Friday 27 April 2012

Hillsong hopes rest with the good Doctor

Affinity Capital creditor Dr Leslie Indrasith.
Photo: SiN Images.
THREE former directors of Affinity Capital Pty Ltd yesterday submitted to questioning as part of an ongoing public examination into the firm's spectacular collapse. (See: Hillsong stung by Affinity fallout )

Dr Leslie Indrasith (pictured) invested $400,000 with Affinity Capital Pty Ltd in May, 2008 after meeting Affinity director Daniel Ku at the Hillsong church in Castle Hill.

Affinity Capital was the financing and trading entity of the Affinity Capital Group, which comprised multiple related companies.

Dr Indrasith asked for his money back in June 2008. Affinity's directors declined to comply. 


On October 10, 2008 most of the Affinity Capital Group companies were placed in voluntary administration. 

Two companies – Affinity Alliance Fund and Acuity Property Fund – were placed into liquidation. 


The remainder of the Affinity group in administration was liquidated in December of the same year. 

More than 100 creditors were left almost $20 million poorer. Several of its directors have since declared themselves bankrupt.

In the aftermath of the collapse Dr Indrasith lost his house and was forced into public housing. But that wasn't the end of it as far as the medical scientist was concerned. 

After liquidator Gavin Moss of Macquarie Gordon discontinued his investigations due to lack of funds, Dr Indrasith made representations to ASIC, the ACCC and his local member, former NSW premier Nathan Rhees. As a consequence, he secured Legal Aid funding to pursue public examinations of five Affinity Group company directors.

Four directors – Daniel Ku, Adrian Chen, Andrew Mah and Michael Chin challenged their examination summonses in the NSW Supreme Court. In her September 2011 judgement Justice Julie Ward set aside Ma and Chin’s summonses and ordered that the summones and orders for production be limited in scope when applied to Ku and Chen, along with fellow ex-Affinity director director Darren Chek, 36 of St Kilda in Victoria.

Justice Ward quoted claims made in a letter sent to ASIC by Dr Indrasith’s lawyers seeking support for a creditor-initiated examination, claims backed by the liquidator’s comments in his report to creditors.

“... the (Affinity) directors and shadow directors have been in breach of the requirements for a Financial Services Licence under Corporations Act 2001 Part 7.2 . Whilst a number of other provisions may also have been breached by the directors and shadow directors the most likely breaches include misleading and deceptive conduct under Australian Consumer Law 2010 s18 and trading whilst insolvent under Corporations Act 2001 s588G.”

No charges of any kind have been laid against Affinity’s directors and they have denied knowingly trading whilst insolvent. But the examinations have uncovered plenty that needs explaining.

Barrister Craig Carter
Photo: SiN Images
Yesterday the court heard that in June 2008, a month after Dr Indrasith made his investment, Affinity raised $350,000 from Mr Augustus Pinto. 

Details of the deed summary provided to Mr Pinto and dated June 5, 2008 indicate that he agreed to lend Affinity $350,000 at 18 per cent interest, 9 per cent to be paid monthly in arrears and 9 per cent quarterly in arrears. Mr Pinto never received a single payment.

However on June 18, 2008 a second deed summary was sent to Mr Pinto. The deed was identical in all respects to the first except that the borrower and guarantor had been changed from Affinity Capital Pty Ltd to Anna Bay Projects Pty Ltd.

Anna Bay Projects is the only Affinity group company not to be placed into liquidation.

Company records show Anna Bay Projects is now controlled by Ruth and Paul Appleby of Lindfield through their company Sandarra Pty Limited. Adrian Chen told the court yesterday that Mr Appleby was construction manager of the Anna Bay site.

Yet to be explained is why a $1.08 million charge the Affinity Alliance Fund held over Anna Bay Projects Pty Limited was never enforced.

Many of the questions put to messrs Ku, Chek and Chen by barrister Craig Carter related to when the Affinity Group directors realised the group's liabilities exceeded its assets and the circumstances surrounding fund raisings just months before the property development group went under.

Mr Ku said while one company in the group might have had a deficiency of liabilities over assets at a certain point, other group entities were on the verge of securing promising new development opportunites.

“When I look at the group as a whole and the opportunities that were being formulated … there were a few prospects which we saw as having the potential to provide significant capital to be injected into the business,” Daniel Ku told the court.

He said it wasn’t until the company’s accountant warned them that they must appoint a voluntary administrator that they realized these opportunities would not be realized soon enough.



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