The Federal Court has ordered that a company associated with Melbourne business figure “Diamond” Joe Gutnick be wound up and declared insolvent amid allegations of millions of dollars of dishonest related party transactions.
The Federal Court on Wednesday appointed liquidators to the publicly traded mining company Merlin Diamonds Limited after a provisional liquidators’ report showed it had just $1331 in the bank and liabilities of $13 million.
Judge Michael O’Bryan said a liquidator would allow for investigations into a number of inter-company loans, related party transactions and “round robin” payments that “have the appearance of uncommercial and dishonest transactions”.
The Australian Securities and Investments Commission’s had requested a liquidator to be appointed after an investigation into Mr Gutnick, one of Australia’s best-known business figures. The ordained Rabbi was once a regular on the BRW Rich 200 list and a benefactor to many Jewish charities. As president of a stricken Melbourne Football Club during the 1990s, his financial support kept the club alive.
However, The Age and The Sydney Morning Herald revealed in a series of stories in 2019 that ASIC was investigating what happened to $18 million in loans that allegedly saw money flow from publicly listed companies controlled by Mr Gutnick to a private company that he was also closely involved with.
In a scathing judgment on Wednesday, Justice O’Bryan said Merlin “does not appear to take its legal obligations seriously,” had expressed “no contrition” for various corporate transgressions and faced a “strong prima facie case” that it had contravened the Corporations Act, particularly when it came to two related companies called Chabad and Axis.
To continue reading click here.