Private equity business Mayfair 101 has demanded transparency from the Australian Securities and Investments Commission after seven Freedom of Information requests were rejected by the regulator.
Mayfair Managing Director James Mawhinney made an FOI request of ASIC on June 20 and six separate requests on July 21, 2023, each of them relating to communications and notes among ASIC officials that could explain anomalies in the regulator’s attempt to collapse the Mayfair Group.
ASIC has denied Mayfair the FOI requests on the basis that they would take too long, despite some of the material being suspected of being highly relevant to legal proceedings and the current Senate Inquiry into ASIC’s investigative and enforcement practices.
Starting in early 2020, ASIC pursued Mayfair and Mr Mawhinney, resulting in $211 million in debt instruments being frozen with 570 lenders being held in a financial limbo. ASIC’s main case – which resulted in Mr Mawhinney being banned from dealing in financial products for 20 years – was overturned on appeal by unanimous decision of the Federal Court who found ASIC’s case was “mistaken” and “absurd” and remitted it for re-hearing.
Mr Mawhinney said recent coverage in The Australian newspaper revealed the Mayfair regulatory actions had been triggered by a conspiratorial email from short-seller John Hempton to ASIC Deputy Chair Karen Chester, which made it important to get to the bottom of ASIC’s decision-making.
One critical anomaly concerns the decision by Karen Chester to take the Mayfair matter under her own aegis, when enforcement actions against market participants are usually handled by the Office of Enforcement. Mr Mawhinney is seeking Ms Chester’s encrypted WhatsApp exchanges with John Hempton, from October 2019 to April 2020. The request has been denied.
In another FOI request, Mr Mawhinney sought messages between ASIC officers, liquidators and a trustee involved with Mayfair’s IPO Wealth entities, in a four-day period in 2020. Mr Mawhinney believes the communications will help establish why ASIC refused to acknowledge a material misreading of a spreadsheet by the trustee and liquidators, which erroneously concluded $18 million of assets had been misappropriated by Mr Mawhinney from his own entities. Instead of acknowledging the mistake, ASIC joined the trustee and liquidators as amicus curiae in the Supreme Court of Victoria and sought to wind-up the division of the Mayfair group based on false information.
“These are communications and notes over a period of just four days, and ASIC says it is impractical to produce them,” said Mr Mawhinney. “The 570 lenders, mostly retirees, who have $211 million in limbo deserve to know why ASIC has put them in this situation for three years.”
Another request seeks the encrypted messages of a senior ASIC officer who at a public presentation presented Mayfair as a case study of fraud, despite ASIC never making a case against Mayfair or Mawhinney of fraud.
Another request seeks a record of notes in a three-week period in January and February 2020 in which six ASIC officers conducted a secret meeting with the trustee of Mayfair’s IPO Wealth entities, excluding Mr Mawhinney. Four months after that meeting, the trustee appointed receivers to the IPO Wealth group.
“I have never been told the outcome or the details of that secret meeting between Vasco Trustees and ASIC, except that we know they subsequently made out that $18 million had disappeared when it hadn’t. IPO Wealth’s unitholders deserve to know what Vasco and ASIC agreed to do at that meeting and why they thought it was appropriate to not invite me, the person in charge of the group.”
Mr Mawhinney said ASIC’s decision to reject the FOI request within six hours of receiving it was suspicious. The regulator decided to bundle the seven separate requests into one file and then claimed that it “would substantially and unreasonably divert the resources of ASIC”.
ASIC has already thrown considerable taxpayer resources at Mayfair including two Federal Court proceedings which went to the High Court, an additional Federal Court proceeding and joining the IPO Wealth group proceeding in the Supreme Court of Victoria. ASIC and its deputy commissioner Sarah Court are also defendants to a defamation action filed by Mr Mawhinney in the Federal Court of Western Australia in October 2022.
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