Breaking Bad: Hells Angels’ venture on ASX passes ASIC muster

by | Apr 9, 2019 | Markets

Investors were furious to find their high-tech battery lab in Thailand was stocked, not with high-tech batteries, but with old ice cream machines. Surely the corporate regulators would fire up now at this, yet another deception by a company listed on the Australian Securities Exchange? Michael West reports.

What about the claims of insider trading, the misleading and deceptive ASX announcements, issuing shares to family members? The dubious fracking “technology”, which never worked, but was acquired from none other than the chairman’s private company?

It was galling enough watching the value of their shares in LWP Technologies go up in smoke (and mirrors) while the company’s promotor, Siegfried Konig, was shipping in a salary of $430,000 a year.

Yet the piece de resistance was when, after years of trying to put a rocket under corporate regulators to act, investors were told the other day there was “insufficient evidence” to take further action.

“Further action” is a regulatory euphemism for “any action”.

What really got under the skin of Ben Pauley, a critic of share price manipulation on the ASX, was that the Australian Securities & Investments Commission (ASIC) told a Senate Committee that it was the job of class action lawyers to address corporate skullduggery so, if investors in LWP still had any gripes they should lawyer-up. Not our problem.

“Shareholders can enforce their rights through private litigation, including through a class action,” was ASIC’s response to Questions on Notice from Senator Jane Hume of the Economics Legislation Committee.

Pauley – as per his email to assorted senators reproduced below – was reasonably outraged:

“LWP went into a joint venture with Vadim Volkov, a member of the Hells Angels bikies and their battery lab turned out to be fake and was just some ice cream machines – I kid you not!

Not batteries, ice cream machines

“So with respect, Senators and Hon MP Irons, you can see why shareholders Australia-wide are just a little bit disappointed that you have blindly accepted Miss Armour’s statement that we have a perfectly good class action system, a statement designed to give some legitimacy to ASIC’s current modus operandi which is to do ABSOLUTELY NOTHING”.

The unsavoury fact of life for investors at the speculative end of the share market is that many listed companies – probably more than ten per cent – might justifiably be categorised as “wallet miners”.

That is, they are either outright cons or are there for the lifestyle and do more to generate wealth from their investors than from their touted technologies or exploration licences. Ramping share prices on sexed-up announcements/news, then exercising share options is a time honoured tradition for company directors.

Shareholdercide – diluted to death

Two decades of following racy share market promoters – and LWP is a classic example – has led this reporter to the firm view that, when it comes to fairy tales, the statutory filings on the ASX make the Complete Works of Hans Christian Anderson look like peer-reviewed science.

Were it not for the dedication of a small group of LWP investors, nothing would have happened at all. Their LWP Action Group has been relentless in pushing authorities to act and just before Christmas had confirmation that the “Queensland Financial and Cyber Crime Group, State Crime Command Queensland is investigating occurrence QP1700025422 in relation to LWP Technologies Pty Ltd.

“They looking at obtaining statements from shareholders who have lost money due to investing in this company and the actions of its former board.”

There is a good run-down of the LWP story here courtesy of the ABC.

When it comes to justice and recompense for investors in speculative stocks it is extremely rare to see a positive outcome. Most victims of ASX stock spruikers walk away and forget about it. ASIC rarely acts on complaints. The ASX either.

There is a conflict of interest, both ASX and ASIC earn good money from listing fees and company registrations. The more stock promoters there are, such as Siegfried Konig – and there are many – the more money they make.

Investors get burnt, yes, but that’s the stock market. Don’t invest money you can’t afford to lose, particularly at the speculative end.

And don’t believe what you read. Contrary to ASIC’s protestations that retail investors can simply resort to class action lawyers to get their money back, they can’t. Litigation funders and their lawyers only go after the bigger market failures, where there is insurance, a pot of money and an odd-on prospect of a settlement and pay-off day.

There is no pay-off in LWP, nothing left.

As for relying on statutory information, it is far more reliable at the blue-chip end. This reporter gave up complaining years ago. We once alerted the ASX to the fact that there was a picture of a tailings dam on a mining company’s official filings which did not actually belong to that mining company.

From memory, it was a tailings dam in Brazil, supposedly part of a gold project which was going to make investors filthy rich. It was hard to check whose dam it was, as the dam was in Brazil but we suspect ASX didn’t bother to even call the company to ask if it was on their tenements.

It wasn’t. So the picture of the dam just stayed there. It is probably there to this day – as are the tales of Hans Christian Anderson – though the company is long bust, shareholders’ gutted, directors off on their next jaunt, the ASX shipping in its next tranche of fees.

Hangover shortlived for miners who like to party

Email from Ben Pauley:

Dear Senators O’Neill, Ketter, Hume and Hon Steve Irons MP

With respect, I was hoping for a reply from at least one Senator to the email I sent the four of you exactly one week ago. In that email I made reference to a Parliamentary Joint Committee on Corporations and financial services.

As I pointed out there are now a number of people who want to hold Miss Cathie Armour of ASIC to account for making false claims in that meeting. Miss Armour stated we have an “effective class action system” for dealing with corporate malfeasance. This statement is absolutely appalling and I will use the example of LWP Technologies as an example.

LWP is such a blatant example of an outrageous scam to steal wealth from shareholders but the real joke is that ASIC has done ABSOLUTELY NOTHING despite being presented with huge amounts of evidence that the has engaged in unlawful activity and scammed shareholders.

The following link to the LWP action group shows complaints that have been lodged with both ASIC and the ASX. These complaints include DIRECTOR SHELL COMPANIES, UNDISCLOSED TRADING IN SHARES, ISSUING SHARES TO FAMILY MEMBERS, MISLEADING ANNOUNCEMENTS, RELATED PARTY TRANSACTIONS, INSIDER TRADING, TRANSACTING IN SHARES IN RESTRICTED PERIODS and FAILING TO LODGE NOTICES.

http://lwp.host22.com/2017/03/20/lwp-technologies-regulatory-failure-corporate-governance-disgrace/

LWP went into a joint venture with Vadim Volkov, a member of the Hells Angels bikies and their battery lab turned out to be fake and was just some ice cream machines – I kid you not!

So with respect, Senators and Hon MP Irons, you can see why shareholders Australia wide are just a little bit disappointed that you have blindly accepted Miss Armour’s statement that we have a perfectly good class action system, a statement designed to give some legitimacy to ASIC’s current modus operandi which is to do ABSOLUTELY NOTHING in the face of more breaches of the corporations act in one company than has been prosecuted by ASIC over the entire spectrum of companies in a whole year.

As I stated in a letter to ASIC the other day “DO your job” I state this to you Senators “please do your job” and take ASIC to task for FAILING TO REGULATE, PROTECTING CROOKS and WASTING RESOURCES AND TIME BY DEFENDING THEIR INACTION.

Senator Hume, on the 25th February 2019 you wrote to ASIC and asked why no action was taken by ASIC over false and misleading information announced to the ASX by LWP. ASIC’s response was two specialist teams within ASIC formed the view that there are insufficient grounds to warrant further enquiries in relation to LWP.

Senator Hume, looking at this below picture of ice cream machines which were the “fake battery lab” from the LWP joint venture with a Hells Angel bikie – are you going to be satisfied with this answer from ASIC? What is amazing is that ASIC never asked any questions about those machines despite numerous complaints and media articles.

ASIC response to Questions on Notice (excerpt):

As you know, ASIC conducted inquiries in relation to LWP to determine whether we had sufficient grounds to commence an investigation and take regulatory action in the public interest to respond to the alleged misconduct.

ASIC found that there were insufficient grounds to warrant further inquiries in relation to LWP. Any action taken by ASIC will generally aim to punish and deter misconduct or ban directors from managing companies and will not result in shareholders recovering compensation.

Shareholders can enforce their rights through private litigation, including through a class action.

Dreams of speed gone to the dogs

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ABOUT THE AUTHOR

Michael West

Michael West

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

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