In Part IV of our investigation into the $10 billion Clean Energy Finance Corporation, Anthony Klan blows the lid on Carbon Revolution, dissecting the financial engineering that has let the Victorian Government and others make millions by flipping serious risk to unsuspecting investors, and looks into some curious green bank connections …
It’s the car manufacturing bail-out you’ve never heard of: tens of millions of taxpayer dollars flowing into a failing company building $3,900-a-piece luxury car wheels, despite it having operated for over a decade and never turned a profit. The nation’s green bank has invested at least $12 million in a long-failing Geelong manufacturer in deals underpinning investments connected to one of its proponents.
In December 2016, the Clean Energy Finance Corporation (CEFC) invested $10 million in Carbon Revolution, a struggling company founded a decade earlier which makes and exports luxury car wheels.
The investment helped Carbon Revolution, then making substantial annual losses, to stay afloat.
Benefitting from the CEFC’s $10 million equity investment was Melbourne fund manager Acorn Capital, for the past two decades chaired by Professor Robert “Bob” Officer, the businessmen who had helped the CEFC in its battle against the Coalition’s attacks two years earlier.
Our investigation shows both Acorn Capital, through its Acorn Capital Investment Fund, and the CEFC, have profited substantially from their dealings with Carbon Revolution, despite the company’s extremely poor underlying financial position.
Professor Officer (who we mentioned in part one of this series) in February 2015 co-authored a report for the CEFC which the CEFC used to argue against the Coalition’s moves to kill it by vastly increasing the level of returns it had to target. (We have read the 2015 report in full and it’s essentially a lengthy representation of the obvious — if you increase returns you increase risk).
Professor Officer denied any wrongdoing and told Michael West Media he had no involvement with the CEFC other than writing the 2015 report, that he had no “direct contact with the CEFC” (that was handled by his co-author) and he had “no knowledge of CEFC’s investments”.
As Acorn Capital’s chairman, a position he has held since 1999, Professor Officer said he had “no specific knowledge” about Acorn Capital’s Carbon Revolution investment.
“Although I am chair of Acorn, I have kept myself apart from its investment committee because of possible conflicts of interest,” Professor Officer said.
Aside from Carbon Revolution being one of the biggest holdings in Acorn Capital’s portfolio, the two companies share another link. Acorn Capital’s investment director James Douglas (since February 2018) is also Carbon Revolution’s chairman (since 2012).
Carbon Revolution did not return calls from Michael West Media.
Acorn Capital’s accounts show it was an investor in Carbon Revolution at June 30 2016, at least six months before CEFC bought into the company, but exactly when Acorn became an investor is unclear because its earlier accounts do not list specific investments.
CEFC’s quarterly investment reports show it invested $10m in equity in Carbon Revolution on December 21, 2016, that it planned to hold the investment for about four years and it expected to earn an annual return of over 10 per cent from Carbon Revolution.
Acorn Capital’s accounts show that at June 30 2017, its Carbon Revolution investment was worth $1.82 million, representing the fourth biggest investment in Acorn’s then $53.4 million portfolio.
CEFC spokeswoman Rebecca Rose declined to comment on the matter other than to say its investment decisions were
“made in accordance with the CEFC Investment Policies”.
Beyond Acorn Capital, Michael West Media has undertaken an in-depth investigation into Carbon Revolution, one of the CEFC’s most questionable investments, and uncovered serious concerns implicating public bodies.
The Victorian Government, Melbourne’s Federal Government-funded Deakin University, the CEFC and others have made tens of millions of dollars through complex financial deals involving Carbon Revolution, leaving the investing public heavily exposed to major losses, potentially in the hundreds of millions of dollars.
More to come….