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Category: Consumer Protection / Public Sector / Liberal National Party (Queensland) / Tax / Fraud and Corporate Crime

Investigators track over $100m from Indian scam to Australia

Friday, 26 Feb 2016 16:23:56 | Peter McCutcheon

Western LHD says it will be tough to keep within its $750 million budget

Authorities in India investigating one of the world's biggest ever financial scams have tracked more than $100 million to Australia.

Key points:

  • Australian Government officials, businessmen and political parties caught up in Indian scam
  • Founder of the Pearls Group was arrested in India last month for allegedly running one of the world's largest ever Ponzi schemes
  • Indian officials began cracking down on schemes operated by the Pearls Group as far back as 2002

The Pearls group of companies scammed 50 million Indians, many of them living in poverty, out of $10 billion.

Former Australian fast bowler, Brett Lee, had been the face of one of the company's advertising campaigns — although there is no suggestion that he knew of the claims of fraudulent dealing.

But now Australian Government officials, businessmen and even political parties have become caught up in the mess.

A company associated with Pearls donated $35,000 to the Liberal National Party and $3,600 to Labor.

Electoral disclosure records show Metro Pearls Madison, which has links to the Pearls group of companies in India, made a $10,000 donation to the LNP fundraiser Forward Brisbane Leadership in 2011 and a further $25,000 to the LNP in early 2012.

The founder of the Pearls Group, Nirmal Singh Bhangoo, was arrested in India last month for allegedly running one of the world's largest ever Ponzi investment schemes.

Indian authorities said at least $133 million of Pearls money was invested in Australia.

The Indian Pearls group was introduced to Australia by Austrade in 2009.

This led to the setting up of the company Pearls Australasia, which was provided with $100 million in capital by the Pearls companies in India.

Do you know more about this story? Email 7.30syd@your.abc.net.au

'A complete lack of due diligence'

In 2010, Pearls Australasia bought the Sheraton Mirage on the Gold Coast for $62.5 million, and later invested $19 million in a joint venture with Metro Property to develop apartments in Brisbane.

Brett Lee fronts Pearls advertising campaign Video: Brett Lee fronts Pearls advertising campaign (ABC News)

The company Metro Pearls Madison was set up in November 2010.

The company's $10,000 donation in 2011 was disclosed to the Electoral Commission of Queensland, and was made to a fundraising body supporting Campbell Newman's bid to become premier, six months before the 2012 Queensland election.

The $25,000 donation in 2012 was made directly to the Liberal National Party of Queensland and disclosed to the Australian Electoral Commission.

Pearls Australasia has confirmed to 7.30 that it also made a smaller donations of $560 to the LNP in 2012 and two donations totalling $3,680 to the ALP in 2011 and 2014.

Corporate intelligence expert and a former senior advisor to the Australian Securities and investment commission, Niall Coburn has been critical of Austrade for introducing the Pearls group to Australia.

"It's clear there is a complete lack of due diligence," he told 7.30.

"Where you're buying large amounts of land in Australia, these are obvious issues that should have been raised right at the start."

Company under investigation for a decade

Indian officials began cracking down on schemes operated by the Pearls Group as far back as 2002.

In 2008, the Securities and Exchange Board India banned one Pearls company, PGF, from dealing in securities for 10 years.

Austrade assisted in the setting up of meetings with Pearls representatives during two Queensland trade missions, led by then Labor premier Anna Bligh in 2010, and Mr Newman as premier in 2012.

In a statement to 7.30, an Austrade spokesman said: "No record has yet been located indicating Austrade staff were aware at that time Pearls Group was subject to court or regulatory orders."

The spokesman added that following a review of operations: "Austrade staff now undertake a more thorough assessment of businesses."

The Metro Property group has told 7.30 that its joint venture with Pearls Australasia was given approval by the Foreign Investment Review Board (FIRB) in 2011.

The FIRB said it cannot comment on its screening arrangements nor particular cases.

Pearls Australasia changed its name to MiiGroup in 2014, and says it was unaware of concerns about the Pearls Group in India.

MiiGroup said the individuals and companies associated with Pearls in India are passive investors and do not take part in any day-to-day operations of the independent and separately owned Australian company.

In a statement released last week, MiiGroup said it "will actively cooperate if the Indian authorities intend to take control of Pearl's India's shareholdings in MiiGroup".

AustraliaPlus


 

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