On Monday, (7 February), it was confirmed that the decision to ban former Provident Capital director Michael Roger O’Sullivan from providing financial services for seven years and to disqualify him from managing corporations was upheld.
However, the AAT has reduced the period of Mr O’Sullivan’s disqualification from managing corporations from five years to two years and nine months and is in effect until 20 September 2024.
The seven-year ban is in place until 16 February 2022.
In reviewing the appeal by Mr O’Sullivan, the AAT found that he “failed to exercise due care and diligence” in regard to the management of the largest loan (the Burleigh Views Loan) made by Provident, “by deciding to accrue interest on that loan as earned and recoverable income rather than characterising that loan as being in arrears” and also made inadequate disclosures or misleading statements.
Provident Capital issued debentures to retail investors through its fixed-term investment portfolio and advanced the debenture funds to third-party borrowers, including property developers, on a first mortgage basis.
Provident Capital also operated a mortgage fund under a wholesale facility with Bendigo and Adelaide Bank and two managed investment schemes.
When Provident Capital went into liquidation on 24 October 2012, more than 3,000 Provident debenture holders were owed approximately $130 million.
