Former director grilled over resignation fee as hearing into BBY collapse continues

BBY director David Perkins has been grilled over a resignation fee ahead of Ken Rosewall’s appearance this afternoon.

Former BBY director David Perkins (left) has told a liquidators hearing into the broker’s 2015 collapse about a $100,000 payment he received after agreeing to resign from Firestone Energy’s board.

BBY director David Perkins demanded a $100,000 fee to resign from the board of one of the broker’s troubled investments, Firestone Energy, after shareholders pushed for his removal, a court has heard.

Mr Perkins said it was “ethical’’ to demand the payment, which was equivalent to two years of directors fees for Firestone, a South African coal prospector, after its largest shareholder Waterberg Coal threatened to remove him.

“My own assessment was that they would be successful in having me removed,’’ Mr Perkins, who was a non-executive director and legal counsel for BBY from 2006, told a liquidators hearing into the broker’s 2015 collapse.

“I said I would resign but I demanded compensation. They paid me two years of directors fees, around about $100,000.’’

The NSW Supreme Court heard that he received a threatening letter from Waterberg Coal’s solicitors Gilbert + Tobin, threatening to call a shareholder meeting to have him removed and then chase him for the cost of calling the meeting.

Counsel for BBY liquidators KPMG, David Pritchard, asked if it was ethical to demand that shareholders pay him the equivalent cost of calling a meeting to remove him.

“Yes, I felt that I had worked very hard for Firestone, I had given a lot of time and I was moved on against my will, so, I would like compensation for my effort’’

Mr Pritchard countered by saying: “It wasn’t compensation, I won’t say blackmail — it was a concept of pay me the money it would cost you to get me off.”

Mr Perkins replied “It wasn’t.”

BBY was left holding the bulk of $25 million of convertible notes in Firestone after a disastrous underwriting in 2009 and liquidator Stephen Vaughan of KPMG has alleged the firm’s capital base never recovered from the investment.

But the Supreme Court of NSW heard yesterday that BBY had not received interest on the notes, took shares in the company in lieu of interest and was pumping tens of thousands of a dollars a month into Firestone in a bid to keep it afloat while it tried to develop its South African coal mine.

The court also heard that BBY controlling shareholder and executive chairman Glenn Rosewall and his father Ken — the tennis legend who was also a director of BBY — had loaned millions of dollars to the company without Perkin’s knowledge.

Mr Perkins said the first he learned of a 2013 loan of $2m from Ken Rosewall was a note in the accounts showing a related party payment of $300,000 in interest. The money was loaned at an interest rate of 15 per cent.

Mr Pritchard also raised a $2.5m loan from Ken and Glenn Rosewall in 2014, asking if this was the first time Mr Perkins had heard of it.

“Yes,’’ Mr Perkins said.

The hearing continues this afternoon with Ken Rosewall expected to give evidence.