THE Australian Securities and Investments Commission has moved against the fuel technology company Firepower in a widespread action that threatens to draw in companies associated with a prominent property developer, one of Australia's top lawyers and a former West Australian police minister.
ASIC filed a civil action in the Federal Court late yesterday against Firepower's founder, Tim Johnston, a number of companies and another individual for allegedly selling shares in his controversial fuel-pill enterprise.
They include companies associated with Johnston and with the property developer Warren Anderson, the barrister Les Stein, and the former WA police minister Gordon Hill.
Mr Stein is a former chief counsel of the Sydney Metropolitan Strategy, a chairman (chief judge) of the Town Planning Appeal Tribunal of Western Australia, and a former professor of law at the University of Western Australia.
ASIC has not joined Mr Anderson, Mr Stein or Mr Hill in the action and is not seeking any orders against them personally.
Also facing ASIC's civil action is Quentin Ward, a financial adviser and former bankrupt from Perth.
Though Firepower's products were difficult to obtain in Australia, some of the investors' money was used to transform the company into the biggest sporting sponsor in the country. The portfolio included South Sydney Rabbitohs rugby league team, Sydney Kings basketball team and Western Force rugby union team.
ASIC alleges that the individuals and companies named were involved in selling shares in Firepower to members of the public in breach of the Corporations Act. It alleges that the proper disclosure documents were not provided to investors who pumped more than $60 million into the company and that this did not allow the investors to make a proper assessment of the risks involved.
ASIC alleges that about 1400 investors bought shares in Firepower. Many bought them on the promise of a stunning sharemarket listing in London. Some expected that the shares they bought for between 5 cents and $1.33 would be worth up to $7 each when the company listed on the Alternative Investment Market, an exchange that caters to small, speculative companies.
Many of the investors were ordinary people, and some borrowed against their houses to buy the shares. But the shareholding register also reveals high-powered identities.
AFL players who invested heavily included the Brownlow medallist Mark Ricciuto, his Adelaide Crows teammates Simon Goodwin, Rhett Biglands, Jason Torney, Brett Burton and Robert Shirley, and their coach, Neil Craig. Wayne Carey, his father, Kevin, and his manager, Anthony McConville, also invested in Firepower.
The high commissioner to Pakistan, Zorica McCarthy, gave consular assistance to Firepower, then later bought shares in it at a fraction of the advertised price.
Ms McCarthy acquired her shares 14 days after a ceremony she organised in November 2005 at which a Pakistani company and Firepower signed an agreement - witnessed by the then prime minister, John Howard, and Pakistan's then prime minister, Shaukat Aziz.
Ms McCarthy has denied any wrongdoing and said that since the ceremony at Mr Aziz's home, she had played "no role in Firepower's commercial or business interests in Pakistan". She said she was not responsible for the final decision on which events Mr Howard attended in Pakistan.
ASIC alleges that Mr Anderson's company Owston Nominees No.2 Pty Ltd, Mr Stein's company Sattvic Pty Ltd, Mr Hill's company Seaswan Holdings Pty Ltd, Mr Ward's company Axis International Management Pty Ltd and Johnston's British Virgin Islands-registered Green Triton Ltd were shareholders in Firepower when it was incorporated in the British Virgin Islands in June 2005.
ASIC alleges that the companies "subsequently on-sold significant amounts of shares to Australian retail investors without providing investors with a disclosure document as required."
It said Johnston was also a director or an officer of Firepower Investments Pte Ltd, which was involved in the share-selling. ASIC said it would be seeking an order from the court to ban both Johnston and Mr Ward from managing future companies in Australia.
Johnston, the chairman of Firepower, is thought to be in Britain after refusing to return home to answer questions from authorities about the demise of the Sydney Kings basketball team. Mr Johnston owned the team but it collapsed after he failed to pay players, staff and suppliers.
Liquidators have since found it was trading insolvent for almost two years. Firepower is also in a state of near collapse and is fighting off liquidators in the Federal Court.
Mr Anderson was a director of Firepower Holdings Group Ltd in 2006 and again for a period last year, according to documents obtained by the Herald .
Mr Anderson said he could not comment because of the proceedings that appeared to be under way.
"I don't really know what it is about," he said.
"You know as well as I do I can't talk about it."
Mr Stein said last night that he was retained by Mr Anderson as a barrister to give advice to Firepower and that he "obtained legal advice that required a product disclosure statement prior to shares being sold which was sent to those promoting the shares before they were sold".
He said he was unaware that that advice was not followed.
Mr Hill said he had not received any documentation from ASIC.
"I do not want to comment until I have seen the documentation and ascertain if there are proceedings to look at," Mr Hill told the Herald .
The ASIC investigation into Firepower began early last year, soon after the Herald first raised questions about the company.
At the height of his power, Johnston dined in Canberra at the residence of Mr Howard. A related entity, TPS Firepower, received almost $400,000 in taxpayer-funded export grants.