30 August 2015
ASIC do nothing as Fairfax Media lose almost a half a billion in failed property projects
Fairfax Media has lost almost a half a billion in failed property projects from mostly mum and dad investors, yet ASIC has chosen not to do anything about it.
As a result of two failed property projects in recent years, Fairfax Media has lost almost half a billion dollars in investor money, primarily consisting of mum and dad investors and even some institutional investors.
Fairfax spent over $200 million building a state of the art commercial property development near the Melbourne Tullamarine Airport to fund for The Age newspaper. However, recently they were able to sell it for only $16 million dollars.
According to the Australian Financial Review, the sale was reported to have occurred in recent weeks when Zagame Car Dealership acquired the property site.
For years, Fairfax had failed to find a buyer, as many planned sales kept falling over due to its collapsing value.
Mum and dad investors who were targeted to invest into Fairfax Media, thanks to their glossy prospectuses, have seen the value of their investment plummet along with other institutional investors, many of who as a result will now struggle in retirement.
To add insult to injury, management received pay rises despite losing investors almost half a billion from just two of its failed property projects.
The other project was in Chullora Sydney, where it spent approximately $340 million in 1995 on a commercial property project for its printers. However, they had to sell it for only $55 million recently.
This is another massive blow to mum and dad investors, some of who would also see their life savings disappear.
When ASIC was questioned about their intended actions on Fairfax Media and the enormous losses caused to investors, no comment was received.
Fairfax Media also failed to comment.
It has been alleged that the ASIC and Fairfax have a close relationship whereby Fairfax agrees to not scrutinise the internal affairs and complaints about the corporate regulator, whilst running pro ASIC propaganda in return for favourable treatment.
One investor stated, “it’s appalling how large companies such as Fairfax can lose almost half a billion in two failed property projects and nothing is done about it. Where was it disclosed that a media company would be investing half a billion into property projects that are now sold for a little over 10% of their value a few years later? It’s a total rort, yet ASIC do nothing about it”, he said.
Another disgruntled investor stated, “it appears as if there is one rule for everyone else but different rules for big companies that enjoy cozy relationships with the corporate regulator, where they can lose half a billion dollars of investors’ money and ASIC will turn a blind eye”.
In May 2008, Fairfax had a market capitalisation of $5 billion. However, by June 2012 it dropped by 85% losing investors billions. Money investors can hardly afford causing significant heartbreak for many who wrongly believed Fairfax would properly manage its investment and not blow it on luxury wasteful property projects.
Mining magnate Gina Rinehart invested in Fairfax in mid-2012 with a 14% stake, becoming the largest shareholder. However, in 2015 Australia’s richest person sold that stake blaming it on the company’s poor management.