Opes Prime’s creditors meet to hear the bad news

Creditors of failed stock broking operation Opes Prime are gathering in Melbourne today to hear what will almost certainly be bad news on their financial situation from administrator Ferrier Hodgson.

Up to 1200 creditors, thought to be owed in the vicinity of $650 million, are ranked behind secured creditors in the queue to claim from what could be a limited and contested pool of available funds.

The grim prospect of waiting what could be years to recover something on their investments appears to have led some creditors to take things into their own hands, with revelations today that Melbourne underground identity Mick Gatto is helping several Opes creditors attempt to recover their losses.

Gatto – who shot dead underworld figure Andrew Veniamin but was acquitted on grounds of self-defence – reportedly flew out this morning to recover Opes assets the creditors believe are hidden in Singapore.

The news of Gatto’s involvement is perhaps the most bizarre among several new developments as the Opes drama enters its third week.

The Australian Securities and Investments Commission announced yesterday that it has obtained court orders preventing another Opes director, Julian Smith, from leaving the country before Friday.

ASIC told the Federal Court it was investigating whether Smith has engaged in illegal conduct in his role as manager of Opes Prime’s Sydney office and accused him of manipulating clients’ accounts and covering up a $38 million loss in an account in which he had an interest.

Meanwhile ASX is investigating whether companies have breached continuous disclosure rules by not disclosing holdings of directors that were financed by loans. If it finds margin loans likely to have a material impact on the stock the company did not disclose it may pass potential breaches to ASIC.

Private legal action by victims of the Opes crunch is also intensifying, with as many as 30 legal challenges launched by creditors and companies in an attempt to prevent the sale of shares taken by ANZ bank and other financiers.

In what has been a bad week for ANZ, chief executive Mike Smith yesterday announced the bank has made a $975 million provision for bad debts for the first half of the 2007-08 financial year to cover losses suffered in the present global financial meltdown.

Smith was also forced to acknowledge that the bank’s reputation has taken a hit because of its dealings with Opes. “There are no winners,” Smith said of the Opes meltdown.

And a third employee of ANZ was reportedly suspended yesterday for association with Opes. Each of the three suspended ANZ employees have been found to have had dormant margin lending accounts with Opes, triggering an investigation by the bank into potential conflicts of interest.