Not a lot has gone right for investors in the 43 Agricultural Investment Schemes promoted by the Great Southern Plantations Group between 1998 and 2008.
This is a summary of the calamity:
- They invested in timber, beef cattle, wine grapes, almond and olive projects. Yes, their investment was tax driven - the money invested was tax deductible immediately. But it was also an investment - they expected to receive their money back and good profits on their investment over the 10 to 12 year term of the project.
- Many investors used borrowed money to fund their investment. They took out a loan from Great Southern Finance (another group company), which then on-sold their loan to the Bendigo and Adelaide Bank.
- It all came to an untimely end in 2009, when the Great Southern Group collapsed and the projects were wound up because they had run out of money to continue.
- 22,000 of the 52,000 investors joined in a class action against the liquidator and the Bank to be compensated for their failed investment and to be relieved of their loan obligations. The class action failed and a settlement was approved on 11 December 2014 in which the loan deeds were acknowledged as valid and enforceable.
- Now, the Bendigo and Adelaide Bank is pursuing the investors through the courts for repayment of their loans plus default interest (at 14.5% pa), even though the projects have failed and all money invested was lost. This is causing hardship and distress for many investors.
- The good news is that the Bendigo Bank can be beaten. In August last year, an organic olive grove investor successfully defended a loan recovery claim. The investor was pursued for a debt of $24,490 plus interest of $42,079.32. He decided to fight the claim, and succeeded because the Bank's documentation was deficient. The Court found that there was no evidence that the Bank had paid anything to purchase the loan from Great Southern Group, and many other deficiencies besides.
If you would like to read a full account of the decision, click on my case note: