Will MFS investors ever see a cent of $650 million compensation ordered?
FAILED Gold Coast businessman Michael King has been ordered to pay more than $177 million of $650m compensation ordered for investors. But will they ever see a cent?
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FAILED Gold Coast businessman Michael King has been ordered to pay more than $177 million in compensation to investors but it is unlikely they will ever see a cent.
The ruling was handed down in the Queensland Supreme Court yesterday and follows the collapse of Mr King’s $2.5 billion MFS investment empire in 2008.
Mr King and four of his former executives were penalised for a collective 217 contraventions of the Corporations Act and ordered to pay total compensation of $615 million.
The breaches were committed in relation to their misappropriation of $147.5 million that had been held by the managed investment scheme known as the Premium Income Fund (PIF) on behalf of unitholders.
The misappropriated funds were used to pay debts owed by other related entities in MFS Group, subsequently known as Octaviar.
The listed company grew rapidly into a corporate giant with interests in financial services, travel and leisure and childcare before its collapse.
Corporate watchdog Australian Securities and Investments Commission launched proceedings against the former MFS officeholders and a funds manager in 2009.
The court last year found the officers acted dishonestly in carrying out their duties.
Yesterday Justice James Douglas said “the insouciant attitude of the defendants to this misuse of money intended to be used for PIF’s investors beggars belief”.
But none of the executives will face jail time because ASIC ran a civil, rather than a criminal case.
In court it was revealed the 52-year-old Mr King had:
* “Lost everything he had financially”;
* Is “unlikely” to practice again as a solicitor;
* Continued to act as a company director after the completion of his personal insolvency agreement in “some small mining exploration companies”.
* Had “not displayed any contrition or remorse”, according to the Australian Securities and Investments Commission.
A business insider believes Mr King, who remains on the Gold Coast, has retained no major assets despite obtaining some consultancy jobs in recent years.
“He was living out the back of Elysium Fields. He lost that through the bankruptcy proceedings and they gave him a small block of land. He lived there in a corner in a house.”
In 2009 Mr King signed a three-year personal insolvency deal with his creditors and maintained he was living in a “shed” on his Elysian Fields polo estate.
Three years later he was still selling blocks of land from the estate.
The biggest deal he negotiated was a $4.5 million sale to Nathan Tinkler when the coal baron acquired 32ha of Elysian Fields.
His plan was to reap at least $8 million from the sale of the rest of Elysian Fields.
As he worked through his part 10 arrangement — an alternative to bankruptcy — the Coast’s former higher flyer continued to earn income as a “consultant for various businesses throughout Australia”.
Business circles speculated about a comeback as Mr King joined Tony Fung’s Aquis Group as a project manager on a proposed $8 billion Aquis mega-resort near Cairns.
Aquis’ Justin Fung at the time welcomed the appointment, saying: “Michael is a project manager who has helped us gain access to networks in Australia
“We’ve found him to be extremely effective and a good character.”
It is understood he no longer works for the Aquis Group.
Business searches show no property is owned under Mr King’s name in Queensland.
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