Four Corners: Mon 4

Monday’s Four Corners features “A Betrayal of Trust” as reporter Stephen Long looks at the sometimes shadowy world of managed investment companies.

With Australia’s population ageing, governments have made it very clear: you had better save and plan for your own retirement. The question is, how can you be sure the money you have to invest is in safe hands?

The country’s banks might be amongst the best-regulated in the world, but outside the banks it’s a very different story. In the past five years it’s estimated up to fifteen billion dollars worth of investments have been lost in dubious investment schemes.

This week, Four Corners reporter Stephen Long heads into the sometimes shadowy world of managed investment companies, following the money trail and trying to find out how billions of dollars have been lost. The story he uncovers involves murder, suicide and the mass destruction of wealth. It will chill anyone looking to invest their retirement savings.

In one case, Four Corners found a company that accepted investment funds, promising competitive returns, in a business that seemed like a winner. What the investors didn’t know was that the company’s founder was removing millions of dollars from the company in fees that he paid to himself. To many of the investors this looked like fraud, but to their dismay no criminal charges have been pursued. The company went into liquidation leaving them with nothing.

Under the law as it currently stands, the corporate regulators are not empowered to demand that mortgage funds and trusts have enough money to back their lending. They can’t stop them lending money to their owners or related companies, and they cannot stop the conflicts of interest that riddle the sector.

Investors are protected only by the requirement that companies taking their money disclose the potential risks involved, somewhere in the fine-print. In other words, as long as they disclose, almost anything goes.

Monday 4th March at 8.30pm on ABC1.