Archive for February, 2011

Mr Kennedy told the NSW Supreme Court he started working for MFS in May 2007 as chief operating officer - a role no one ever lasted long in at MFS.

On February 25, 2008, he said he tried to raise his concerns about the company. ''I sent an email to the then chief executive, Craig White, about some concerns I had about the way some of the directors were doing their job, doing their duties,'' Mr Kennedy said. ''I was considering whether I should be bringing any action against them.''

The next morning, ''Craig called me and told me that I should go home'', he said. Several weeks later he left the job.

Mr Kennedy said before he was suspended he had approved an internal investigation into a transaction worth $ 130 million that another colleague had raised doubts about. That colleague also left before the audit was completed.

Intercompany loans are suspected to total about $ 1 billion.

Mr Kennedy said many of the dozens of companies under MFS were essentially dormant. ''They used to have a range of investment companies set up, waiting to do something,'' he said.

Asked if he was a director of MFS Castle, or MFS Investments, he said: ''I have no idea. I think I was a director of 26 companies in the group.''

MFS companies invested in everything from affordable housing to aquariums and tree-top walks.

Mr Kennedy was employed by MFS Administration, as most staff were. MFS Administration would act as a treasury, making payments on behalf of other wholly owned subsidiaries, and Mr Kennedy said he expected the loans were credited to other companies in the group.

He said he was not involved in approving loans to other group companies, and he acted only on instructions.

He said real decisions were made at board level, and that Michael King was ''the decision-maker''.

An internal investment approval committee could reject a proposal, only to have Mr King override the decision and approve it anyway, he said. In some cases, a proposal was a done deal when the committee was asked to consider it for the first time, Mr Kennedy said.

At one stage, concerned about conflicts of interest, Mr Kennedy said he tried to encourage Mr White to resign from a committee.

The committee was overseeing the funds for deals that were proposed by Mr White and one of his staff members, who was also on the committee.

Mr Kennedy said he suggested putting the company's risk and compliance officer on the committee in Mr White's place.

''Craig said he didn't want that, that would be too much red tape and make it to difficult for things to go through,'' Mr Kennedy said.

Mr White decided to remain on the committee. ''At that point, risk and compliance was removed from one of my areas of responsibility,'' Mr Kennedy said.

Mr Kennedy said many people at MFS found the chairman, the former Liberal leader Andrew Peacock, difficult to deal with, though he personally liked him.

''He has a relatively large ego and my experience with him was … he liked to instil fear into people at times. I had to talk to him once about yelling and screaming at our IT people.''

Mr Kennedy said the company secretary, Kim Kercher, also incurred Mr Peacock's wrath, not for the substantive contents of board minutes, but for spelling mistakes. Similarly, Mr Kennedy said Mr King was dominating and intimidating.

Mr Kennedy said he queried the ''silly'' amount executive Luke Gannon was spending on marble and other fittings for the company's Melbourne office. ''I thought he spent a ridiculous amount of money,'' Mr Kennedy said.

Mr Gannon would simply hang up on him, he said. Liquidators from Bentleys have so far recovered about $ 134 million in cash. Examinations continue today before the senior deputy registrar, Andrew Musgrave.>
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