As the clients of Opes Prime emerged from the initial creditors meeting of the fallen stockbroker at the Melbourne Exhibition Centre yesterday, the mood of muted frustration was palpable.
The lead Opes administrator, John Lindholm of Ferrier Hodgson, had earlier told the unsecured creditors they were likely to receive 30 cents in the dollar. On that estimate, the 1200 or so Opes clients with frozen accounts would bear a loss of about $360 million.
The creditors in attendance ranged from polished downtown business types to denim clad DIY investors.
One woman stormed out from the meeting shouting “let the games begin”, a reference perhaps to looming court battles over the Opes collapse.
However the majority of the creditors from the closed meeting were confounded by the sudden events that led to the vaporisation of their stock holdings. Only a few made comments to the waiting media; most were subdued, and rushed out.
One creditor singled out the regulator ASIC and the ASX for not doing more in the face of a collapse that threatens the integrity of the Australian financial markets, also bringing into question the actions of ANZ bank.
He described the regulators as “ineffective” and “incompetent”, continuing that “it is obscene what has not happened”.
What surfaced yesterday was the central role of entity Riqueza, registered in the British Virgin Islands. It was the vehicle for many of the irregular transactions uncovered last month. Ferrier’s Lindholm described Riqueza as a lynchpin into the investigation to uncover the money trail. The entity owes Opes a net $101 million.
Riqueza in turn was owed money by Leveraged Capital and Hawkswood Investments, firms controlled by Opes directors Laurie Emini, Julian Smith and Anthony Blumberg (just Hawkswood). Riqueza appears to have acted as a conduit for these directors in using Opes Prime for private interests. The sole director of Riqueza was Jay Moghe, the former head of the Singapore based Opes Prime Asset Management.
Lindholm said the administrators wanted to quickly quarantine the issues stemming from Riqueza: “We are looking to take control at director level, and once we have worked out the extent of the transactions we will decide whether to liquidate the entity and then track down the cash that may or may not have gone through it.”
The issues with Riqueza come on top the six “problem accounts” of preferred clients who owe Opes $128 million. Opes Prime’s failure to make margin calls on these accounts and the subsequent stock shuffling to cover positions triggered the collapse of Opes Prime.
At times during a media conference yesterday held immediately after the creditors meeting, Lindholm seemed exhausted and limited as to what he could divulge. There are concurrent ASIC investigations running over the Opes affair and of course much of the information is price sensitive, due to the stock holdings.
Clients seeking legal injunctions against lenders ANZ and Merrill Lynch selling stock that was used as collateral were unlikely to be successful, according to Lindholm. The total collateral held by the financiers, which also includes Dresdner Kleinwort, was estimated at a theoretical value of $1.59 billion as of 27 March.
Lindholm also told media that chasing up the funds tied to the problem accounts would take time. “Getting $128 million from six individuals is always going to be problematic. I’d like to think its months, but I don’t know,” he said, referring to the entire process.
In response to questions about Melbourne underworld identity Mick Gatto visiting Singapore on behalf of Opes clients, Lindholm said: “I don’t believe it’ll have any effect on the work we have to do… the assets are owned by the companies. We have legal remedies to recover the assets there.”
At that point the lawyer advising Ferrier Hodgson, Mallesons Stephen Jaques partner Tony Troiani, interjected to state that: “For the record, Mr Gatto is not acting as an agent for the administrator,” he said.
This brought a rare moment of murmured laughter in a drawn out and glum day.