Has Clive Peeters Compromised A Major Fraud Investigation?

COMMENT: The Victorian Police have confirmed that within the past 36 hours a matter relating to the alleged theft of millions of dollars from retailer Clive Peeters has finally been referred to them for investigation. But is this too late?

Now questions are being asked as to why Clive Peeters management did not refer Sonia Causer the Companies Payroll Manager to Police when they first discovered that she had been responsible for the theft of millions of dollars from the Company some two weeks ago.

The Company did find time to advice the ASX early in August that there was a serious problem with their accounts that could affect their future earnings. They also found time to take the matter to the Supreme Court and seek applications. 

They also found time to advice the ASX on Tuesday of this week of their dilema. 

In an interview with Greg Smith the CEO of Clive Peeters on Tuesday, some 15 minutes after the Company announced to the Australian Stock Exchange that they were a victim of a multimillion dollar fraud Smith point blank, refused to say that the Company had referred the matter to the Victorian Police.

Instead he kept saying “On legal advice I cannot comment on whether we have referred the matter to the Victorian Police”.

If he had called in the Police at this stage I see no reason why he could not be honest about it, as it would have demostrated that he was at least taking the appropiate course of action. 

Calls to the Victorian Police Fraud Squad and the media liaison unit straight after the conversation revealed that they had no record of a major fraud incident involving Clive Peeters.

What Smith has admitted today is that he put the commercial interests of Clive Peeters ahead of a criminal investigation despite there being overwhelming evidence of a massive fraud on the Company.

He also admits that that the accounting irregularities that were discovered by their internal finance team and not by the Companies auditors, Deloittes or consultants KPMG who Clive Peeters management called in late last year to advise them on a possible capital raising.

In the 2 years that Sonya Causer was robbing the Company of up to $800,000 a month Clive Peeters would have had at least 8 audits of their accounts in preparation of reporting obligations for shareholders and the ASX.

While Clive Peeters has an obligation to shareholders they also have an obligation to ensure that they have not contaminated evidence for Victorian Police investigators, who have now been called in to investigate a crime that Clive Peeters lawyers have spent the last two weeks crawling all over, in the best interest of Clive Peeters and not necesarily the Victorian Police.

Back in 1999 I exposed a major fraud involving a Sydney based distributor who had allegedly been making false media claims on IT vendors worth millions of dollars. The case was initially prepared by a major Sydney legal practise. During the process I was tipped off to the fact that the legal practise was preparing a case that was eventually handed over to police investigators.

Despite passing the committal process the case eventually failed in the Supreme Court, because the Company involved at the time, a large US IT Company had failed to call in the police when they discovered the crime. Instead they called in their lawyers to act in the best interest of the company and not a police investigation, which is what I suspect, has happened in the case of Clive Peeters.

The problem now, for police investigators, is that Clive Peeters by lodging an applications with the Supreme Court and not seeking any privacy orders to prevent the other party being identified have in essence revealed the name of Sonya Causer.

This in itself could present issue for a police investigation as she has already been labelled a crook in the media without being convicted.  

During the past few weeks Greg Smith has been wrong on several occasions.

He was wrong when he said that Clive Peeters was not close to being placed into administration when the financial irregularities were first discovered because without the recovery of the assets purchased by Causer the Company would today be facing a big lack of confidence among creditors and above all a big shortage of cash which both the Insurance Companies and creditors would not have accepted. I also doubt whether their bankers the National Australia Bank would have looked favourably on the Company.

I also believe that Clive Peeters executive should have called in the police, when the fraud was first discovered.

What Clive Peeters and Greg Smith have done is act like 99.9% of Companies facing the same situation would have done. They have looked after their own interests and that of shareholders first.

 Whether this is ethical, or was the right thing is going to rest on whether the Victorian Police are able to obtain a conviction.

While Smith is bleating to various trade media that “no deal has been cut” with Sonia Causer he seems to have forgotten that it is Clive Peeters who is now in possession of assets that were last month in the possession of Sonia Causer and her Companies.

This constitutes a deal that is certainly in the best interests of the Victorian retailer.