The Aboriginal Community Benefit Fund collapse and the missing millions

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VENNESSA POELINA: I’m seeking a cremation when I pass and that’s worth a lot of money, so I just didn’t want to have that burden on my children.

AMY BAINBRIDGE: Nyikina traditional owner Vennessa Poelina is clear about what she wants to happen when she passes away.

VENNESSA POELINA: My reasoning for signing up to ACBF was so that I could lay-by my cremation. I want to be put to sea with my dad and brother who rest off Entrance Point here in Broome.

AMY BAINBRIDGE: Ms Poelina signed up to the Aboriginal Community Benefit Fund – now known as Youpla – more than two decades ago paying more than $20,000 for funeral cover for herself and her family.

ALAN GRAY, BUSH MONEY MOB FINANCIAL COUNSELLOR: Are you running the workshop or are you a participant?

VENNESSA POELINA: We have been designing an Indigenous one.

ALAN GRAY: Good on you, that’s awesome, mate.

AMY BAINBRIDGE: But she stopped paying premiums in February on the advice of her local financial counsellor after one of the group’s four funds went into administration and there were growing concerns about the viability of the remaining funds.

VENNESSA POELINA: I was really apprehensive to stop paying because I just felt like, “Nah, certainly not, they’ve got our money, how can they be going broke.”

AMY BAINBRIDGE: Then on the 9th of March, just two days before the entire Youpla Group went into liquidation, the company asked her for payment.

EXTRACT OF A LETER FROM YOUPLA GROUP: If you do wish for your Fund 1 benefits to be available, you will need to ensure that you remain financial and that regular payments recommence.

ALAN GRAY: I think that behaviour absolutely warrants a very, very bright spotlight on the issue of directors trading while insolvent.

AMY BAINBRIDGE: That same day the corporate watchdog ASIC wrote to the company asking it to clarify its financial position for customers, it also reminded directors of their duties including the prohibition on insolvent trading.

GREG WHEELDON, DIRECTOR: We applied the rules of insolvency to our company and, no, we were not trading insolvent.

My sole driving ambition, and that of my, the director, was the protection of the members. That’s all we cared about.

AMY BAINBRIDGE: Speaking publicly for the first time, director Greg Wheeldon says an ambitious plan to consolidate all four funds would have saved the company from collapse, but he says the corporate watchdog ASIC didn’t approve the plan.

GREG WHEELDON: All the documents had been done, had been drafted. It just needed goodwill and a desire by the regulators to protect these shareholders.

I find it amusing that everyone is now looking at technical breaches of insolvent trading.

AMY BAINBRIDGE: The plan would have needed agreement from all of the 14,500 members, regulator approval, creditor approval, a reinsurer and an Australian financial services licence. The company had none of those things.

On March the 10th, Mr Wheeldon says he was told regulators wouldn’t approve the restructure and the entire Youpla Group collapsed.

ASIC won’t comment on events leading up to the liquidation or on the allegation it wouldn’t work with the company to resolve the situation.

GREG WHEELDON: It was a very disappointing result for me personally, that we couldn’t save the company. So all I can say is no, I don’t regret it, I just wish I could have been helpful in getting a better result for the company and its members.

AMY BAINBRIDGE: Last month 7.30 revealed co-founder and long-time director Ron Pattendon had set up a reinsurance company for ACBF in Vanuatu in the early 2000s and owns a luxury boat and a waterfront apartment in New Zealand.

AMY BAINBRIDGE (May 2022): I really want to get a short statement from you.

RON PATTENDON, CO-FOUNDER (May 2022): Give me some more time …

AMY BAINBRIDGE: Mr Pattenden sold the company shortly after it was grilled at the 2018 banking royal commission and declined an interview when 7.30 approached him.

GREG WHEELDON: I believe that probably is a matter the regulator should look at closely and if possible, retrieve some money for the pool of the Aboriginals and tip it back into the funds, if there is a case.

AMY BAINBRIDGE: An explosive liquidator’s report released on Friday said companies controlled by or associated with Ron Pattenden were paid dividends worth almost $12 million from ACBF including to a hospitality business in Vanuatu.

It is not known who received another $7 million in dividends.

The liquidator also says $41 million was sent to an underwriting company associated with Mr Pattenden, Crown Insurance Services, and it made a surplus of $23 million after paying out funeral claims to customers.

EXTRACT FROM SV PARTNERS REPORT: I am investigating whether this arrangement is a breach of the directors’ duties pursuant to section 180 to 184 of the Act.

AMY BAINBRIDGE: The liquidator also says it’s investigating whether various directors of the company may have breached their duties, which can carry large penalties.

Since 7.30 fronted Ron Pattenden last month he has not responded to further questions, including to the allegations in the liquidator’s report.

ASIC has also confirmed it’s investigating past and current directors, and Mr Pattenden is understood to be one of the main directors of interest.

ALAN GRAY: All of these court processes, they go on for years and at the end of it, the little people get nothing. I’ve seen it time and time and again and I have zero hope that this will be any different.

What our policyholders want is a refund. They want to see a fund established by the government because this was a massive regulatory failure by a government body, ASIC.

AMY BAINBRIDGE: In the meantime, customers like Vennessa Poelina are left without funeral cover.

VENNESSA POELINA: It’s real mixed emotions. You kind of want to feel angry, then you get frustrated and then you feel sad because now you know the cost burden is going to be on your family to look for money for your cremation.

You know, like, and then other parts, you just kind of like, as we do as Aboriginal people, you kind of laugh off this sort of stuff but it is really disheartening.