Part I—Retail investors and incentives to invest
The collapse of a number of high-profile agribusiness MIS
has resulted in substantial financial losses for investors in such schemes. In
this part of the report, the committee provides some insight into the
emotional, physical and financial harm caused by the failure of these schemes
and the reasons retail investors, with little or no experience in investments,
entered into these ventures.
The committee considers the use of tax incentives as a
driver to invest in agribusiness MIS and how the concessions were used as a
selling point. It looks at the motivations that encouraged investors to take
out recourse loans to fund their investment; their understanding, or as it
turned out their misunderstanding, of the loan arrangements; the trust they
placed in their advisors; and finally their vulnerability and high
susceptibility to the marketing techniques used to promote and sell
The reason I need to bring my story for your attention and
consideration is based on the current suffering and personal circumstances that
have forced us to sell our family home that we have lived in and made home for
the last 14 years. This is just a small part of the impact that this
Timbercorp story has had on me and my family. I myself now suffer from
depression. As well as being a type 1 diabetic, I now have to take more
medication daily to treat my depression which is now constantly affecting my
life and the life of my family. This goes hand in hand with the stress that has
been put on my marriage and my family life on a daily basis since Timbercorp
People from all walks of life and of varying ages were encouraged to
become investors and, moreover, to borrow to invest in agribusiness MIS. As a
group, many investors, known as growers, bore the brunt of the massive losses
occasioned by the MIS failures.
Importantly, they could not be characterised as sophisticated investors but as
retail investors entering into complex borrowing arrangements to finance a speculative
For the purposes of this inquiry, the committee is concerned primarily
with retail investors, many of whom were first time investors and not highly
literate in financial matters.
When the schemes collapsed, many of these investors lost not only their
investment and prospects of future income but were saddled with the burden of
repaying the loans and interest on a valueless asset. In this chapter, the
committee looks at the personal toll on growers who lost out on their
investment in agribusiness MIS.
Evidence before the committee is replete with stories of the shattered
lives of people who invested and borrowed to invest in agribusiness MIS—separation,
broken relationships, lost life savings, bankruptcy, damaged health,
depression, self-harm and families placed under enormous stress.
For example, with the likelihood of bankruptcy hanging over his head, one
investor, a director of a small business, feared for his position and the
possible termination of the business. Another grower stated simply that the
failed scheme had left his 'financial position and superannuation in tatters'.
Other investors found the prospect of rebuilding their lives
unattainable: a number were forced to live in temporary mobile accommodation while
some had contemplated suicide. An investor, who described herself as 'an
everyday suburban mother, was 'paralysed, angry, confused and perplexed at the
Without doubt, the failure of these various MIS has taken a heavy toll,
emotionally, physically and financially, on investors. One such investor
We had to sell our family home in 2013 to try and reduce our
debt and we now live in a shed on a block of land out of the Perth metro areas
as we could not afford to buy another family home.
Since the global financial crisis (GFC) and because of their failed investment
in Great Southern, a 63-year old man and his wife have been living in a 16-foot
caravan having lost their home, superannuation, savings, life insurance and 'somewhere
for the grandchildren to stay with them'. They are unable to find full
employment because they do not have a fixed address and, in their words, face
'an extremely bleak future'.
Another described the devastation to her family's emotional, financial and
We nearly found ourselves divorced and in counselling through
all this mess, my health has taken a turn for the worse. I am living with an Auto
Immune disease and depression, brought on by increased stress...The decision to
put a stop to growing our family has been made because of the financial
uncertainty that we face...I have to work and cannot be the stay at home mum I
would like to be...My only child may very well just be an only child, this
saddens me and has caused many arguments in our house.
A couple described their grim situation, which:
...has robbed us of any plans we once had for the future and
will strip us bare of almost everything we have ever worked for. Now aged in
our late 50s, we live in fear of never being able to recover from this
Another couple indicated:
The last five years of uncertainty has had a devastating
effect on our lives. The damage on our marriage, our heath and overall state is
irreparable. We feel helpless in doing the most basic thing of providing for
our children. The ability to retire seems far gone as we face the very real
prospect of losing our home. It is hard to imagine our financial future, as it
stands; there is none.
Many were on the brink of selling, or had sold, their family home to
meet their loan obligations.
The father of three young boys, forced to relinquish his home at a loss,
We understand that investments don't always work out, but
this is an extreme outcome. We were trying to make our future financially
better and through no fault of our own our financial future is dire. We need a
commercial outcome that is fair and achievable and not a hopeless situation.
In his words, '[w]e cannot afford to pay back 85c in the dollar and feel
very strongly it is unfair to have to do that. We have done nothing wrong,
nothing illegal and yet we are made to feel that way by the aggressive tactics
of the liquidators'.
Many others found themselves in a similar situation. According to another grower:
I'm 42 years old with three dependent children and this was
going to be my long term investment for retirement.
Mr Peter Jack described the considerable strain that his family was
experiencing because of the failure of Timbercorp:
We have gone from having a secure future to now a future of
uncertainty with the very real and present danger of our livelihood being
destroyed and the forced sale of our family home.
A number of investors lost, or put at risk, their superannuation. One
such investor stated:
The only way I could pay this loan would be to [take] money
from my superannuation fund to repay which will further affect my finances for
the rest of my life.
Mr Peter Tomasetti stated simply 'Our superannuation savings were lost'.
A number of the growers invested in the schemes at a time of their lives
when recovering from a financial loss would be difficult if not impossible. One
grower aged 53 suggested that he was nearly unemployable and will have no
choice but to declare bankruptcy and 'go on the dole and possibly be forced
into government housing'.
Another told the committee that at his age he will never own a home again or
regain the same financial security he once had.
Yet another couple around the same age could only hint at their predicament:
At the age of 54, we are now on the brink of being
financially wiped out/bankrupted/back to square one in getting somewhere with a
roof over our heads, when we should be getting ready for the next enjoyable
phase of life.
One older couple stated:
We are retirees aged 71 and 68 who have lost our life
savings, superannuation and will now have to sell our home to repay loans to a
bank for investments in Great Southern MIS schemes which we should never have
A single older female informed the committee that, in April 2008, she
went to a financial adviser (based on a recommendation from a friend) to set herself
up for retirement. She explained that she wanted to 'be self-sustaining and not
reliant on the government pension'. Her biggest fear was being unable to take
care of and feed herself. She explained:
If I am forced to repay this money I will LOSE my home, I
will have nothing for my future. I think the emotional impact of this is
untenable, I hope I am more tenacious than this but there is a part of me that
would prefer to 'just give up' if this is to be the outcome.
One submitter summed up the desperation facing those who borrowed to
finance their investment in agribusiness MIS and who continue to see their debt
This situation requires rapid restitution to stop this type
of under-handed thievery once and for all. We bear witness to the accumulating,
depressive, detrimental effect of MIS collusion as we watch our lives slip by,
year after year, without a fair resolution. Why should a daily walk to the
letterbox cause our heart to pound with anxiety? Not to mention the sudden
panic that erupts at the sight of a courier van in our street...when all we can
do is close our eyes and pray that the driver continues on his way without
stopping to knock on our door to serve the writ that will ultimately seal our
fate. How much longer do we have to hold our breath in fear, and then exhale
feeling totally drained of the energy we need to face yet another day of this
The stories retold here do not adequately convey the deep pain and
suffering endured by many of the growers who invested in MIS. Some struggled to
put together their submission because re-living it was 'extremely confronting',
while others could not summons the energy and have remained silent.
In the following chapters, the committee examines the factors that
enticed people to invest in agribusiness MIS.
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