our justice system really worth?
Can you imagine just what evidence will be uncovered when depositions start happening – everybody will be looking for life jackets – and the ones left on the boat will be left to carry the can.
The 1st Chapter of the new book currently in edit phase tells of a possible ending to this story – it is set in 2017 and you can read this chapter using this link here …
At the moment there is a list – a list of possible SBNSW and NSWG names and the criminal charges each party involved in this matter from as far back as the late 70’s could be facing. The top of that list includes Premier’s, MP’s, MD’s, Lawyer’s, and NSWG staffer’s – some of the involved parties are now deceased – and that may hinder some of the yet unknown facts from being discovered – no matter, 90% is already known and is ready to start burning some of the ‘evil’ scum who made this all happen.
Part 9 … continues – … Human Evil Exposed – John O’Neill – Part 9 – The Regulatory Investigation begins … John O’Neill hits a speed-bump – the first of many he was to encounter over the next few weeks … read it and see all the evidence in the next installments … see below for link …
Link to all previous chapters for –
The EYE-BALL Opinion … Without Prejudice …
Human Evil Exposed –
(CEO-ARU) … Part 6
Definitions of Allegations alleged against Mr John O’Neill and his cohorts …
Part 6 commences … The Phil Gray Audit/Inspection Report …
When John O’Neill decided to push the go button on his merger plan – he needed ’cause’ to be in a position to sack the SBS GM – Denis Cleary.
By Anzac Day 1988 – the 25th April and after the Phil Gray Audit report had been delivered to the SBS – Cleary knew he was in trouble. The SBS Treasurer was still on extended Administration leave insisted upon by Cleary – and still 10 days away from returning to his desk.
During the research phase of this project – it was revealed by two senior SBNSW sources that O’Neill received a phone call advising him the SBS had huge futures and option positions, and that he might want to investigate the holdings. Whether that ‘whistleblower’ phone call was real, or a fabrication is still to be determined. No evidence can be found other than heresy – all emanating from O’Neill.
However – according to Paul Kearns – the SBNSW Legal Counsel and O’Neill’s former boss – it was someone from the Reserve Bank of Australia (RBA) – and according to Mr Phil Gray – The SBNSW Treasurer – it was someone high up in the Futures industry. Both were relying on O’Neill’s telling of the phone call as the source of the information.
The fact that these two high-ranking SBNSW Executives had different stories – and both adamant that they had the key – gives some realism to an alternative theory. Perhaps there was no initiating phone call – perhaps it was all a part of O’Neill’s grand master plan to find ’cause’ to sack Cleary, to get inside the SBS Treasury operation and have a look at how the profits were being made. This later reasoning sounds more like O’Neill’s modus-operandi given how he played future plots in this massive FRAUD.
Research undertaken to track down the ‘deep-throat’ was extensive – some six months chasing down an RBA employee who had a close relationship with the Co-operatives Dept, and given up as the most likely person who would have made such a phone call – that same person is still a person of interest, he is connected with the ‘Securency’ note bribery scandal and has gone to ground.
The RBA story was deemed the most likely because in the days before the SBS Treasurer went on leave at the end of Mar ’88 – the RBA contacted him and requested a meeting. The meeting was a low-level meet with two RBA Executives and there were no red-flags raised. The RBA were enquiring into the increased levels of SBS holdings in Commonwealth Bonds and wanted to know if it was likely to continue. They were offering tender options whereby the SBS could tender directly on future CGS Bond Issues.
The real reasons why the SBNSW saw a need to investigate the SBS Treasury is a story for John O’Neill to tell in due course. Whatever his reasoning was – he did had mitigating and extreme motives – he wanted to regain control over the SBS Board lost under his watch some eight months earlier, and he wanted to merger with the SBS more than anything else – he could not have the merger unless he controlled the SBS Board.
Whether he used Phil Gray to carry out that inspection as a means to deliberately fulfil his merger agenda is still conjecture – but largely believed – in any scenario – without the Audit Report O’Neill’s move against Cleary would have had to come from some other avenue.
In a series of E-Mail exchanges with Mr Gray during the research phase, the parameters of that Audit/Inspection were somewhat revealed along with other responses to questions that were asked. Those e-mail messages are pasted below to provide authenticity and to establish Phil Gray’s creditability …
I believe Phil Gray to be a man of integrity – more so than Paul Kearns who was the legal opinion and promoter behind the flawed formation and structure of the SBS as far back as the late 70’s – and again all through the court case with the CSB through to late ’87. His motives were always aligned with O’Neill’s – whereas Mr Gray had only been with the SBNSW since Sept ’87 – and his knowledge of what had taken place before his employ commenced, left him as a possible ‘stooge’ in the game doing O’Neill’s bidding. In fact, Mr Gray explained his status and position in direct terms in his e-mail exchanges – [see below.]
Kearns took over from O’Neill as Chairman of the SBS in July ’88 and only after O’Neill was forced out over ‘conflict of interest’ issues – primarily because he held Board Directorship’s on both the SBNSW and SBS Boards. With Kearns’ appointment as O’Neill’s replacement SBS Chairman – the real ‘conflict’ was never resolved, and he remained Chairman throughout O’Neill’s end-game agenda and right up until the sale to St George was completed. It was ironic that Kearns was still there until the end – as he had also been there from the start.
Mr Kearns also exchanged several e-mail messages with the researcher – his responses were always seen less than genuine despite undertakings and promise’ made to offer up his side of the story. All through those exchanges he was holding out for what source information had been uncovered. As soon as the questions became pointy – he did what was expected of any ‘snake in the grass’ type personality and ran for cover. To this day – he remains as guilty as sin in the eyes of the researcher – and just as culpable and responsible as O’Neill and Greiner for the Corporate RAPE and FRAUD committed against the SBS Members and staff.
The E-Mail messages responses from Mr Kearns and Mr Greiner will be uploaded in future posts. Both Mr O’Neill and Mr Kearns will have their own individual ‘Wall of Shame’ document and comment posts. As this story delves deeper into events that happened after the May 5th Board meeting – all revealing Kearn’s, Greiner’s and O’Neill’s complicit actions, the documents and sequence of events will give cause to further events – and it is envisaged that that will include future and intended action that will ultimately determine their collective fates.
In the Interim – Mr Gray’s E-Mail responses appear below:
In an earlier E-Mail Mr Gray revealed his information about the ‘phone call’ received from John O’Neill.
In response to some specific points asked of Mr Gray – he responded as pasted below:
[A copy of the Audit Report was sent to Mr Gray in response e-mails to help him recall events.]
The researcher wishes to thank Mr gray for his contributions to date – and to let it beknown that there is still an open invitation for him, and any one else who can or wishes to contribute to this story. The email address: email@example.com – can be used to accommodate any contact.
During this Audit period in April ’88 the SBS and whilst the SBS Treasurer remained on annual and then administrative leave – everything he had built up in the 10 or so months since he took on the Treasurer position – was now being torn down by the SBNSW without legitimate foundation or reason – or rebuttal from anyone who understood Treasury operations. The only game in play was O’Neill’s frantic and almost manic want to merge the SBS with the SBNSW. What took place can all attributed to this Phil Gray Audit/Inspection report and as commented on hereto – the Report was a complete mis-representation and based on ignorance and a total lack of understanding of what really did happen.
That report can be read in full using the links below:
The SBNSW Report: Page 1:
The SBNSW Report: Page 2:
The SBNSW Report: Page 3:
The SBNSW Report: Page 4:
The SBNSW Report: Page 5:
The SBNSW Report: Page 6:
The importance of this document in the whole scheme of things cannot ever be overstated. Because of the outcomes from this document – Ken Dennewald, Denis Cleary got booted – leaving the Deputy GM – Len Thompson as the only SBS Executive apart from two other GM’s. Mr Thompson was sent on Administrative leave within days of the 5th May Board room coup for almost 2 months. After that 5th May meeting – the SBS Board was again controlled by O’Neill and he appointed a GM from the SBNSW named Tony Howarth as caretaker of the SBS.
From that position O’Neill was able to orchestrate as he wanted until the Co-Operatives Department stepped in and investigated the happenings at the 5th May Board meeting. But until that investigation was complete there was little that could be done to stop O’Neill and his intended game-plan. O’Neill was now ‘McScrooge’ in control and playing GOD over how he was going to get what he wanted.
Before we go there in detail – [ i.e. Part 7 – the May 5th SBS Board Meeting …] – lets first have a good look at the Phil Gray Audit/Inspection Report in more detail and break it down and expose it for what it was.
The SBS Treasurer’s reading of the Report:
The SBS Treasurer was not given a copy of this report until after the May 5th SBS Board meeting. The report was complied without any imput or conversation with the SBS Treasurer throughout the inspection phase. When he became aware the Audit was in progress – whilst on leave on the 31st Mar ’88 – he immediately offered to return but was ordered to stay away. In fact – a week into the Audit/Inspection he was again ordered to extend his leave for another three weeks to early May ’88 by the SBS GM – Denis Cleary. His return date was to be the 4th May ’88.
When he finally had the opportunity to read the report after the 5th May Board meeting – he immediately knew the report had very little reference to the depth and breath of all the SBS Treasury activities during March ’88, or over the whole term of his tenure since Aug ’87. It’s was a snapshot of the March ’88 end of day positions taken in a hindsight perspective, and based on one aspect of the overall SBS Treasury’s portfolio structure. The Report gloss’ over the raw data and its realism, and primarily focused on the futures and option positions. It did no justice to the breath and depth of the SBS Treasury operation or its innovative ‘risk management’ techniques.
The report painted a false picture and distorted the connectivity of futures and options and their role in the overall ‘risk management’ positions, and does not grant the concessions that had connective offsets against all the other SBS Treasury activities. There were several components of the Treasury activities that were not commented on or formed any part of the report. It is not known if these were deliberately left out – or whether Mr Gray did not receive any information on these activities from his Audit/Inspection team leader – Mr Steve Heald.
After the SBS Treasurer was finally received a copy of the report and was able to read it in the solitude of his office – all its fabrications and inaccuracies were immediately obvious to him. He made notes as a means of containing his frustrations, all of the comments made would not have been obvious to any of the SBS Executive who tried to defend the SBS Treasury in the face of Mr Gray’s summary document. There was no way the SBS Treasurer could trust anybody remaining or whom he was to report to after that May 5th Board meeting. His arrival back in the dealing room on the 4th May was met with Treasury staff concerned and wanting to know what was happening. The specifics of these events will be covered in future uploads.
For the moment the SBNSW Audit Report is the focus.
Page 1 of the SBNSW Dealing Activities Report:
Copies of any Attachments referred to throughout the report were not received as a part of the report to the SBS Treasurer, and they have never been seen.
The phrases – “FOLLOWING DISCUSSIONS”, “SUBSEQUENTLY ADOPTED”, “AGREED BY BOTH PARTIES” and “ATTENDANT RISK” stood out as coercive entanglement – i.e. Mr Gray was laying down his ground rules and putting a noose around the SBS Executive at the same time.
These ‘phrases’ were the set-up – what ‘discussions’, what was ‘adopted’, who agreed to what ‘re-creations’, and what ‘attendant risk’ – were obvious questions the SBS Treasurer wanted answers to but there was nobody around to ask – they were all gone.
Why had Cleary and his advisors agreed with Mr Gray to these initial parameter settings?
Whatever took place during that discussion between Mr Gray and the SBS Executive at that introduction meeting – and given his charter from O’Neill – [see below] – it was clear what the inspection/audit was about – and the SBS Executive were already on a path that was about to about to lead them to their own hanging.
Nobody on the SBS Executive and at that meeting could refute or challenge Mr Gray’s treasury knowledge – it was like a ‘howdy-doody’ show where the ringmaster -[Mr Gray] – cracked his whip and the SBS pigeons all lined up in a row – said how high. The SBS Executive were severely disadvantaged from the get go – they knew absolutely nothing in real terms and its realism about Treasury operations and Mr Gray was about to make them sing to his tune.
The term ‘adopting‘ as a research reference sets the policy structure and this would have been completely outside the SBS Executive knowledge base on Treasury matters – unless of course someone senior from SBS Treasury was there to advise them – this was not the case.
There was never any discussion with the SBS Treasurer in any time frame about these discussions issues, or the adopted methodology, or parameters in how the SBNSW was to carry out their inspection. First impressions upon reading the report were that Mr Gray was writing the report with no counter input to any of the issues raised. He had free reign and the SBS ‘mouse-like’ staff cowered in the face of Mr Gray and his reputation. The SBS Executive had accepted and agreed the Society would adopt and use the SBNSW’s inspection policy relating to:
Mr Graeme Chambers was unknown to the SBS Treasurer – his authority or credentials were also unknown. The Economic Research Unit could have been an independent organisation but was most likely a economic division within the SBNSW. Mr Gray was suggesting that some body of researches who researched interest rate movements, were now some sort of benchmark authority that the SBS should listen to and accept in a retrospective expose. This was Mr Gray’s comfort zone and his reality.
The SBS had correctly picked every interest rate move since before the Oct ’87 crash. The ‘think-tank’ approach Mr Gray wanted to use was his knowledge base – and it was all new to the SBS Executive – they had no basis to object nor any answer to this ‘rail-road’ type approach.
The words ‘attendant risk’ also stood out – ‘which parties agreed’ on behalf of the SBS – there was nobody within the SBS Executive who had any real depth of understanding to what ‘attendant risk’ really meant in market terms.
Mr Gray was being allowed to dictate his own terms of reference for his report and this severely disadvantaged the SBS. Mr Gray was also implying associated, or contingent, or measured risk and he was using phraseology to confuse and intimidate the SBS’s Executive, and expose their lack of knowledge on Treasury functions and operations. Nobody on the SBS Executive side was willingly going to admit they were out of their depth – this was an ego issue … and in the end their collective posturing failed miserably. If Mr Gray had of put O’Neill in the same position – O’Neill would have also been an ‘Elmer Thudd’ – and as ‘thick as a brick’ as the saying goes.
These same shortcomings applied to all the current SBS Board members, including the four SBNSW appointed Directors that included O’Neill and Kearns. Dennewald was connected with a Pitt St. Merchant Bank and he would have some knowledge – but he was not at this meeting. Take Mr Gray out of the room and leave O’Neill and Cleary to face off against one another – it would have been like watching two men on Viagra trying to duel with eachother – neither could talk authoritatively on Treasury matters so it would have been all about ego and one up-manship.
The intent of this report was transparent from the outset – it was still early in the read but already it could be seen that it was designed to expose the SBS Executive’s weakness on Treasury matters and the attendant risk profiles that become associated with Treasury activities. it was obvious in hindsight to now see through O’Neill’s plan – he had been intent in making Cleary the scapegoat for all the current and collective ignorance within the SBS Board’s past record on Treasury function and the absence of defined Treasury limits.
O’Neill needed Gray to expose the Cleary’s and the other SBS Executive’s ignorance on Treasury operations. Not having the SBS Treasurer there to defend the SBS Treasury against the report was a risk O’Neill did not want to address. But was it O’Neill’s or Cleary’s decision to keep the SBS Treasurer away for all of April – the truth on this matter is still to be disclosed – Cleary made the phone call – and has stated that O’Neill had threatened to sack the SBS Treasurer – but this is only part of the story that still awaits to be told.
O’Neill already had his fish-hook baited and Cleary was now at a full nibble – and was soon to be hooked completely. He just did not know what was coming.
When Mr Gray alleged negligence and irresponsible risk profiling at the Treasury Operations, and using soft and loose words to embellish and support what he called an ‘excessive risk’ profile – the Report became the link document O’Neill needed to sack Cleary for ’cause’. Mr Gray was using market terminology well above the knowledge base of any non Treasury personnel. Cleary needed an expert by his side – and where was the SBS Treasurer – benched for the duration.
Cleary has much to answer for in the ultimate demise of the SBS – he played his hand badly – and the help from his Deputy Len Thompson during this period was just as poorly advised. If Cleary wasn’t going to recall the Treasurer – that should have been Thompson’s cue to step in and insist they needed an expert to help advise.
Comments Page 2:
The first point made in this passage was a complete fabrication of facts. Mr Gray was reporting an outright lie – the SBS General Manager never ‘approved any limits’ – the SBS Treasury had no Limits in place despite repeated urgings to the AGM Finance before he left in Feb ’88. The SBS Treasury had never had any defined or structural limits apart from the minimal requirements for size of liquidity assets. Ever since the SBS was formed in 1982 – no Treasury limits existed.
This was an operational oversight many years in the making, and all structured under the SBNSW controlled SBS Board all through that time – with the exception since Aug ’87 when the SBNSW no longer controlled the SBS Board.
The SBNSW had just gone through their own limit review process arranged by Mr Gray, Now – Mr Gray shows up and lectures the SBS Executive about limits that had never been a part of the SBS treasury operational procedures. It was like trying to shut the hen-house gate after the fox had his fill. Monday quarterbacking is a great gig if you can swing it – but this report had its own agenda and the SBS treasury operation was just the means …
Mr Gray stated he sighted “Documentary evidence” – someone was filling in the blanks before the questions were being asked. Whatever evidence Mr Gray was talking about was either fabricated or documents that had never been discussed or shown to the SBS Treasurer.
Why did Cleary feel he had to manufacture evidence?
It was obvious the SBS Executive were in panic mode and playing with fire – they were handing O’Neill the SBS on a platter.
The ‘interim limits‘ spoken of above refer to late February and early March ’88 meetings between the SBS Treasurer and the Executive SBS Management, and were specific to the on-going futures close-out strategy. At those meetings indications to possible moves in portfolio size volumes were discussed in non-specific terms. The only numbers talked about in specific terms were the upside and downside profit forecasts. advice was given that the SBS had already locked in $4 million of the $8 million forecasted profits. Further advice was given that is the strategy came unstuck – the minimum profit would be $2 million after positions were unwound. There was some discussion as to estimates of projected forward sales that might be used to manage the overall position. But to construct some formal evidence of ‘interim limits’ was beyond the pail in this Audit/Inspection scenario.
What were they thinking?
The SBS portfolio was sitting above $500 million and had been there for some months. No specifics about the size or structure of the Liquids portfolio were entered into – other than Cleary being asked directly if he wanted the strategy to continue, and him giving his approval to pursue the ‘Futures Closeout’ strategy. This happened a week before the futures contract closed on the 15th Mar ’88.
How Cleary and his team were able to explain these away as ‘interim limits’ and produce ‘documentary evidence’ – only demonstrates the amount of rope Mr Gray was feeding to all the SBS Executives to hang themselves. If the SBS members had any idea how there Society was being managed throughout this period – they would have wanted blood.
Cleary and his Executive team still need to explain how this ‘documentary evidence’ appeared, and how ‘interim approved limits’ were enacted.
An extract from the diary notes made by the SBS Treasurer after a meeting he had with the SBS Executive on the 29th February ’88 appears below:
As for the second string – Page 2:
Mr Gray was right – there was a short maturity structure and a long-end maturity structure. As positions were liquidated the percentage size of each of these short and long structures varied with positional strategy along the yield curve. Since Oct ’87 – the portfolio strategy had been largely targeted at the long end and specifically at the Jan ’98 maturity.
The SBS Treasury operation was not a Bank Treasury with a multitude of various derivatives and capital market type exposures. It did not have an industry style funds management operation, or foreign exchange exposure and transactions. Its deposit base customers owned shares equivalent to their deposit balances in the Society and it operated as a Co-Operative – this made it entirely different to a Bank operation on so many risk and administrative levels.
The SBS was not lending for anything other than residential housing or commercial property ventures. The Liquidity Portfolio was the management tool to cover all the daily and monthly operating costs of the Society. In an extraction of SBS profits since its formation in ’82 – the largest share of profits came from the Liquids Portfolio and its return over cost of retail funds. It can be argued that the business of the SBS – that being lending for residential housing was structured for the benefits of members as per the Co-Operatives mantra.
To give some validity to this assessment – an extraction of the SBS Liquids assets and its budged returns of 1% above cost of funds used to estimate the Treasury contribution to the overall SBS gross profits. The extractions for the SBS Treasury can be seen from the table below:
[This is a raw extraction based on end of year numbers – it is not 100% accurate, but for the purpose of demonstrating the point that the Liquids performance dictates the overall profitability of the SBS it is quite accurate.]
Mr Gray’s ‘interim limits’ comments again talk in circles and try and connect the SBS Treasury operations with the protocols and structures of the SBNSW Treasury operations. Why would he measure and use similar yardsticks for the Treasury operations of a Bank with those of a building Society?
A Bank Treasury and a Building Society treasury function are like chalk and cheese – in regulatory terms, in settlement and commerce arrangements, and in funding requirements. Aligning them up under Mr Gray’s viewpoints was very prejudicial to the SBS Treasury operations.
Turing to the obvious – the SBS treasury was very profitable and the SBNSW was not – secondly the SBNSW had all sorts of regulatory Banking protocols to conform to that the SBS did not – thirdly the SBS was a Co-Operative where members shared in the benefits of the Societies profits.
There were many others – but this audit/inspection was about finding out the SBS futures and options holdings, its strategy, and its overall risk profile. It could never be completed or done accurately without information and guidance from the SBS Treasurer, and for Mr Gray to think otherwise or that he could do any reasonable reconstruct without the input from the SBS Treasurer – meant he was yanking his own chain – or was that Mr O’Neill’s chain.
Review of SBS Liquids Portfolio Aug ’87:
When the Liquids portfolio was first reviewed when the SBS Treasurer started in Aug ’87, he knew immediately that it was an old style investment portfolio that relied on buying a security at the best yield on offer and generally holding it through to maturity. The criteria for purchasing such a security was that it complied within the Legislative Investment guidelines the Society’s could invest in.
The Aug ’87 SBS Liquids portfolio was invested in the most obscure of stocks, one that comes to mind was something called Northern Territory Abbatoirs, and guaranteed by the NT Government. If the Society needed to sell this type of security to meet withdrawal demands over and above its immediate cash position, the Society was at significant risk of inheriting a capital loss, or in a worst case scenario – not being able to find an immediate buyer for the security.
This was the way the SBS Board had approved Treasury investment guidelines since it was formed in 1982. As this SBS Board control rested completely with SBNSW appointed Directors up until Aug ’87 – their own Banking expertise was reflected in this existing and ongoing policy of investing. This all altered after the appointment of the SBS Treasurer in Aug ’87. Lengthy discussions were held between the SBS Executive and the new SBS Treasurer before they agreed to a new approach to managing the SBS portfolio.
For O’Neill via the Phil Gray report to now get on his high horse after the SBS suddenly turned their performance around – making some $20+ million with the new portfolio management structure – O’Neill and Mr Gray would have been better off tapping into the SBS Treasurer’s expertise and knowledge base to try and improve their own Treasury performance.
As part of the immediate overhaul when the new SBS Treasurer arrived – he completely restructured the portfolio with Managements approval during Sept-Oct ’87 and before the Oct 19th Stock market crash hit. Before approval was given to the restructure – he went to great lengths to explain the inherent risks to the Society in investing in illiquid assets/securities.
As history proved – this restructure exercise saved the Society $10’s of millions of dollars in unrealised and revaluation losses after the ’87 crash. These losses would have happened had a significant run on members deposits eventuated as a result of the crash. From what Mr Gray was not saying in his report, that being the real story of the restructure and where the SBS liquids portfolio now stood as a result, the SBS Management had largely forgotten this restructure as well and never even raised this issue.
OTC’s – Over the Counter Options:
Mr Gray’s comments mostly relate to exchange traded futures and options activities. Yet the ‘Over the Counter’ options OTC’s – that were a daily risk management tool the SBS Treasurer used were never included in Mr Gray’s summary calculations – these were offset positions that yielded overnight protection. This was yet another misrepresentation contained in the report.
The type of hindsight risk profile Mr Gray was building against the SBS Treasury operation was not industry standard Auditing. None of the SBNSW staff doing the Audit/Inspection were recognised Audit staff. Mr Steve Heald was a Treasury operative and had worked with Mr Gray previously at Australian Bank. His tenure with the SBNSW was also aligned with the recent appointment of Mr Gray – [Sept ’87].
During the eighties there had been several ‘deposit-runs’ on Building Societies across Australia that saw them fold and/or become part of a Bank or another Building Society because of liquidity problems. This was mainly because their ‘liquids’ could not be liquidated to accommodate the deposit redemptions without erosion of the Societies capital holdings. The SBS Treasury portfolio was quite possibly the best structured and managed portfolio in all of Australia at the time Mr Gray did his audit – his report makes no comment on these aspects of the portfolio.
How Mr Gray’s summations and recommendations for the SBS would have compared with a similar review of the SBNSW’s portfolio, and that of other Building Societies, and at this same time – would have been most interesting.
Maybe Mr Gray knew nothing about O’Neill’s overall agenda regards Cleary and the SBS Board control – the end result was that this report gave O’Neill the ’cause’ needed to sack Cleary.
The over-riding question that still haunts the SBS Treasurer to this day – is why Cleary ordered that he stay away for that three week period from 11th April through until early May ’88 – and during a time when the SBS had the lifeblood sucked out of them – triggering a slow and painful death ending in the sale of the SBS to St George in Aug ’88?
Phil Gray Report Continues … Page 2 –
Honestly, as these ‘Risk Analysis’ comments were read, re-read and absorbed – all this poppycock word association and veiled threat analysis was giving a clearer picture of what sort of Treasury operation the SBNSW was now running under Phil Gray.
Mr Gray’s synopsis did not scare the SBS Treasurer – nor did O’Neill for that matter. Gray was again applying his own form of conservative ‘risk-profile’ management, and using it retrospectively to hindsight judge the SBS Treasury portfolio in ‘what-if’ type scenarios.
The SBS Treasury had kicked ass – perhaps Mr Gray should have taken a leaf out of the SBS Treasury book and learn something about ‘risk management’ – hang on a moment – he did!
Mr Gray approached the SBS Treasurer with a position to Manage all the SBNSW risk exposures after the SBS Management had been sacked. The SBS Treasurer never had to turned him down – Mr Gray knew the position he wanted for the SBS Treasurer and it was a very interesting approach. It was made with some provisos’ – they all being about getting his own Treasury staff to yield up their own discretionary limits. But Mr Gray could not sell it within his own Treasury Management group. The formal offer was never made – but Mr Gray exposed his underbelly in that he had seen the SBS Treasury operations first hand – and he wanted the SBS Treasurer to come and work for him.
With that sanction and approval in mind – all Mr Gray’s comments have to be read with some scepticism and clouded assessment as to whether he really believed everything he wrote in the report. This report was not aimed at the ability of the SBS Treasurer or the current ‘risk profile’ of the SBS Treasury – it was aimed at the SBS Management and Mr Cleary in particular. All the heat in the SBS Portfolio was gone by the 15th Mar ’88 – and this report was happening some 3-4 weeks later.
In further reference to the ‘Risk Analysis’ comments in Mr Gray’s report highlighted above – the interest rate moves Mr Gray use to highlight his theory related to the extremes of the Oct ’87 crash. The same period when the October crash saw the equity market correct itself in a way that had not been seen in almost 60 years.
You don’t think he was loading a pistol with a cannon ball to make his point. 1987 was a year of many extreme moves – the point being that the SBS was on the right side of all those moves. Yet – Mr Gray’s bean-counter extractions show once again how he was helping to line the SBS Executive up against a wall – and daring them to defend the past performance of the SBS Treasury against his ‘dooms-day’ type projections.
This was low-ball commentary – every dealer worth a pinch of salt knows and understands volatility – it’s a bit like being a bookmaker – no … its exactly like being a bookmaker – as a trader you take on and embrace the risk to know where the risk is and coming from. Avoiding some huge punter for fear you might lose is no way to play the game – take on the risk and you own the market’s risk exposure and from there all you have to do is manage that risk by spreading it over other assets – i.e. in bookmaker terms – spread the risk over the other horse in the field.
Hell – this volatility was why the SBS was having so much fun in making all its money – it owned the risk and was managing it in a way that was controlled, and whilst the interest rate trend remained bullish until the March ’88 futures close-out – there was never any real risk exposure that was not already covered any and whichever way possible.
Mr Gray and his helper Mr Heald – had no way to report or structure an answer to this type of Treasury operation – they had never seen it before. I fact they never saw the real SBS treasury purpose in its futures and options positioning. Of course the raw numbers scared them – hell it would have scared everybody – but if they had of asked the right person – then they might have got it – they might not have understood it all – but they might have learnt something. they were sitting on this great big scandal with keys to expose the ‘futures sting’ of the decade – yet the didn’t see it or get it. That is a reflection of the base level creditability that can be attached to this report from the SBS treasurer’s perspective.
Hell what the SBS Treasurer did – was not supposed to be able to happen – if the regulatory SFE staffers had of got a hold of what actually happened the whole ‘non-deliverable’ aspect and integrity attached to the 10 year bond contract would have been blown away. Mr Gray was sitting on the SFE Compliance committee when the recent contact with him happened. When this story was exposed to him – he had no comment as the above e-mails can attest to. Mr Gray’s comments were like a kindergarten reading in the big-picture and the big-league that the SBS Treasury was operating in.
[If you want to know more about how the SBS profits were made – you can read all about it using this link to – ‘Balls like an Elephant’ – a non-fiction novel account of the SBS Treasury operation during this period.]
Overnight Interest Rate Moves:
Yes – the overnight interest rate moves Mr Gray highlights in this report did occur – but the risk exposure was no greater for the SBS than it was for every other Investment portfolio that took on naked interest rate exposures. That just happened to be almost every Investment Fund and Bank in the world. Mr Gray picks on the worse overnight move during the October ’87 crash, and uses it to paint a picture where the SBS would have incurred a negative revaluation exposures of $20 million.
What was the SBNSW’s exposure on the same day – or any other Financial Institution for that matter?
If the SBS compared its overnight exposure with the SBNSW’s on that same day – the SBNSW would have been in the crapper like so many other Banks throughout Australia and the world – and yet low and behold – the SBS survived intact and was operating its business as usual – there was no hiccup – the crash presented once in a year type opportunities and the SBS portfolio was structured to take full advantage. You could call it luck – by the crash was coming and the reason for the portfolios hasty restructured – in timing terms it may have been luck – but then the skill needed to take advantage of the opportunities still had to be implemented.
Mr Gray’s numbers were purely a scare tactic and they did spook the SBS Executive – by this stage of the report Cleary would have been almost ready to fall on his sword – and the report was only into its second page.
The reality of the ’87 crash scenario was the Society reported a trading profit of over $1 million for the month of October ’87 – and had positioned itself in Commonwealth 10 year Bonds above 14% in yield terms. That position was as pure laden as gold. In addition, whilst the revaluation in the portfolio the day after the crash was negative, by month’s end it was substantially positive because the portfolio had been liquid and was repositioned quickly to take advantage of the high yields on offer.
Hell, SBS made more money because of the crash, not losses. Who was Mr Gray kidding – and yet – the SBS Executive were the ones left standing trying to defend the SBS Treasury’s operations – all like innocent lambs to the slaughter.
Mr Gray’s dramatics in using words like ‘typical’, and ‘dramatic’ in demonstrating interest rate movements, were word-theatre, and intended to make un-knowledgeable and inexperienced Directors and Executive Management types quiver in their boots with the prospect of moral and fiduciary responsibilities. There overall importance was nothing more that bean-counter terms and were better used to access corporate debt exposures and serviceability on loan applications.
Mr Gray’s analogy was like applying a rider to a home loan application in a scenario where the family income was reduced by a factor of 20% and then at 40%, to see whether they could still afford the loan. The decision to either make the loan or decline it would depend on whether the loan could still be serviced under those complying conditions. If that analogy was applied to every investment security prior to purchase, and then analysed and subjected to the capital loss exposure if interest rates moved negatively, nobody would ever buy a security, or a house or take out a fixed rate loan. This report cuts to the very core of Banking and understanding that Banking is ‘Risk Management’ and if you avoid all risk, then you cannot call yourself a Banker.
Mr Gray spoke of ‘interim limits’ in his ‘Preliminary Observations’, limits that were never in existence but applied for the purpose of his Audit, and then he presumes to make statements about overnight ‘capital losses’ based on a SBNSW research committee report on possible interest rate moves. The creditability of this report were as false as O’Neill’s credentials to be the MD of the SBNSW – yet this report was toxic for the SBS Management and it was what sunk Cleary.
Again the Question – why did Cleary not recall the SBS Treasurer to defend the SBS against the summations contained within the Report.
Continues to Page 3:
Once again Mr Gray is dealing in layered and degrees of deception. For every futures contract traded, there is a buy side and a sell side. So when he comments, ‘a total of 24,647 contracts were traded representing 3.8% of total market turnover’,… that number of contracts represents only 50% and not 100% of the completed transaction. Therefore the 3.8% was really only 1.9%. [To defend Mr Gray’s comments – this was possibly just an honest error within the report …]
The futures and options numbers Mr Gray mentions sounded right from SBS’s side of the transaction. But to try and make mileage out of the size has no relevance unless they are benched and offset against all intra-day positions – including physicals and forward purchases and sales, and any movement an re-positioning in the maturity structure of the physical and forward positions within the portfolio.
Mr Gray’s report mainly focused on the futures and options activity. How could the risk exposures of the futures and options position be taken in isolation and used to create the illusion for readers of the report that the SBS Treasury’s risk exposures had no mitigating offsets. Mr Grays risk exposures were wrong on so many levels.
How could Mr Gray make the comment – ‘trading was used to leverage the trading risk of the Society’, without understanding any of the intra day, overnight, weekly and longer term strategies, and the overall maturity structure of the $500+ million Portfolio, it begs to ask – how smart was Mr Gray?
Mr Gray’s staff did not even mentioned the OTC’s as highlighted previously – the SBS were very active in these overnight style options and these helped mitigate much of any overnight risk exposures.
Mr Gray does not acknowledge the expiry of the March Futures Contract in any of his summations and how that impacted on risk profiles. The 10 year Bond contract was non-deliverable – that meant that all risk exposures to futures and options expired at midday on the 15th Mar ’88. At a minute to closeout you might have 25,000 open futures contracts, at midday you have zero exposure and a cash settlement against the close out price determined against the physical benchmark stock. Mr Gray did not factor any of these contract specific’s into his report.
Mr Gray ould have known these specifications attached to the 10 year Bond contract – but he made no mention of it in his report – was that an oversight or a deliberate omission? Mr Gray never commented when asked this question in recent e-mail exchanges – [see e-mail message exchange responses above.]
At the completion of the Audit – Mr Gray was still not aware of the stratigised positioning undertaken by the SBS in its March Futures strategy. This says lots about how successful the SBS was in covering its market exposures. Put another way – the SBS Treasury was so good at its job – that it fooled everybody in the market and and has done so for nigh on 24 years – nobody has had a goddamn clue how the SBS pulled off the biggest ‘futures sting’ in Australian Financial history.
It would be most interesting to know if this successful ‘futures sting’ – revealed toi Mr Gray during the recent contact is now used in training manuals to rewrite SFE history and educate compliance officers in the futures industry.
SBS Internal Auditor:
Tony Page, the SBS Internal Auditor was up to his eyeballs in this report. He had either turned stooge or was sufficiently intimidated by his lack of understanding of Treasury operations and accounting procedures – that he folded like a cheap tent under the SBNSW investigation microscope. Page was advising Cleary on all things SBS Treasury – its operations and procedures. He had been doing this for several months – he was Cleary’s go to man when Cleary needed understanding about Treasury matters. That meant Cleary was almost certainly relying on Page to advise him in the face of this report. Talk about the blind leading the blind.
Efforts to contact Mr Page to date have proved unsuccessful.
These comments suggest some ignorance of the rules and entitlements pertaining to SFE’s Floor membership, their role and relationship with the International Commodities Clearing House (ICCH), and the ICCH’s role and its guarantees pertaining to all SFE futures contracts.
Mr Gray does not even mention the FRA/Futures agreement between Bain Refco and SBS and how their agreement worked. It is most likely that Mr Gray had no idea about the arrangement.
The reality was that each FRA/Futures contract SBS transacted with Bain Refco was equally matched with a genuine futures contract that became part of Bain Refco Floor Membership house account with the ICCH. SBS dealt with Bain Refco in FRA’s and Bain Refco offset these position with a like futures contract. That meant that every open position SBS had was not even with the SFE. All the Bain Refco House account positions held in offset to the SBS positions were guaranteed by the ICCH and therefore Bain Refco as the holder of the contract, was itself guaranteed and protected.
So when Mr Gray speaks of unsecured credit limits, he is talking about the ICCH as the end client for the futures contract. In not being aware of or the understanding of Bain Refco and SBS arrangement – his relationship statement that even the SBNSW does not have an unsecured facility with Bain Refco, is scare mongering. It has no relevance to where any futures risk exposure lay between the SBS and Bain Refco under their forward rate agreements – FRA’s. The FRA differential exposure to market value was where any credit risk might be – the same as the futures contract and how it is valued to market with margin calls.
To explain this further, each futures open trade has a bought and sold matching contract. That in effect means that any margin debt (call) required by the ICCH is also internally matched with a corresponding margin credit (surplus). Any default on margin, deposit, or contract settlement by a client of a Floor Member, on any open or closed contract, is the responsibility of the floor member and clearing broker. Any default on futures settlement is guaranteed by the ICCH.
That means, that Bain Refco covered all deposit and margin call requirements on behalf of all transactions it was holding on account of the FRA/Futures agreement with SBS. If the margin position was negative, Bain Refco were responsible for funding the margin call to the ICCH. The SBS would then also be carrying the loss margin in its revaluations from its trade position. That then means SBS would owe Bain Refco as an unsettled liability.
In the reverse of that transaction, that is where Bain Refco have a credit margin on trades it is holding for SBS, there is a credit exposure between Bain Refco and SBS in that Bain Refco owes SBS the amount of the profit margin on revaluation – if there was credit risk – this is where it happened.
If SBS were dealing directly with a Floor Member (Bain Refco) as a normal client, SBS would not be entitled to that margin credit via its clearing account with any Floor Member (Bain Refco) until it liquidated the contracts. That Floor Member (Bain Refco) would then be holding those funds in its segregated Clients Funds account until it settled with SBS. SBS and Bain Refco settled on a daily basis for the net result of all closed positions.
Mr Gray had to of understood this process – he had been connected with the SFE for some years and remains so today. He did not ask about this agreement before he wrote this report, and therefore he did not comprehend the agreement – nor fully understand the Counterparty Risk argument he presented. He elected to write about Counterparty Risk as pure intent to again intimidate the SBS Management.
There was never ever any credit risk exposure that had connectivity with Mr Gray’s comment – “the SBNSW did not have unsecured credit limits with Bain’s”. Also, Mr Gray’s comments under ‘Counterparty risk’ – ‘Using the same interest rate scenario, the overnight counterparty risk was estimated at up to $6.5 million’, … are an absolute beat-up. These comments are almost criminal in their misrepresentation – and whether deliberately so is for Mr Gray to respond to.
This report had lost all creditability within the SBS Treasurer’s mindset by the time he had read page 3 – and yet it continued …
General Comments from the bottom of Page 3:
Gray was really showing up his staff’s deficiencies throughout the investigation phase – there was such a computer program. It was used exclusively by the SBS and was propriety software.
All the printouts Mr Heald was looking at had to have been printed from this software. Did he not ask to see the program?
The same program that generated those printouts also provided the risk profiling for all the SBS Liquids portfolio. Every position, transaction, forward, option, futures, FRA, OTC’s, physical maturities, yield curve analysis, trading records, profit/loss reconciliations, management reporting – everything was a part of that computer program and the SBNSW staff never bothered to have a look at the program to see what it was capable of.
The SBS Treasurer had developed this program over a long market career. In the after SBS experience the program was sold to Bank Treasury operations on a commercial basis. The program was on all the SBS Treasury Computers and encompassed all the day to day activities. So when Mr Gray says there was no program to monitor all the associated risk exposures – he is being completely ignorant on a factual basis – and again misleading everybody who read the report. In fact the program is still functioning today with some major upgrades due to spreadsheet improvements. Why the SBS Executive did not take on Mr Gray on this point is a mystery … hell they were receiving the reports this computer program was generating.
With the touch of a button and with market price/value updates – the total SBS Liquids portfolio, physicals and derivatives could be revalued via a calculus macro within the program. The refresh function instantly appraise every physical asset, Bank Bills, Semi and Commonwealth Government security in terms of Market Valuation and a hedge relationship with both 90 day Bank Bill, 3yr and 10yr Bond contracts. All Options, Futures and other derivatives could also be revalued ‘to market’ using the same parameters.
The quality of the input of transactions was the Dealers responsibility and then verified by the Settlements staff for errors. There had not been a single error input in the time the SBS had been using the software. The SBS Finance Dept continued to run its existing procedures to verify all Treasury operations – but from a Management Risk profile – the program running on all the Treasury computers was what was used to monitor all the Portfolio risk. Whilst the dual systems produced the same numbers – Executive Management were trusting the SBS Treasurer’s software for Management reports.
Again – the SBS Executive was aware of this – how they did not defend against this allegation is beyond understanding.
The volatility barometer within the program was a self policing input. The SBS Treasurer knew the SBS Treasury activity was causing the markets increased volatility because of the ‘in-and-out’ squeeze being applying to the spread value between the 10 year futures contract and the 10 year physical market. It would not have been prudent or accurate to adjust the ‘Vega’ variables for true value on account of that volatility being instigated by the SBS Treasury. The SBS were the reason for the volatility and why should they pay away the premium income that volatility generated – hell the SBS made more money because of the volatility factor and it was being controlled by the SBS’s market activities. Mr Gray should have understood this.
It was possible for the program to price the fair value of all options, both OTC and Exchange traded, basis time decay and intrinsic values relative to the physical/futures spreads. This was a wiz-bang computer program and it gave the SBS a monumental head-start over all the other market operators. It could factor in market scenarios from any perspective – bullish or bearish moves, the ‘what-if’s’ were used in determining potential profit and loss scenarios and applied to trading strategies.
This program was 5 years maybe even 10 years ahead of the market. It could have been termed a ‘computer generated trading program’ – and dealing rooms around the world now can’t survive without them. For Mr Gray to say:
” … it is now clear that the Society was only able to accurately estimate the risk of its options positions on an ex-post basis. In the absence of a well-developed and installed options pricing and hedging model, it is difficult to justify the substantial positions and turnover in bond options which took place…”
… demonstrates a true indication to how biased and unfair this report was.
The SBS Treasurer had proprietary title to this software and SBS Management were paying him a monthly fee for its use. This arrangement was established and approved shortly after the SBS Treasurer joined the SBS and the AGM Finance – Paul Ogilvy had signed off on it.
When SBS were eventually sold to St George, the soon to be ex SBS Treasurer brokered a deal where St George could use the software for 3 months during the changeover period, and on the basis that if they still wanted to use it they would then have to buy it. This was a verbal agreement with Greg Bartlett, the St George Treasurer at the time. When the three months expired, Bartlett elected not to continue to use it – the price tag was $10,000 – cheap at any cost. The St George Treasury were scared of the SBS Treasurer and did not want him anywhere near the St George dealing room under the merger and integration arrangements negotiated when St George took over the SBS.
Shortly thereafter the now ex SBS Treasurer instigated legal proceedings against ST George when an ex SBS dealer – now operating out of the St George dealing room – informed the ex SBS Treasurer that St George were still using the software. The ex SBS dealer also claimed that St George Treasury Management – i.e. Greg Bartlett – had approached him to pirate the software by entering the macro structure and the source calculus, to try and recreate the program functions in a different format so it would look like a different program. The ex – SBS dealer was unable to create the new program so St George continued to use the program as it was.
The ex SBS dealer was to be the star witness and his testimony would have sunk St George. The St George Solicitors and Treasury Management intimidated the ex SBS dealer by using his job security into withdrawing his testimony. After 12 months or so, the SBS Treasurer dropped the case to protect the ex SBS dealer. Greg Bartlett, the Treasurer of St George at the time, and recently retired Director of Westpac Banking Corporation, was the person involved throughout this piracy scam. He was never bought to account for that theft.
Mr Gray’s recommendations were the final slap in the face given what the SBS Treasury had achieved over the previous 10 months.
The limits issue was fair-game, but his attempts to address this issue had been rebuffed by the previous AGM Finance – and now in the face of this report the SBS Executive were making up limit structures to suit Gray’s requests.
The Financial markets were evolving – they have and always will be a living breathing and emotive centrepiece, and limits form the most important fencing structure to not let dealers wander off the grid. But – when the Management have no understanding on what Limits really mean and how they should be used – they become a useless tool. You only had to read about the AWA FX dealer Andy Koval 1986-87 exploits, and the more recent NAB’s Dealer scandal’s to understand how dealers can get around Management imposed limits.
The SBS Limit situation was not perfect – but the SBS Treasurer had structured a self-policing limit structure and he was the only one who knew about it. He made it a point to kept his Management informed of every aspect of the portfolio’s performance, structure, profit, loss and revaluation status on a daily basis. He took it upon himself to make sure that his operation had full disclosure to everyone that mattered … his Management trusted him implicitly … and yet – Mr Cleary did not trust him enough to bring him back from leave and defend what he had created in the face of O’Neill’s ‘seek missile’.
Mr Gray’s summation was the nail in Cleary’s coffin – exposing all the wrongs Mr Gray believed was wrong with the SBS Treasury protocols – his views and his perspective.
Was this the best possible summation of the SBS Treasury operation … hardly – given the examples exposed hereto about Mr Gray’s inability to fully understand the SBS Treasury operation as this Audit report response is a testament to its lack of creditability.
The EYE-BALL Opinion’s Summary Comments – on behalf of the SBS Treasurer:
The SBS Treasurer new every aspect of the SBS liquids portfolio – he had lived and breathed it for 10 months – he had restructured it, massaged it, lengthened and shortened it when necessary, and his ‘game plan’ for the futures strategy was ‘inch-perfect’ in its formation and its execution. He had positioned the portfolio in a ‘bull’ market run that was still going – and he had used the market’s post ’87 crash skittishness to turn the SBS Treasury into a major market player. Not for player or reputation recognition’s sake – but because of his professionalism and pride in that the SBS Treasurer applied himself to be the best at anything and everything he did.
This O’Neill sanctioned witch-hunt audit in the form of a ‘rats’ scheme – was trying to turn the efforts of the SBS Treasury into something less that it actually was. The profits generated were extreme in ’88 terms – and there was nobody who did not tip their hat to the SBS Treasury performance.
O’Neill’s creditability was a lap behind in racehorse terms – he was a young 35-year-old with the MD tile of the SBNSW – he was in love with the political power within the NSW Labour party that title generated – he was not in love with his Banking responsibilities because he was now in charge of a Bank on life support.
Yet – he was sending Mr Gray into the game to destroy the best thing he had going as a Director and Deputy Chairman of the SBS with fiduciary responsibilities to the SBS membership. His SBNSW title was not more important than his responsibilities to the SBS members – yet his actions pissed all over those SBS members to achieve a financial gain for the SBNSW. His responsibilities in the way he went about this Audit, and the way in which he set about a course to destroy Cleary and the creditability of the SBS Treasury and SBS Treasurer – were not the actions of someone acting on behalf of the SBS members. He was trying to tear down what had been created from within to save his own skin.
Mr Gray’s comments in support for the SBS Treasurer ‘expertise’ were small change compared to the – ‘casino like futures trading’ – allegations O’Neill coined and used in his own personal attack against Cleary. He again used them in press leaks to sway SBS members in a crucial vote to sell SBS to St George in Aug ’88.
The information that led to the story appearing in the press clippings below and dated 16th Aug 1988 – were leaked just six days before the 22 Aug ’88 SBS AGM and vote on the sale of SBS to St George Building Society.
These press leaks did untold damage to the previous SBS Executive’s creditability – and they destroyed the SBS Treasurer’s own market creditability and career – and all done by O’Neill’s PR campaign to sway the SBS member support for the impending sale to St George without a second thought. O’Neill was just blasting away and paid no consideration to those he destroyed in the process.
In the face of this Audit report – Mr Kearns the SBNSW Legal Counsel, and replacement SBS Chairman after O’Neill was booted from the position for ‘conflict of interest considerations – commented in the 1988 SBS Annual Report as follows:
Can you all read the hypocrisy in Mr Kearns comments – [above] – and this all orchestrated whilst serving as John O’Neill’s lap-dog on the SBS Board. Mr Kearns told lies in this Chairman’s report – the SBS Treasury had made near $25 million by the end of the Financial year in May ’88 – some $8 odd million was trimmed from the Treasury’s contribution in this Chairman’s report – $5 million as a provision and the other $3 million that has never been publicly accounted for.
In Mr Kearns’ review of operations he had this to say about the SBS Treasury Operations – page 8 of the Chairman’s review:
Everybody can now read how the SBS Chairman and still serving SBNSW legal Counsel – viewed the SBS Treasury operation in hindsight – his comments in acknowledging the SBS Treasury’s performance when stacked up against the Phil Gray Audit Report – are in themselves a walking contradiction. How could the SBNSW Executive live with themselves.
With more incriminating documents still to be uploaded – the criminal intent and their crimes will only become more exposed.
Final Say on Mr Gray’s report:
Back to Mr Gray’s report and Apr ’88 – every portfolio security, every option and futures/FRA, every forward sale/purchase, every OTC, every aspect of the portfolio was known, massaged and caressed like a new-born baby – this SBS Treasury operation was no fly by night – take the money and run type operation.
Yet – Mr Gray walked into the SBS Treasury while the SBS Treasurer was away with a mandate from Mr O’Neill to find out what was going on within the SBS Treasury.
If Mr O’Neill wanted to know – why did he not just ask the SBS Treasurer – he was Deputy Chairman of the SBS Board – Cleary could not deny him access – yet the SBS Treasurer has never met Mr O’Neill nor any of the other SBS Board Members apart from the SBS Chairman – Mr Ken Dennewald and the SBS GM and Executive Director – Denis Cleary.
If they were so desperate to know the SBS futures and options positions – all they had to do was ask – yet Mr O’Neill decided the ‘jackboot’ style approach was better. Mr O’Neill wanted Cleary’s head desperately – that would give him back SBS Board control – he wanted to see Cleary him humiliated, wanted him so jacked up that he would be happy to fall on his sword.
Mr O’Neill was not concerned at who he destroyed to get what he wanted – another sign of just how ‘evil’ the man is and was. His desperation to save his own career – not his Bank – but his own reputation – was so committed he saw no good in what the SBS had achieved – as a SBS Board member was he serving the SBS members interests? Of course not – he was serving his own interests.
Mr Gray’s comments and assumptions in this report were consistently erroneous to a fault – in some cases they formed outright lies. Who conducts an Audit and does not speak with the attending Management to discuss any findings – or to ask the questions when issues are discovered?
The SBS Treasurer was given no right of response – and in the situation where the SBNSW were preparing to commit a soon to be revealed FRAUD with purposeful intent to steal the value attached to the SBS reserves – some $75 million – this Report became the instrument that allowed O’Neill to set up the events of the May 5th Board meeting where he staged his coup, and then set in motion a Corporate RAPE and its attendant FRAUD that has never been exposed – nor challenged in any meaningful way. O’Neill got away with it – and this expose has intent to change that history.
On a major side issue that has to still be addressed to give clear reasons as to why things happened as they did –
In can simply be said of Mr Gray and everybody else associated with this report – they did not understand what they did not understand …
Part 7 continues … The 5th May SBS Board Meeting … see below for link …
Link to all previous chapters for –
The EYE-BALL Opinion … Without Prejudice …
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