Blue Sky defends non-disclosure of apartment sale to boss Rob Shand; other top brass buy into Townsville project

THE boss of embattled fund manager Blue Sky quietly bought a $369,000 apartment from a Blue Sky entity, raising questions about corporate disclosures.

Blue Sky has defended disclosure of an apartment purchase by its managing director Rob Shand. Pic: Lyndon Mechielsen/The Australian

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THE managing director of embattled fund manager Blue Sky Alternative Investments quietly bought a $369,000 apartment from a Blue Sky entity, raising questions about corporate disclosures.

The purchase by Blue Sky managing director Robert Shand last financial year was not listed in the Brisbane-based fund-manager’s latest annual report.

Blue Sky defended the decision, saying it “has been at all times in full compliance with its disclosure obligations”. Sources close to the company justified not making a declaration by saying Blue Sky had no longer had a financial interest in the apartments.

But a corporate governance expert says stockmarket listed companies in general should err on the side of caution in disclosing any related-party declarations.

It marks the latest controversy surrounding Blue Sky’s accounts. Blue Sky has been targeted by short-seller Glaucus, which alleged the Brisbane company had been inflating assets and its disclosures of funds were unnecessarily secret.

Blue Sky has rejected the claims of Glaucus, which makes money from share prices falling.

The Brisbane fund manager oversees 80 funds, with stakes in assets from childcare to student accommodation.

One project was Townsville’s Riverway Point, a 70-apartment complex boasting a “resort style swimming pool”. It was completed in 2012, with the bulk of two and three-bedroom apartments selling between 2011 and 2013 for prices ranging from $250,000 and $389,000.

At least seven apartments were unsold. Property records state Mr Shand bought one of those, a three-bedroom apartment, in June 2017.

The seller was Blue Sky subsidiary Milky Way Development No 2, acting as a trustee for a trust. Sources close to Blue Sky said the associated trust fund was an older Blue Sky one, yet to be finished, but Blue Sky no longer earns fees nor has any interest in the fund.

This lack of “economic interest” meant Blue Sky felt no declaration was required under accounting standards, sources said.

Accounting standards state that related parties include key management personnel and examples of related party declarations can include “purchases or sales of property”.

Gavin Nicholson, of QUT’s School of Accountancy, said companies should err on the side of declaring related-party dealings.

“One of the rules of corporate governance is to retain the confidence of investors,” he said. Not declaring dealings could undermine that confidence, he said.

Sources close to Blue Sky said investors in the associated fund were told Blue Sky people were purchasing apartments. All sales were at prices either at or above market valuations, sources said.

Mr Shand’s purchase was one of four Riverway apartment sales that have occurred in 2017, according to property records. Each involved a top Blue Sky person and Blue Sky’s Milky Way.

Another Blue Sky executive, Edan Norris, the company’s co-head of private real estate, also acquired a three-bedroom apartment for $369,000 in June last year via his private company.

Then in December this year, Blue Sky chairman John Kain’s personal company Emerald Hill Holdings also bought two apartments — one three-bedroom unit also for $369,000 and a two-bedroom unit for $329,000.

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