ANZ-Primebroker spat could draw crowd

The contents of existing witness statements from Primebroker's principals, Sal Catalano and Ian Pattison, sworn as part of a related matter involving ANZ and Primebroker, will entangle some well-known faces along Collins Street.

In particular, those statements reveal the details of conversations that normally remain behind closed doors.

As foreshadowed in BusinessDay yesterday, ANZ faces two lawsuits totalling $285 million over its role in the collapse of Primebroker. That action could lead to a number of prominent Melbourne business identities taking the witness stand, including ANZ chief executive Mike Smith.

The lawsuits concern the final months of Primebroker, a boutique stock lending company that boasted an elite list of wealthy clients until ANZ called in the receivers in July 2008.

According to the sworn statement of Catalano the contents of which ANZ will dispute should the matter ever reach a court he attended a meeting in Melbourne on April 16, 2008.

At that meeting were Peter Hodgson, then ANZ chief of institutional banking, and Ben Steinberg, the man called in by the bank to sort out messes at Bill Express, Opes Prime and Primebroker.

According to the signed and dated affidavit of Catalano: "Michael Smith, the ANZ chief executive, also briefly attended the meeting."

It's one of a number of meetings that will be referred to in the impending court battle.

According to Catalano, Hodgson told him at that meeting that Primebroker "was fundamentally a good business and that the business model and structure was proven globally, although he stated 'differentiating ourselves from Opes would be very important given the improprieties that had been found within the Opes Prime business'."

It would be another four months before ANZ released to the public its review of its stock-lending ventures. That review would admit to failings by the bank, which would claim the jobs of eight ANZ staff, including that of Hodgson.

At the time ANZ's review was released, in August 2008, Smith stated: "The Review Committee found that because of these failings, these issues were never given the proper attention and oversight and, in particular, were not escalated to the CEO, to the board committees or to the board in the way that they should have been."

Catalano's statement tells a different story.

According to Catalano: "During the course of this discussion Mr Smith briefly entered the meeting and introduced himself to Ms Loone and me. He said words to the effect, 'You need to do something about the media. Why are they writing these things about you?' and I replied, 'Unfortunately we could not control the press.'

"[Smith] told us that we had a sound business and operated a very different business to our competition, including Opes, and he counselled us to 'differentiate ourselves' from the pack. Mr Smith also stated the stock loan business was a good business but not well understood locally by the media."

According to Catalano, Hodgson also updated Smith on the discussions "regarding the recapitalisation strategy for Primebroker".

"At that point, Mr Smith added in jest that 'he had no easy answers', or words to the effect. To which Mr Hodgson replied, also in jest, 'Well, you're not much use,' and Smith left the room."

One might wonder if Smith will be quizzed on how much he knew about ANZ's stock-lending forays, and Primebroker and Opes Prime in particular, at a time when the CEO and board aware apparently kept in the dark.

Interesting moments

THE testimony of Mark Korda, of high-profile corporate adviser KordaMentha, could also provide some interesting moments should the liquidator of Primebroker call him as a witness.

KordaMentha was engaged by ANZ to perform due diligence of Primebroker and Chimaera Capital, before the bank signed off on a proposed $55 million equity injection.

ANZ never went ahead with the deal, and issued a press release that suggested Chimaera and Primebroker had failed due diligence. According to Sal Catalano's witness statement, Mentha said the main reason for the due diligence report from ANZ was to confirm "there were no dead bodies and no Maseratis" a reference to the woes at Opes Prime, and a hunt for missing cars and cash that involved Mick Gatto.

In the statement of Ian Pattison, meetings were held with Mentha and Chris Cooper, then ANZ's managing director of working capital, until Mentha "foreshadowed that Mr Cooper would be leaving ANZ".