Diamonds – a Dirty Business, Fertilizer Does Nothing to Clean it Up – Gutnick

 

Common Denominator Between Diamonds in All Stories – Singapore  – Common Denominator with Diamond Magnates – Chabad and Real Estate – Fertilizer was a surprise…

Lost Messiah, July 14, 2016

Perhaps the fertilizer angle should not have been such a surprise. DAP or Diammonium Phosphate, the type of fertilizer in which Joe Gutnick invested, was a more stable alternative to the traditional fertilizers. In the United States, had subsequent to a number of domestic bombings created numerous laws making farming with traditional fertilizers more difficult, including limiting quantities that could be purchased, requiring farming licenses and other similar restrictions. DAP did not require many of those safeguards to obtain large quantities of it. It was in some cases less expensive. It is far more stable and easier to transport, with less risk of explosions.  It has an advantage of increasing nitrogen and changing PH levels of the soil, which previously required additional chemicals, thereby saving time and money in adding additional fertilizers and plan nutrient products. It also allows farmers, who had limited themselves to a single type of crop, to extend their crop variety because of the inclusion of reaction with the soil creating an increase in nitrogen. Finally, DAP is a water soluble product which means it can be sprayed in the water, rather than requiring more localized application, saving time and manpower.

DAP also has other uses. When added to other chemicals DAP is a flame retardant. It has been used by fire-control agencies to create a “fire line” in advance of a fire to prevent the spread of that fire. It then dissolves into the soil, fertilizing it and restoring land ravaged by unexpected forest and other brush fires to  germinate more rapidly. Interestingly, DAP Flame Retardant’s main export markets are: 

Main Export Markets:

  • Eastern Europe
  • North America
  • Mid East/Africa
  • Central/South America
  • Asia
  • Western Europe
  • Australasia

The largest company in the DAP flame retardant industry is located in China (think China Sonangol and Queensbury): 

Zhejiang Longyou Sihai Chemical Industry Co. Ltd

Address: No.26 Zhuangzhi Road, Chengnan Development Zone, Longyou County, Quzhou, Zhejiang, China (324400)
 

We are pursuing the China angle.

DAP also can be applied to metals to purify them and is used in the polishing process and the smelting process. It has uses in mining and in removing impurities. So far, we have found that ammonium products are generally not used when gold is the metal involved but platinum may be another story.

Finally, DAP is mined from rocks and those rocks can be found in many of the mines where other minerals and gems are being mined. And it may be that reason why it appeared to be a viable investment. Here we can only speculate. 

We do not think that Gutnick was suddenly prompted to get involved in an industry with which he was wholly unfamiliar. He did not amass his fortune through poorly researched investments. He most likely did not have a dream from his Chabad “Moshiach” telling him that fertilizer was the way to increased wealth. Nor is he now feigning bankruptcy as a fools folly. We simply cannot seem find the trigger that made DAP investments so appealing, except perhaps as window into India’s other minerals and metals, or a connection with China. We are exploring those angles.

If there is one thing we can state unequivocally, Diamond Joe Gutnick is anything but bankrupt. He has perfected the appearance of insolvency to an art-form.  

For the purposes of this article, we are relying on information from the site TOT, part of a private investigation firm. We have not engaged them but, in using so much of their information must endorse their services. Here is the contact us link.

 

Joseph Gutnick $87M Asset Transfer To Sister’s Firm Probed

http://www.totpi.com/joseph-gutnick/

Liquidators of bankrupt mining magnate Joe Gutnick’s failed Legend International are investigating the transfer of phosphate deposits worth up to $87 million to a company controlled by his sister and nephew as the group teetered on the brink of collapse in April.

The potentially lucrative tenements have emerged as a key asset of Mr Gutnick’s former empire, and the best hope major creditor the Indian Farmers Fertiliser Co-operative has of recovering some of the $79m it is owed by the magnate and Legend as the result of a bruising legal battle.

With IFFCO’s backing, Legend’s liquidators, Mark Korda and Craig Shepherd of Korda Mentha, have launched lawsuits in Australia and the United States over a deal transferring ownership of Legend subsidiary Paradise Phosphate, which owned the tenements, to Queensland Phosphate, a company controlled by Mr Gutnick’s sister Pnina Feldman and her son Sholom.

Ms Feldman declined to say how much Queensland Phosphate paid for Paradise but insisted the deal was completely above board. “Don’t believe any silly rumours about things not being legitimate,” she told The Australian yesterday.

“Legal advice has been obtained all along the way.”

The Paradise deal is just part of a complex business web established by Mr Gutnick spanning Australia, Singapore and the US that will now be sifted through by Korda Mentha and the fallen mogul’s personal bankruptcy trustees, Andrew Yeo and Gess Rambaldi of Pitcher Partners.

Mr Gutnick declared himself bankrupt with debts of $275m on Friday, beating IFFCO, which had a bankruptcy hearing scheduled for the Federal Court on Tuesday, to the punch.

He owes IFFCO $54m personally, and Legend owes it $25m, over a failed joint venture.

Significantly, the sheer number of personal creditors and the scale of unpaid debts threaten to swamp IFFCO’s claim on his estate.

Over $130m of Mr Gutnick’s debts are owed to relatives, including a $30.7m loan to his wife, Stera Gutnick.

While he once presided over a $300m fortune and enjoyed the nickname “Diamond Joe” thanks to investments in diamond and gold projects, his statement of affairs obtained by The Australian this week revealed a threadbare estate comprising a $2m superannuation fund and close to $16,000 in cash.

Asked by The Australian why he owed so much money to relatives, including his wife, and members of the Jewish community, Mr Gutnick said: “No comment.”

He repeated the remark when asked whether all the debts were legitimate and the impact the scale and quantum of debt would have upon IFFCO’s claim.

Asked when he would be able to speak more openly about the bankruptcy, he replied: “Call me in a month.”

The fortunes of Mr Gutnick and Legend — which had assets of just $US3.58m ($4.7m), according to US bankruptcy filings — would have been much larger if Mr Gutnick’s dreams for the Paradise phosphate project had been realised.

In a 2010 presentation on Legend’s website, the company told investors the tenements could generate average earnings of $US151m a year and had a net present value of $US1.5bn.

The phosphate business was worth “$75m to $87m, with a midpoint of $81m”, KPMG said in a valuation filed with the Victorian Supreme Court.

How it came to be transferred to Queensland Phosphate is not yet clear. According to US Securities and Exchange Commission filings, on November 24 last year Queensland Phosphate agreed to inject between $1m and $2.5m into Legend by buying convertible bonds.

In return, Legend gave Queensland Phosphate “a charge over its entire shareholding in Paradise Phosphate”, and Paradise “guaranteed the repayment of the face value of the bonds”, Legend told the SEC.

Pnina and Sholom Feldman were also appointed to the boards of both Legend and Paradise.

US Federal Court and Victorian Supreme Court documents show that on March 11 Queensland Phosphate appointed Christopher Palmer as receiver of Paradise and the shares in it owned by Legend.

“When we saw that Legend and Joseph Gutnick were not doing so well, we put in a receiver to get our security to get these tenements,” Ms Feldman said.

“Obviously my brother was absolutely distraught when he found out we’d put in a receiver,” Ms Feldman said.

“I don’t think he was quite as distraught as he was yesterday, with all the newspaper articles.

“I feel a bit sorry for the situation.”

Mr Palmer, who did not respond to calls and emails, transferred the Paradise shares to Queensland Phosphate on April 22, according to Victorian court documents.

Solicitor for IFFCO, Michael Sloan of Ashurst, told the court the sale went ahead despite a warning from his firm in February to “refrain from taking any action that would put the assets of Legend out of reach”.

Mr Gutnick’s bankruptcy trustees now face the daunting task of assessing the merits of each creditor, including the mogul’s wife. Mr Rambaldi yesterday said he would act in the interests of creditors to “identify, secure and realise the assets, income and property of Mr Gutnick’s personal estate”.

He said he had custody of Mr Gutnick’s Australian passport and signalled the administration faced a long haul, pointing out Mr Gutnick’s affairs were “complex and the investigation will require an assessment of a number of matters, including the nature of the creditors’ claims”.

The Australian can reveal that in addition to Legend, registered in the US state of Delaware, and the 55 Australian companies and trusts declared in his statement of affairs, Mr Gutnick is also the sole director and shareholder
of Singaporean investment holding company Merlin Diamonds Pte Ltd.

Company records show he was a resident of the city state as of November 14, 2014, when he filed a change of address.

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