ASIC pushes for receivers to be appointed into investment promoter Brite Advisors amid $1b savings probe

The corporate watchdog is fighting to put receivers into Brite Advisors as it probes the investment promoter’s management of up to $1 billion in client savings.

The Australian Securities and Investments Commission claims investigators have been struggling to get information about what is happening with $117 million of Brite client savings invested through an associated company in Hong Kong.

A Federal Court-appointed investigative accountant on Wednesday warned of a potential $100m discrepancy between total investor account balances and assets held by the besieged Perth-based group.

Accountant Linda Smith, of insolvency firm of McGrathNicol, said her team’s analysis of client transaction records indicates their investment balances totalled $US670m ($1b) on November 9. Whereas Ms Smith said her team’s analysis of Brite’s investments showed the company held assets totalling $US611m for its clients.

“The two should match each other,” she said.

Another measure of client transactions indicated there should be about $US682m held for them by Brite, the accountant testified.

Brite is the Australian arm of an international group linked to former England sports merchandise promoters Mark Donnelly and sells itself to former UK workers considering moving private pensions to their new home countries.

ASIC gained Federal Court freezing orders against Brite on October 28 amid allegations the licensed financial services had failed to file its 2021-22 accounts and the entire group had allegedly not reported total funds under management since 2019.

ASIC stepped up pressure on November 9 by having Ms Smith and her McGrathNicol partner Rob Kirman to report on the affairs of the Australian company and its funds under management.

While the McGrathNicol report is yet to be finalised, the Federal regulator now wants Brite put into receivership based on evidence filed by Ms Smith and ASIC investigators.

Ms Smith said Brite had been slow to hand over information and had failed to provide access to a key document system.

She said she had to rely on material provided to her by directors, including 40,000 documents given to her on Sunday along with some company laptops.

The board had not provided evidence to support journal entries that effectively wrote-off of chunks $96.1m of loans made by Brite to associated companies overseas, she said.

“I have not received any information or loan agreements,” she said.

She was subjected to prolonged cross-examination by Brite’s lawyer Kevin Dundo as he opposed McGrathNicol being upgraded to receivers .

He put a series of questions to Ms Smith suggesting directors had been co-operative and challenging her various claims about Brite’s affair, but the accountant about stuck by her evidence.

ASIC barrister Jonathan Moore said Brite had given “woefully inadequate” explanations about what was happening with the $117m of investor funds in Hong Kong.

Mr Moore said Brite’s failure to get the money back to Australia could amount to contempt of court.

ASIC’s receivership application continues on Thursday, with a senior investigator from the Federal agency facing cross-examination by Mr Dundo based on six affidavits he has filed.

McGrathNicol is due to file its report about Brite by this Friday.