VICTIMS MAY GET PAYOUT

Two of Australia’s largest financial institutions are offering compensation to victims of the Firepower scandal in an obvious attempt to prevent a class action lawsuit.

The victims bought their shares in the fraudulent fuel pill company via financial planners linked to Financial Services Partners, owned by the ANZ Bank and ING.

Approximately $10 million worth of stock was sold via the financial planners on the pretext that Firepower would deliver massive windfalls after it listed on London’s secondary stock exchange.

At the centre of the optimism was a fraudulent claim by Firepower that it had invented a pill would could vastly improve fuel consumption and reduce toxic emissions in motor vehicles.

Financial Services Partners has since been included into an ASIC investigation of Firepower and has suspended the five financial planners who sold the shares, admitting they should never have been sold because they were not on the firm’s approved product list.

It is now offering to repay between 20 and 35 per cent of client’s losses, but only if they refuse to join a class action law suit being taken against the firm.

Financial Services Partners refused to comment on the offer other than to admit it was “talking with investors on a case by case basis to determine their circumstances and to address any concerns or issues that may arise.”

Paul Rainford from IMF (Australia), who is funding the legal action on behalf of more than 400 Firepower shareholders, said the motivation for the move was clear.  “Different offers are being made to different clients and some clients are being offered nothing at all,” he said.

Mr Rainford said clients were being told that the insurer for Financial Services Partners had refused cover because the Firepower investment was not on an approved list.  But he said it would be difficult for Financial Services Partners to suggest that the Firepower share sales were not authorised when one of the financial planners selling them was one of the company’s own directors.  Two were part owners of Financial Services Partners, he said.

The overall investment in Firepower is believed to extend to more than $100 million, which could be the most glamorous fraud in Australian financial history.

Mr Rainford said that his investigation indicated that Firepower had no proper financial accounts and the large overseas contracts it claimed to have for its technology didn’t exist.

He added that much of the money raised went to those promoting the company including Firepower chairman Tim Johnston, and that Firepower was never capable of listing on any stock exchange and therefore unable to produce the promised returns to investors.