Avestra bosses banned

entity and holder of an Australian financial services licence that operated a number of registered and wholesale managed investment schemes.

The ban comes after the Federal Court earlier ruled that Avestra, Mr Rowles and Mr Dempsey had engaged in contraventions of the Corporations Act. ASIC in late 2015 had secured the wind up of Avestra due to concerns it had contravened its duties.

ASIC had found the pair indulged in improper related party deals and other wrongdoing with up to $18.5 million of investor funds.

Before the collapse, ASIC alleged Avestra sent $5.6 million in cash and Malaysian stocks to a Caymans Island entity, Bridge Global CMC, potentially at the expense of retail investors.

Liquidators previously said the Caymans company, Bridge Global CMC, was set up “to appeal to institutional investors (particularly from Malaysia and Hong Kong)”. Rowles also served as a director of a related Bridge Global fund, where $US2.3 billion of promissory notes controlled by 1MDB, Malaysia’s sovereign wealth fund, were once lodged.

It’s alleged that up to $US1 billion of that money was later stolen by a scam artist and another $US700 million-plus ended up in the bank account of Malaysian PM Najib Razak.

Mr Razak for two years has denied any wrongdoing over the scandal, shrugging off revelations by foreign journalists that almost $1 billion turned up in his personal bank accounts. Last month, taking a cue from US president Donald Trump, as he prepared to call early elections, Mr Razak accused journalists of fabricating “fake news” about Malaysia.

In its judgment, the Federal Court said that “if Avestra had observed effective compliance and conflict-management practices, it is likely that the episodes of misconduct described … would not have unfolded, or not to the same extent. Dempsey’s and Rowles’s omissions … were not merely procedural or technical contraventions. They were shortcomings that created or reflected a significantly deficient corporate culture, which enabled Avestra to act with a systematic and serious disregard of its fiduciary and regulatory obligations.”

ASIC Commissioner John Price said: “The findings of the Federal Court in this matter make very clear that responsible entities are required to act in the interests of members. ASIC will ensure that responsible entities and their directors who fail in these duties are held to account.”