Writing was on the wall for Harts
Financial services group Harts Australasia may have left the financial services industry reeling in the past week with news of its collapse, however, it appears that the demise of the group has been on the cards for some time.
In May last year Harts listed on the Australian Stock Exchange (ASX) with a share price of $1 and a $30 million float. But despite its confident start, in less than 20 months Harts share price has plummeted to four cents.
However the loss in share price is the least of Hart’s worries. Since May 2000 the group has experienced a rapid decline in profit, a provisional liquidator was appointed to the group last week and its executive director Steve Hart is facing more than 25 years behind bars for charges relating to fraud.
In March this year the group recorded a first-half loss of more than $18 million. Hart’s second half results continued along the same dismal path with the group recording a staggering loss of $17.5 million.
To add to its woes Harts has fought off four winding-up applications by its creditors and had its dealer’s license with Cardinal Financial Services revoked by the Australian Securities and Investments Commission (ASIC).
In the months since December 2000 the group has received the resignation of seven of its senior directors, as well as the departure of a large number of staff including accountants and financial planners from its main group and 36 subsidiaries.
In 2000, according to Money Management’s Top 100 survey the Harts Group, under the name Harts Securities, had more than 100 planners with $800 million in funds under administration. However, this year Harts doesn’t rate a mention, and the minimum number of advisers accepted into the survey is 11.
According to sources a large number of planners left the Harts group for other dealer groups, with a number of advisers having their license revoked by Harts themselves.
However the most recent blow for the group has come from the action taken by the ASIC.
Last Tuesday the Federal Court in Brisbane granted ASIC’s proposal to appoint a provisional liquidator to the Harts group, including 35 of its 36 subsidiaries. In the past year the group has lost almost $100 million.
ASIC has filed an affidavit from the Australian Tax Office (ATO) regarding money owned by the Harts Group. Among the outstanding sums are $943,000 owed to its staff superannuation fund, Harts Australia staff superannuation fund.
Speirs says the Harts group’s remaining subsidiary, Sunraysia Syndicate Management is the only group not involved with the provisional liquidation, as it changed hands
Steve Hart now faces up to 25 year behind bars after he was arrested and charged with 11 tax-related fraud offences last week that equate to the sum of $5 million.
Hart, the founder of the embattled financial services group, is accused of swindling more than $40,000 from insurance giant AMP Society through false life insurance claims.
It is alleged that Hart set up life insurance policies in the names of three people over a three-day period in November 1990 before claiming the proceeds of the policies three years later on a day in January 1993.
The policies were in the names Ralph William Holding, Lionel Edmons and Roy McKinty, according to a report by Australian Associated Press.
Hart has also been charged with one count of organised fraud, one count of defrauding the Commonwealth and the Australian Taxation Office, six counts of forgery and three counts of false pretences.
Hart was not required to enter a plea but declared outside the court that he would fight the charges.
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