- A bankrupt former Queensland property developer who set up a failed whisky distillery investment in Tasmania fails again with a cattle scheme
- Corporate watchdog ASIC is believed to have been monitoring the scheme for nearly two years, and finally acted this week over animal welfare concerns
- Investors complaining to police and Fair Trading for more than a year
- The mum-and-dad investors involved are likely to lose millions of dollars
The corporate regulator has sent liquidators into a Queensland beef investment scheme over concerns for hundreds of abandoned cattle.
ASIC applied to the Supreme Court of Queensland for Deloitte to become provisional liquidators to three companies: Nangus Holdings Group Pty Ltd, Nangus Holdings Pty Ltd, and Nangus Grazing Company Pty Ltd.
Nangus, previously known as Nant Angus Holdings Pty Ltd, was created by husband and wife pair Keith Batt and Margaret Letizia, who are now both personally bankrupt.
ASIC says their bankruptcy means they are both disqualified from managing a corporation.
The scheme targeted retail investors, with promises of a 9.95% annual return. The investors supposedly owned the cattle for five years, with Nangus then leasing them, then agreeing to buy them back for an agreed price.
The duo were behind a similar scheme in Tasmania at the Nant Whisky Distillery, north of Hobart.
Both schemes were marketed via ads in the Australian Financial Review, attracting a high level of “mum-and-dad” investors. Critics viewed the financial model as a kind of ponzi scheme funded via a stream of new investors.
Batt and Letizia created the Nant Distillery in 2008 in Bothwell. It enticed investors who paid up to $14,000 for a barrel of whisky with promises of a 9.55% annual return and the pledge that the company would buy the barrel after four years of maturity. Around 900 investors bought into the scheme.
The company built a global reputation for great whisky and opened Nant-branded bars in Brisbane, Melbourne and Hobart.
But concerns began to emerge in late 2016 after Batt went bankrupt owing more than $16 million, after transferring control of the companies involved in the distillery business to his wife. The debts related to a failed property development business run by Batt.
Investors complained about being unable to redeem their investment, or being told the whisky wasn’t ready up to six years later, and slow responses from the company to their queries.
Batt denied there were problems, but in early 2017, Nant Distilling was placed into receivership by one of its major creditors. The Australian Tax Office was also owed millions of dollars.
Investors in the Nant scheme lost millions when a subsequent audit of the barrels they’d bought revealed more than 700 were never filled with whisky, others were missing or had been been bottled and sold without the owner knowing, while others contained low-volume alcohol used as a substitute. All up, more than 1,300 barrels, supposedly held in bond at the distillery in Bothwell, were involved.
A deal with Australian Whisky Holdings Ltd to buy the stock fell through as a result. AWH instead bought the distillery production assets and brand and has run the business for the last 12 months.
Tasmanian fraud squad officers have been investigating the scheme since last August with a view to pressing charges.
ABC Radio’s Background Briefing program conducted a comprehensive investigation into the complex web of businesses set up by Batt and Letizia in September last year. You can read about Nant and its dudded investors here.
Switch to beef
With the failure of the whisky business, Queensland-based Batt changed tack and began marketing his Angus cattle investment scheme.
ASIC moved in this week, heading to court against the Nangus group saying it had “concerns about a herd of approximately 261 head of cattle abandoned by company management”.
The regulator obtained court orders for the liquidators, Richard Hughes and David Orr of Deloitte in Brisbane, to assess the financial position of the Nangus companies with a view to winding them up.
The Queensland Office of Fair Trading and police began investigating the Nangus Holdings scheme back in March 2017 following Australia-wide complaints from investors.
ASIC is believed to have been monitoring the scheme since mid-2016.
Last year, a Brisbane court fined Batt and placed him on a 12-month good behaviour bond for a breach of the law that requires the National Livestock Identification System registry to be notified of cattle movements.
The Weekly Times reported last July that several investors in the Nangus scheme had their NILS stock numbers changed last year after the company said an audit revealed “a clerical error”, sparking a fresh round of complaints to Fair Trading and police.
One estimate suggests investors in Nangus could be up to $20 million out of pocket as a result of the schemes failure.