If investors in the collapsed Great Southern agricultural managed investment scheme claimed tax deductions on the loans they took out to fund their investments then it follows they could not have been fraudulent loans, according to Bendigo and Adelaide Bank.
In a strong rebuttal of media suggestions that it had acted harshly with investors impacted by the 2009 collapse of the agricultural managed investment scheme, Bendigo and Adelaide claimed it was most unlikely any of the loans were fraudulent because taking out a loan was optional and because borrowers received significant up-front tax deductions.
The banking group said that it had not acted in an aggressive or unethical manner in its dealing with Great Southern investors and rejected any such accusations.
“The bank is not responsible for the inappropriate advice and fraudulent loans provided by some advisors,” it said. “The bank provided no financial advice to any investor or borrower that invested in the Great Southern schemes, and the loan application signed by the borrower recommended they obtain their own independent legal, accounting and taxation advice regarding both investment and borrowing.”
Bendigo and Adelaide also pointed out that while a class action had been filed against the bank on behalf of investors in many schemes managed by Great Southern, the lead plaintiffs had moved prior to judgement for settlement.
“Their willingness to settle reflected the weak case they pursued, best summed up by Justice Croft’s view; ‘there does not seem to be a clearer example of where a party breaches its overreaching obligation to ensure that any claims is brought before the court has a proper basis …’,” the banking group said.
Bendigo and Adelaide confirmed that as at 31 December, 1033 borrowers (87 per cent) still owed $86.1 million to the bank but claimed that the vast majority had made arrangements to repay following the Supreme Court of Victoria approval of a settlement deed concluding the class action in 2014.
