Westpoint

Reporter : Natalie Bonjolo

No one should have to go through this. Everything these men have worked for, their life's savings, are gone.

Joe Felice says “I even thought about ending it all cause I thought what else have I got to live for, I've lost everything”

When Joe Felice was told he could earn twelve percent on his superannuation, by investing in a safe finance scheme, he couldn't wait to sign. “I was never told about the risks that were involved, I'm not a sophisticated investor I'm just an ordinary person who has done a little bit of investing”

After getting advice from a financial adviser, Joe put 300 000 into a fund he was told, was as safe as houses. “I trusted him, he's a guy I have a game of golf with, have a bottle of wine and lunch with”

Rod Norgate says “I do feel I was pushed into this by the financial planners” Rod Norgate was lured with the promise of 'guaranteed' returns. “I've been working over forty years and that was a large percentage of my superannuation”

Rod and Joe were investing in mezzanine finance with a company called WestPoint. What they didn't know was mezzanine finance was a risky business at the best of time. Now the company has gone bust. Joe says “they just led us like lambs to the slaughter”

Australia wide, financial planners and advisors sold this mezzanine finance scheme to people with lots of cash, close to retirement. The investors were told they'd be getting very generous interest rates, up to 12 per cent a year - more than double the going rate for cash. Not bad

Rod says “they presented it as such an attractive investment”

With promised returns like that, the investors were keen, so too were the financial planners. They were being generous commissions, up to ten per cent, HUGE by industry standards.

Rod says I knew they'd be getting some commission but I thought in the range of .5 to 2 percent. Since then I've found out they were getting more than what we were getting in interest

WestPoint was a property developer with a big portfolio, with buildings going up all over the country, and they were desperate for cash, so they paid over the odds, at both ends, to their investors, and to financial planners selling their investments.

It was only a matter of time....

Joe says “we were in the hands of planners who pushed the product we didn't have the regulator telling us not to go in”

It wasn't until the interest payments stopped rolling in, alarm bells started to ring. Soon after, WestPoint ground to a halt. Rod says “you feel shattered because you think how I can be so stupid”

He wasn't alone. For thousands of families who invested in WestPoint, it was a train wreck.

Liquidators estimate four thousand investors lost three hundred million dollars. Some predict it could hit the billion dollar mark

Denise Brailey says “we have no consumer protection at this moment in Australia” Consumer advocate Denise Brailey who uncovered WA's finance brokers scandal, says the WestPoint saga was a diaster, waiting to happen. “Mezzanine finance generally is a recognised commercial high risk product. It was the abuse of the product that was of serious concern that regulators should have been looking into".

Government watchdog, the Australian Securities and Investments Commission, have come under fire for not stepping in sooner. Denise Brailey says “I certainly believe ASIC was asleep at the wheel during this whole debacle and I've said so since I raised the alarm bells in 2000 and 2001”

One by one, WestPoint ventures went to the wall. Nine property funds in all, including York Street, Sydney. Melbourne's Bayshore and Bayview projects. The failed Emu Brewary in Perth. and Ann Street Brisbane. Where there's nothing to show for investor's millions. The same can't be said for WestPoint boss Norm Carey, who's been keeping a very low profile.

Business commentator Neal Prior says even though WestPoint's gone belly up, it's possible the property magnate's behind a new business. “It is on the old WestPoint offices using former WestPoint staff, former WestPoint boss and the WestPoint owner's brother; it has every indication of being WestPoint re incarnated”

Mr Carey and his directors are being investigated by ASIC. No charges have been laid.

Since the collapse of company, there's been no sign of Mr Carey. With no answer at his palatial Perth apartment. Also being investigated are the hundreds of planners who sold the WestPoint dream to their shell shocked clients.

Joe Felice says “a lot of these people are back there operating as if nothing had happened, getting a new bunch of suckers quiet frankly” Joe doesn't know if he'll get a cent of his life's savings back. Angry investors are deciding if they'll launch a class action against the planners. Meantime, the blame game rages on.

Denise Brailey says “with planners blaming directors, directors blaming planners, ASIC blaming everybody and the consumers blaming ASIC, it's a dog's breakfast”

Contact Details

The Westpoint Victims support committee : rod@bigpond.net.au
Denise Brailey – IMF – Litigation funder looking at class action : www.imf.com.au