Twas four days before Christmas 1989, but there was no festive spirit in that small, neon-lit office 12 floors above Melbourne’s heaving holiday throngs. A block away, noels carolled from the public address systems of a dozen tinsel-decked depart-ment stores, and bearded bolster-bellied Santas accosted small children in Bourke Street mall. But in the boardroom of the Credit Co-operatives Reserve Board, you could have heard a snowflake fall.
Around the oval, ash-veneered table sat nine men and one woman, the directors and chief executive of this government regulator which, although little-known to the public, is responsible by law for the safety of the savings of more than a mil-lion Victorians, and the financial security of the$2 billion in assets controlled by the State’s “people’s banks” – the credit unions.
Nervously waiting for proceedings to begin was a delegation of directors and executives from the Moe and District Credit Union Co-operative, one of the 100-odd credit unions under the Reserve Board’s control. They had been hastily summonsed from their small town in the Gippsland dales, some 134 kilometres to the east. Their “bank” was in trouble, that much they had guessed. Just how much trouble they were about to find out.
The chairman of the Reserve Board, Gerald O’Byrne, a veteran of the credit union movement then aged 75, got straight to the point. Adjusting his glasses and referring to a typewritten brief in front of him, he informed the Moe delegation that a snap audit of their books had uncovered the most extraordinary breaches of the credit union rules: $10 mil-lion, a fifth of all its assets, had been lent to a $2 company controlled by an unknown Sydney entrepreneur; contracts had been signed with people who in all likelihood did not exist; and apparently bogus valuations had been accepted as security. What, demanded the chairman, was the meaning of all this?
For the next hour and a half, O’Byrne and his directors listened with a rising sense of dismay and incredulity as the men from Moe attempted to justify their decisions. There was nothing to worry about, they said, the loan was fully secur-ed against bricks and broad-acre assets. The borrowers were people of good repute – even though no-one had ever actually met them all, the Reserve could be assured they did exist. As for the repayments, con-tracts had been signed for the import of urea and tomato paste from Russia, the construction of a resort hotel in the Crimea, a champagne vineyard in Moldova…
Head reeling, the Reserve’s chief executive would comment later: “Rather than persuading the Reserve Board, (the statements about Russian contracts)increased its concerns.” The delegation from Moe was asked to leave the board-room, and the Reserve rapidly resolved to sack them and place the co-op under “statutory direction” pending a complete investigation by outside accountants.
Within a month, the unthinkable was to happen. For the first time in the 40-year history of credit unions in Victoria, one of them was to be effectively declared bank-rupt. The signs were taken down on the “bank” that had served the miners of Moe and their families for a generation. With a $10 million bail-out, which almost sent the Reserve Board itself broke, the husk of the credit union was palmed off on one of its rivals in the brown-coal towns of Gippsland, the State Electricity Commission (SEC) Credit Union. Two years later, the architect of the scam was to be imprisoned for fraud.
That Christmas, the entire Victorian credit union movement came close to the brink, as the enormity of the financial disaster at Moe became clearer … and yet hardly a line appeared in the Melbourne media, not a question was asked in Parliament. It appears to be one of the few successful cover-ups of the scandal-wracked Cain Government, which tried in vain to lie about the losses of the Victorian Eco-nomic Development Corporation (VEDC) and to quietly sell off the Tricontinental merchant bank before news of its $2 billion losses could get about.
Successful until now, that is.
Moe, declare the locals, is one of those towns that you either love or you hate. Sadly, even that cliche is not true. Most people simply ignore it – it’s just a name on a signpost beside the Princes Highway that flashes past as holiday-makers head for the greener pastures and cleaner beaches of East Gippsland.
If you do detour for a coffee, you will find a pleasant town of 19,300 people, grit-tily trying to cope with the worst recession anyone can remember. Living in neat Depart-ment of Housing estates of brick and timber cottages, most of the families here depend on the vast deposits of brown coal (a sort of compromise between coal and peat) for their livelihood. The coal fuels the thermal power stations that provide electricity for most of Victoria. And the power industry has been laying off people by the thousand; hardly a week goes by without another bunch of workers receiving their VDPs – Voluntary Departure Packages – as they are called in the valley.
In this blue-collar community, the Moe credit union played a unique role. Founded in 1969 by a merger between two local Catholic charities, as many credit unions were, it was not just a savings bank and the place to get a quick loan for a second-hand Falcon. Tales of its generosity abound.
“Before we came along,” says Laurie Watt, general manager of the Moe credit union for 20 of its 21 years, “the SEC used to employ several people full-time just to garnishee the men’s wages. We helped them manage, set aside money for the rates and so on, so that they did not finish up in court.”
“People were loyal to the credit union, because it had a social accountability. It was there to help the local people and the local economy,”says Bob Pugsley, who was the town clerk of Moe for more than 20 years and is the town’s historian.
The seven directors of the co-op served more for the prestige of the position than the money. On the fourth Monday of each month they met in the concrete and mirror-glass building on the corner of Moe’s main street where, after the reading of the credit union prayer (“Lord, make me an instru-ment of your peace…”), they were re-quired to personally approve every loan of more than $20,000. For their atten-dance they received just $2,000 a year. And, although the co-op’s rules provided for annual elections, the board had become a self-perpetuating clique; two of the seven had, like the general manager, been there 20 years, the others an average of 10.
As well, their qualifications inspired little confidence that they would be able to cope with the sort of high-flying fi-nancial adventure on which they were to embark. The board members included a jeans shop proprietor, the man who ran the local coffee lounge, an industrial rel-ations officer, a payroll clerk, and a re-tired draftsman. The chairman of the board, and very much its driving force, was Gavin Smith, a former local foot-ball hero and racing identity, who is a partner in the Moe law firm O’Halloran Davis. We shall hear more of him later.
For most of its life, the Moe credit union concerned itself with the bread-and-butter financial concerns of its 14,000 depositors. It lent for housing, for cars and bikes and boats and caravans. It bailed people out if they got behind with their rent. The one thing it was not allowed to do, under the Co-operation Act of 1981, was lend to a company … and for a very good reason. As Jack Pattison, chief executive of the Reserve Board, was later to put it: “The funding of com-mercial ventures is strongly discouraged by the Reserve Board. Generally, a credit union does not have the highly specialised staffing skills required to take on commercial lending. I believed,” he added with the bitter wisdom of hindsight, “that this was the case at the Moe credit union.”
Under its rules, the Moe credit union was also pledged to certain other safe-guards. It was allowed to lend only to people who lived or worked in the district (Rule 6 (1) (A) (ii)), and it was not permitted to lend more than 1 per cent of its capital to any one borrower (Rule 5). It was also supposed(Rule 29) to “encour-age habits of thrift among its members”. Unfortunately, that last rule was not to apply to the directors of the credit union, who were about to squander $10 million of their members’ savings on a series of bizarre”investments” they were never supposed to make.
By the late 1980s, the Moe credit union had breached most of the rules outlined above. The beneficiary of their largess was no longer the battlers with the bailiffs at their door, but an engineering firm called Minax Pty Ltd, run by two local identities – Stephen McKendry, an engineer, and George Korolew, whom local people describe as an entrepreneur. “I’d love to help you, mate,” said Korolew on his car phone the other day, 10 minutes after having agreed to an interview, “but there is still legal action pending, and my lawyer … well … you know, mate …”
By January of 1988 Korolew and McKendry had managed to borrow around $3.5 million from the Moe credit union for their business – it is hardly necessary to point out that this was in contravention of the spirit of the act (it was for a commercial venture) and of the credit union’s own rules (since its total capital was only $50 million, no more than $500,000 should have been lent to any one borrower). And the Korolew/McKendry business, which involved making equip-ment to refurbish gold mines among other such speculative ventures, was going bad.
This did not come to light until a junior employee of the credit union stumbled on the fact that the loans had been masked as the personal borrowings of McKendry and Korolew and their wives, and of two of their employees. The whistle was blown. Lawyers and accountants from Melbourne were called in, and the credit union was advised that the money was dead – nothing could be done to save Minax from obliteration.
In June that year, Minax went into liquidation. After all the security was sold, the credit union was left with a net loss of $1.5 million. A huge hit by the standards of a small-town thrift, but hardly one that would shake the foundations of the credit co-operative movement, nor cause swift sprints to the loo in the government offices at No 1 Treasury Place, Melbourne.
If the credit union chiefs Watt and Smith had acknowledged the loss then, resigned and called for a reconstruction of their little bank, the directors of the Moe credit union would still be walking around town with their heads held high. Instead, they decided to tough it out. And things inexorably got worse. Much, much worse.
Tall, burly, dark of hair and eye and Stalin moustache, dressed in the best of tailored pinstripes, flash watch, polka-dot tie, he looks the part of the successful international banker, even in his police mug-shot. But then, they all do, don’t they? They wouldn’t be suc-cessful crooks and con-men if they didn’t.
Gregory Hall, to quote Detective-Ser-geant Glenn Turnley of the Fraud Squad, one of the policemen who eventually locked him up, was in reality “a career loser. Nothing spectacular. No criminal record. Just one of those guys who always wanted to be someone, but everything he touched turned to shit.”Even Hall’s own sister Carol has hardly a kind word to say about him: “He’s been doing this sort of thing for 15 years,” she says. “You’d really have a story if you had a file on all the people he’s conned, all the money he’s taken. He has illusions of grandeur, that’s the only explanation I can think of.”
The history of Greg Hall is a depressing series of sordid little business ventures which floated high on the hot air of Hall’s enthusiasm for a while, before inevitably crashing to earth with the loss of large amounts of other people’s money. At the age of 37, married with a couple of young children, Greg Hall has had more business incarnations than most people have had hot breakfasts. There was a Tasmanian crayfish exporting business in the early 1980s which devoured $100,000 of his father-in-law’s money before it collapsed. There was a service station at Collaroy, Sydney, that was going to be converted into shops, which relieved AGC Ltd of a large chunk of money. There was a Sydney restaurant called the Don Diego which went broke. There was a caravan park at Kempsey. Fishing rights in Fiji. Plans to buy a Catholic college in Goulburn and turn it into a retirement home. He dabbled in property develop-ment (other people’s property, of course) and in international finance(when he exhausted the gullibility of Australian lenders). There was no limit to Greg Hall’s versatility, nor to his voracious appetite for other people’s money.
One man who knows his business rec-ord well is the colourful Melbourne solicitor, financier and honorary consul for the West African republic of Liberia, Ron Silverstein. Silverstein had lent Hall money for several of his ventures, and was probably the only person to make money out of him, by adopting the cast-iron rule of prudent lending – always take a first mortgage, always get a sworn valuation. “This was especially necessary with Greg,” he chuckles, “because he had this highly original method of accounting – any money he could borrow, that went down as profit. The idea that it might have to be repaid one day never crossed his mind.”
By July 1986, Hall had exhausted the patience of his hordes of creditors and was declared bankrupt. This made not the slightest difference to his ignominious business career, except that he became careful about listing himself as a director of the dozens of companies he used for his various ventures. He now preferred to use his de facto wife, Christine Hill, or a partner, to front for him – although, she says, it was Hall who called the shots.
By 1989 Hall had linked himself with a small concern operating out of a back-street office in Cremorne, Sydney, known as Hansen Marketing – the partners in the business were brothers David and Ste-phen Hansen, and Victor Gluszko. The Hansens were planning just the sort of ven-ture Hall enjoyed – a country club resort near Berrima, NSW, complete with golf course, hotel, housing etc. Even better, they actually owned 240 hectares of land on which to put it. He couldn’t believe his luck.
Says a bruised and embittered David Hansen: “He latched on to us because we had some good property. He dressed well, he looked the part, you know, Mr Nice Guy. He was always running around saying, ‘I’ve just closed this terrific deal.’ We had no idea about his past, no idea it was all bullshit. If I had(known he was bankrupt) do you think we would have had anything to do with him?”
By September of that year, Hall – styling himself the “financial consultant” to the Hansen group – had undertaken to refinance the Berrima development, and other properties owned by the Hansens at a lower interest rate. Knowing that, as a bankrupt with a calamitous commercial track record, he had no hope of persuading even the most naive Australian lender to trust him with any more money, Hall per-suaded the Hansens to sponsor him on a month-long trip to Japan, where he promised he could raise a loan.
Not much is known about Hall’s trip, except that he wasn’t able to con the canny Japanese bankers out of one red yen. That is if he actually ever met any. Various mysterious figures drift in and out of the optimistic messages he kept sending back to the Hansens. There was money in Hong Kong, a meeting with a New Zealand billionaire, a $US150 million deal with the Royal Bank of Canada.
But then, towards the end of his stay, Hall bumped into a fellow Australian entrepreneur at the hotel where he was staying, a man by the name of Bill Cum-ming. And, surprise, surprise, this entre-preneur was also looking for money. “Can I do a deal for you!” exclaimed Hall, or words to that effect. Hands were shaken, bits of paper were signed, and the ludicrous charade that was eventually to destroy the people of Moe’s little bank was under way.
William Graham Cumming would never have come into this story, Greg Hall would never have heard of Moe and the credit union would still be trading, if the directors and executives of the credit union had been prepared to face up to their $1.5 million loss on the Korolew/ McKendry engineering business. Instead, over the 18 months following its collapse, they grasped at increasingly hare-brained ideas to somehow recover the money.
First of all, they pumped another $900,000 into the business as working capital to manufacture a hydraulic lifting arm, to which Cumming held the patent rights. Then, when this venture went bad, another $500,000 of the savings of the citizens of Moe was advanced to buy into a business called Cossack Hall Pty Ltd, which claimed to have commodity con-tracts with Russia involving urea, tomato paste and wooden pallets. There was also talk of resort hotels in the Crimea and a champagne plant in Moldova.
None of these ventures came to any-thing, and the defaulting loans continued to grow: $2.2 million by the end of 1988 … $3 million by the middle of the following year … $3.5 million by September. Today, all that is left of the money is a vast edifice on the outskirts of Moe, a tin shed the size of an aircraft hangar, now deserted and rattling in the wind, which stands as a permanent reproach to the men who thought they could save the credit union by spending more and more of its money.By
now, the Reserve Board in Mel-bourne had been informed of the disaster -Jack Pattison had known about the Korolew/McKendry loans as early as June 1988, and correspondence leaked from the Reserve shows that he had drawn the irregularities to the attention of the regis-trar of credit unions, Corporate Affairs Commissioner David Lafranchi, at least as early as April 1989. But no-one stepped in to stop the final play that was to destroy the credit union.
With time running out, Cumming – who had become a partner in the engineering business – was sent to Japan to raise money to bail out the credit union. Just how he expected to do this is not clear, since he concedes that he had never been involved in international financial negotiations, knew no-one in Japan and did not speak the language. However, after stringing the credit union along for an extraordinary 16 weeks with assurances of mega-million-dollar loans, Cumming finally came up with his trump card – Greg Hall.
By the time Hall got back to Australia in mid-October, it was a minute to midnight. Belatedly, an audit by the Reserve had been scheduled for late November, and that inspection was bound to reveal that the Moe board had broken every rule in the book and squandered $3.5 million of its members’money. But how were Watt, Smith and the other directors to take advantage of what they imagined to be Hall’s financial acumen? (No, no-one ever thought to do anything as elementary as check the credit rating or bankruptcy status of the man Cumming met in a Tokyo pub.)
The first major problem the directors faced was that the maximum loan they were allowed to make was only 1 per cent of their total assets, a bit over$500,000. The second was that Hall neither lived nor worked in the Moe area -in fact, he had never heard of Moe until Bill Cum-ming told him about it.
A series of telephone messages and faxes was exchanged between Moe and Sydn ey, and a clever scheme was devised. Hall was to apply for a loan of $10.8 million. To get around the residential qualifications, and the loan limit rule, a company, Tunadis Pty Ltd, would be formed which would contract with 20 different people that at some time in the future they would work as consult-ants in Moe. Each of the 20 “res-idents” would then apply for a loan of $543,000, precisely the maximum allowed.
Advice was obtained from O’Halloran Davis (the law firm of the co-op chairman Gavin Smith) that this patently artificial scheme was nevertheless legal. On October 25, Hall flew to Moe and met Smith and Watt for the first time.
It was agreed that the credit union would lend Hall the $10.8 million but only if he gave back $3.5 million to pay out the Korolew/ McKendry/ Cumming loans. The rest would be used by Hall to pay off various mortgages, and to invest in deals with the Soviet Union. It was that simple – the credit union would pay off its debts by borrowing its own money.
With $7 million almost within his grasp, more money that he had ever dreamed of in his previous scams, Greg Hall had one major problem. Where could he find 20 credible people to sign loan application forms, and where could he lay his hands on some half-way respectable property to put up as security?Furthermore, how could he do all this within a single week?
You don’t have to be an expert to recognise the handwriting on the applica-tion forms. It is the same crabbed script Greg Hall used in his faxed pitch to the credit union. But who are all these people he signed up to take out $543,000 loans?
Gluszko and the Hansens, we have met – they owned the land near Berrima that Hall was trying to refinance. Christine Hill is Hall’s wife. But who are Allison Hall, George Vincent Hall, George Herbert Hawkes and all the others?
These are questions that were also of great interest to the police and the re-ceivers when they were eventually called in to sort out the tangled web of deceit and double-dealing. What they discovered reflected little credit on the managers and directors of the credit union, and none at all on Greg Hall.
Allison Hall is in fact Greg Hall’s mother. She had been dead for 10 years at the time she applied for the $543,000 loan. George Hall is Greg’s 85-year-old father, a veteran of Tobruk who lives in an RSL retirement village. He not only denies hav-ing signed the application, but says, “I’ve never borrowed a shilling in my life.” Hall’s 73-year-old father-in-law Leonard Hill is not on that list, but he has now been threatened with eviction from the house in Balgowlah, Sydney, he built with his own hands in 1950, over another loan he guaranteed for Hall. George Hawkes is an 80-year-old invalid residing in a nursing home. There are shop assistants and secretaries on the list earning $400 a week committing themselves to monthly repayments of$8,850. No-one down in Moe made the most elementary attempt to check the bona fides of the applicants for the largest loan any credit union has ever made, 60 per cent of the total amount Moe usually lent in a whole year. If they had, they would have discovered that of the 20 names, 14 either do not exist or know nothing about the loan and say their signatures were forged.
As for the security, Hall simply forged valuations for the land at Berrima and other blocks and buildings in Queensland and NSW which were pledged. A farm near Brisbane touted as “future rural living” and valued at $6.6 million, was found by a valuer to be “a neglected and overgrown former dairy farm”worth no more than $1.3 million. The Berrima land, promoted as a “proved development site” worth $4.1 million, had no development approval and was valued at $850,000. A $1.1 million house in Neutral Bay, Syd-ney, turned out to be “fairly neglected” and worth less than half this.
The Moe credit co-op thought it was getting first mortgages on land worth$14 million to cover the loans. In fact, the re-ceivers will be lucky to recover $3 million. The rest of the money has simply van-ished … repaid to banks and other lenders (including Ron Silverstein who, to his surprise, discovered $500,000 in his bank balance one day).
So desperate was the co-op to get the Korolew/McKendry/Cumming bad debts off its books before the Reserve’s inspec-tion that the loans were rushed through even before the board could give its formal approval. Watt’s deputy, John Sheriff, flew to Sydney on November 1, 1989, and collected the paperwork from Hall, which turned out to be bogus.
Sheriff arrived back at Moe mid-morning on November 3, and the $10.8 million was paid out that afternoon. It was such an enormous loan it drained the co-op’s entire reserves and it had to borrow $4 million from the Victorian Credit Co-operative Ltd, the “Reserve Bank” of the credit union movement in Victoria.
The illusion that the Moe credit union had solved all its problems with one more imaginative masterstroke lasted for just one month. The board even met and passed a special resolution congratulating Watt and Sheriff on the”outstanding conclu-sion” to its bad debt nightmare. And then in December, the Reserve Board’s aud-itors made a belated appearance in Moe and discovered what had happened.
On December 18, the Reserve’s Jack Pattison telephoned Watt. “I outlined my shock and concern. I told him that the Moe management had vested the future of the credit union in the hands of an unknown Mr Greg Hall,” says Pattison. According to Watt, he also added, “As far as our friendship is concerned, this is the parting of the ways.” (The two had known each other for years, and Watt sat on the Reserve Board in 1986, 1987 and 1989.) Pattison formally notified the other members of the Reserve Board including the registrar, David Lafranchi.
A week later, after that doom-laden Christmas meeting in the Reserve’s boardroom above Little Collins Street, the accountants Ferrier Hodgson were sent in. They reported that there was an “almost complete lack of documentation” of the loans, and it looked as though at least $10 million had disappeared. They told the Reserve there was no way the credit union could survive, and a frantic scramble began to try to save the $50 mil-lion of depositors’ money that was at risk … and to keep the news from the public.
Behind the scenes, belatedly, the Victorian Government had been told what was going on. “There was complete and utter panic,” says a government source. “We had already been through the VEDC and the Tricontinental debacles, now this. The last thing we wanted was a run on the credit unions.” But the one thing they couldn’t do was keep the news from the 14,000 people of Moe whose”bank” was about to disappear.
The Latrobe Valley Express, an enterprising local newspaper, first got wind of the trouble in January and, in spite of a grinning “no comment” by then Attorney-General Andrew McCutcheon (also min-ister in charge of credit unions at the time), managed to get enough into print to put the wind up the Government even more.
On a hoar-frosted night in June 1990, the full extent of the disaster could no longer be kept under wraps: 650 angry people packed the Gala Reception Centre in Moe to be told by Jack Pattison that their credit union “has no reserves, no base, it’s got a big hole”. Tony Hodgson, the accountant, put it even more bluntly: “Your money is safe, but your credit union is gone.”
“We were absolutely devastated,” says former town clerk Bob Pugsley. “No-one was given any idea exactly what had gone on … in fact, we still don’t know. All we did know was that this credit union which had been part of our community for 20 years was being taken away.”
But it took until the following August for the Government to get the deal done. Moe was dead, but the credit union move-ment’s emergency fund was not big enough to bail it out and no other credit union was willing to take over this black hole of fraud, incompetence and debt. Eventually, the Reserve levied $3 million from the other credit unions and gave this, plus another $7 million, to the SEC Credit Union to persuade it to take over the lia-bilities. But even this now looks like a raw deal. According to Pattison, swallow-ing the Moe credit union will cost the SEC’s members at least another $2 million.
This is one of those stories where there are no winners. There is a villain, there are victims, there are dupes, there are fools. In the cast of characters of this cautionary tale of ’80s’ corporate greed, who’s who, and what has become of them?
GREG HALL is in Pentridge, serving three-and-a-half years with a mini-mum of two, after pleading guilty to fraud charges. A compensation order for $3.5 million has been made against him, but since Hall has no assets that anyone can discover, and no prospects, the best that can be hoped is that he will again be declared bankrupt; so, most likely, will his wife Christine Hill, who has been ordered to repay the $543,000 she “borrowed” but never saw.
Friends (yes, he still has one or two) hoot with laughter when they say Hall has been classified as a “trusty” and given work in the records section of the prison. He has been complaining that because of the Government’s funding cuts, he is forced to spend the $35 a week he earns on food in the prison canteen to avoid starving to death.
However, his spirits are still high and it would not be unexpected if an advertise-ment appeared in the real estate columns some time soon to the effect: “Finance required. Gilt-edged investment. Historic bluestone building in Coburg, suit con-version to hotel, resort, nursing home etc.”
Oh yes, it’s easy to have a laugh at Greg Hall’s expense. But would he have succeeded in the scam if the bona fides of the borrowers had been checked? Or if there had been a proper investigation of the assets backing the loan? Or if the credit union had stuck to its rules?
LAURIE WATT sits in his office in Moe pulling on the umpteenth Horizon from a pack of 30. The air is blue with smoke, and his eyes appear to be brim-ming with tears. At least he still has a job, manager of the local branch of FAI insurance, just around the corner from his old office, the concrete and mirror-glass blockhouse of the Moe (now SEC) credit union. Watt still cannot understand why anyone would hold him responsible for the debacle. “I believe that my board and myself have been deceived into approving loans based on falsities,” he says.
This, of course, does not explain why the credit union kept pouring millions into the Korolew/McKendry enterprise for nearly two years after it began defaulting, nor can Watt explain why his proposed “final solution”involved breaching the credit union rules and legislation. Nor can he account for the speed with which the loan was rushed through, and the fact that no-one made the most elementary checks on the phantom “borrowers.”
Laurie Watt would not be surprised if he, too, was asked to account for himself in a civil court.
GAVIN SMITH and the other for-mer directors of the former credit union have, understand-ably, been keeping a low profile around the town. Smith de-clined to talk to the police, and he de-clined to talk to Good Weekend, beyond saying that he did not think it would be appropriate to infer that he had any responsibility at all for the disaster. No action has as yet been taken against the directors, in spite of the fact that the statement of affairs of the credit union lists under assets “legal action against directors(and) advising solicitors”.
GEORGE KOROLEW and STEPHEN McKENDRY have been sued for some tens of thousands of dollars arising from the debts of their business to the credit union. They, in turn, have taken legal action and it will be up to the courts to decide what part, if any, they played.
JACK PATTISON is indignantly pro-testing that he did everything he could -although on certain key matters, such as precisely when he told his board there was big trouble in Moe and when he first told David Lafranchi there were breaches of the credit union rules and legislation, he is a little vague.
“With the best intentions in the world, no supervisory authority can cope with a fraud on that scale,” he says, side-stepping the fact that he knew for at least 18 months that there was trouble at Moe but failed to step in, and that what he ac-knowledges as serious breaches of the credit union law remain unprosecuted to this day.
The HANSENS say the affair has already cost them their houses and they may also lose the Berrima land. “Every-one’s saying I’m a bum,” says David. “We have done zip, except we are the suckers in the middle who put up our property.”
LEN HILL, Hall’s father-in-law, has received notice to quit his house which was put up as secu-rity for another loan: “Greg rang me up from jail in March and told me what he’d done … I said, ‘You rotten bugger. What are you doing, Greg? Come out of your dream world.’ ”
As for THE PEOPLE OF MOE, Jack Pattison says they are better off with “3 per cent cheaper loans, and the security of a well-run credit union like the SEC”. But many people in Moe disagree. Since the take-over, branches have closed, people have been laid off and the whole business (according to Bob Pugsley, who recently took his account away) has become more impersonal.
To Jack Pattison away in his board-room in Melbourne, it might be just another credit union. To Greg Hall, it was just another sting. But to Moe, it was the community bank, and they want their revenge on the men who destroyed it.