Deniliquin and Murray Shire councils could recoup hundreds of thousands of dollars after a court ruling.November 9, 2012 4:43am
Deniliquin and Murray Shire councils could recoup hundreds of thousands of dollars of ratepayers’ money after two landmark rulings that could have world-wide ramifications.
Deniliquin Council lost hundreds of thousands when it invested almost $3 million in Rembrant and Lehman Brothers prior to the 2008 global financial crisis (GFC).
On Monday the Federal Court of Australia ruled that three organisations involved in the Rembrant investments must pay the councils back their losses, plus interest.
Those organisations were ratings agency Standard & Poor’s (S&P), investment bank ABN AMRO and Local Government Financial Services (LGFS).
Deniliquin Council lost $466,613 from one $500,000 Rembrant investment alone.
Murray Shire Council lost $933,225 through a $1 million Rembrant investment.
However, no one knows how much the councils may receive — or when they will see a cent.
The local councils have joined with other organisations in the past four years, pursuing lawsuits to try and recover the money.
Deniliquin and Murray were among 12 councils to purchase complex investments known as constant proportion debt obligations (CPDOs).
These investments were arranged by ABN AMRO, given a AAA rating by S&P and sold by LGFS.
In her judgment, Justice Jayne Jagot labelled the AAA rating as ‘‘misleading and deceptive’’, and said the CPDOs were ‘‘grotesquely complicated’’.
The organisations were ordered to each pay back one-third of the amount lost, plus interest.
The decision is likely to have global implications, especially in Europe and the US where similar products were sold to banks and pension funds.
Deniliquin Mayor Lindsay Renwick said the ruling was a ‘‘big win all around’’.
He said the councils had ‘‘invested wisely’’, but ‘‘unfortunately it went wrong’’.
‘‘Every dollar that we don’t lose is a dollar that we can spend on our town,’’ he said.
‘‘That’s very good news for us.’’
However, there is not a $466,613 cheque in the mail just yet. S&P said it intends to appeal the decision.
When asked how long that could take, Deniliquin Council manager finance Tony Tonta answered, ‘‘who knows?’’.
‘‘It could be another 12 months, 18 months, two years.’’
And when the money does arrive, there is no telling how much there will be.
The councils had a litigation funding arrangement with IMF Australia Ltd, which means IMF will take a portion of the cash.
‘‘We will be lucky if we get half of that $466,613 back,’’ Mr Tonta said.
Deniliquin Council also had a significant development in its court case against Lehman Brothers in September.
The council was part of a class action involving 72 councils, churches and charities who sued Lehman Brothers for around $250 million, claiming it breached contracts and engaged in misleading and negligent conduct.
Justice Steven Rares ruled that the parties are entitled to compensation, but the amount is yet to be finalised.
Deniliquin Council originally invested $2.45 million in Lehman Brothers, $450,000 of which is yet to mature.
It is uncertain how much of that will be recovered.
Deniliquin Council lost $372,000 of the $2 million that has either matured or cashed out.
Mr Tonta said they had actually done ‘‘fairly well, when compared to initial estimates of losses’’ from the ill-fated investment.
There is also no indication yet of when and how much of the lost money will be returned to Deniliquin Council.
Convicted murderer Steven James Bradley remains calm in face of guilty verdict in trial for murder of teenager Michelle Buckingham in 1983.
With her effective left hand in particular, Chelsea Hanley retained the Victorian Under 17 junior welterweight title last Sunday with a convincing points decision victory.
It has been a successful year for Bega Cheese, which reflects on Tatura Milk Industries, with chair Barry Irvin announcing recently that Bega Cheese’s normalised earnings before interest, tax, depreciation and amortisation was $55.7 million and normalised profit after tax of $22 million.
ECHUCA police are still investigating the cause of an accident which saw a car and train collide on Ogilvie Ave on Friday night.
TIMMERING Holstein breeders Scott and Nirrelle Somerville are thrilled with the announcement of their Holstein cow Somerelle Leader Lassco as the 2015 Australian Cow of the Year.
Great Race helps a great cause
Hundreds flock to Avenel to learn a thing or three.
Tocumwal Lions Club has plans to purchase the Bowling Club site for an aged care facility, which will only happen if the merger between the Tocumwal bowls and golf clubs proceeds.
A NASTY run-in with a kangaroo on the Northern Hwy between Melbourne and Echuca has convinced one regular traveller on the road the question of a cull needs to be addressed.
Three Cobram teens have been arrested by police after they allegedly stole tractors from Cobram and Tocumwal and caused about $30 000 in damage.
Deniliquin footballers Will Shaw and Cooper Wallace (pictured) have gone head-to-head with the state’s best at the recent AFL NSW/ACT Joss Under-14 State Zone Trials in Albury.
The Australian Dairy Industry Council (ADIC) has acknowledged the completion of negotiations under the Trans Pacific Partnership (TPP), noting modest but important gains made for the Australian dairy industry in improving access to global markets.
Benalla banded together to raise $2000 for the Abolishing Injustice in the 21st Century (A21).
The News magazines are online - read high quality magazines in your time. Check in regularly for the latest editions.
Riverine Herald's well regarded locally produced magazines. They're now online, so you can read them whenever and wherever you like.
Search for published and unpublished photos from McPherson Media Group newspapers and magazines. All our photos are available to purchase.
Place an advertisement in any one of McPherson Media Group's local newspapers.