How an NDIS housing provider blew millions of dollars

Recipients love NDIS, but it’s also become a honey pot for financial shenanigans.

Want to help disabled people in need? Want big returns on your investment? Want to watch your hard-earned cash disappear into international travel, Cambodian dairy farms, and director credit card bills worth more than $4.3m? Invest in an NDIS housing provider.

That seems to be the distressing message from the liquidator’s report into one such boondoggle that Margin Call has been following closely, Saorsa Health.

Readers may remember that Saorsa, run by Queensland businessman Aiden Garrison, ran into trouble last year when Garrison accidentally exposed his long list of aggrieved investors when sending out yet another email making excuses over the company’s failure to pay back punters who had loaned his companies money.

Garrison and business partner Will McKellar raised an estimated $45m from investors to develop nine properties for use by NDIS participants, telling each they could expect a 10 per cent interest on their cash, plus another 15 per cent when the houses were built and sold.

Garrison called in liquidators to the Saorsa group shortly after the mistake was exposed.

Well, BPS liquidator David Sampson has delivered his report to creditors and it tells a sorry tale.

William McKellar

Aiden Garrison

Added to the case of fellow housing hopeful ALAMMC Developments – where ASIC called in liquidators after discovering director David McWilliams appeared to have punted $39m of investor cash at Star casino’s – what Sampson’s report suggests is that the wild west of NDIS housing provision needs thorough investigation.

Saorsa investors were promised the chance to do some good in the world, as well as earn extraordinary returns, always a warning sign. What happened to their money? Sampson’s investigations are not yet complete, but the tally so far is extraordinary.

Rather than all of the cash stumped up by investors going to build properties, even a quick look through Sampson’s report throws up a litany of dubious transactions. Some $2.4m went out the door in loans to companies that appear to be associated with a dairy farm in Cambodia, where Garrison claimed to be trying to establish a separate health business. Another $1.9m was lent to an offshore solar business, and another $531,000 to McKellar. It’s not clear whether any of these loans was repaid.

Garrison himself allegedly ran some $4.3m worth of bills through the company AMEX over 30 months “some of which do not appear to have been business-related expenses and have been used for personal expenses”, according to the report.

Saorsa directors and employees also allegedly racked up close to $900,000 worth of travel expenses, including overseas trips – a tough thing to justify given all of the company’s properties were in Queensland. Sampson also notes that another $15,000 worth of payments were allegedly made for a boat that the company didn’t own.

All told, Sampson has already identified almost $1.8m in allegedly “unreasonable director-related transactions”.

Now, to be clear, Sampson’s report is just a report. And Garrison and McKellar may have perfectly reasonable explanations for all of the above. But they’ll have to make them to the corporate regulator, which Margin Call hears is taking a close interest in the matter.

But ASIC may also need to take a closer look at the financial infrastructure surrounding Saorsa and the rest of the investment industry. One of the key findings in Sampson’s report is that Garrison and McKellar likely breached the Corporations Act when raising money for Saorsa, by neglecting to tell investors exactly how much of a clip their brokers, Mountain Assets. were taking on the money coming in through the door. That’s close to 15 per cent, Margin Call hears.

In the meantime, the 200 or so investors in Saorsa properties are left hanging without much hope of any return. Their only hope is that Sampson uncovers enough in the Saorsa accounts to justify a lawsuit against the company’s directors, or any insurance company conveniently associated with the debacle.