Royal Commission Into the Tricontinental Group of Companies

Full description

Appointment

The Royal Commission into the Tricontinental Group of Companies was appointed by letters patent dated 7September and 22October 1990. The Commissioners appointed were the Honourable Sir Albert Edward Woodward, O.B.E., Q.C. (Chairman); Douglas Gilbert Williamson, R.F.D., Q.C.; and William Patrick Gurry, Esquire. William Gurry resigned his appointment and was replaced in October 1990 by Leo John Carden, Esquire.

The Letters Patent defined the terms of reference for the Royal Commission. The terms, broadly, were that the Commission should determine what matters and events caused the collapse of Tricontinental and to investigate the nature and extent of any criminal, civil or administrative responsibility for the losses amongst persons in Government, State Bank Victoria (SBV), or Tricontinental, or amongst auditors, valuers or advisers. The full terms of reference are set out in Appendix 1 and 2 to the First Report of the Royal Commission into the Tricontinental Group of Companies. (As at April 1993 copies of the first and final reports of the Commission had not been transferred into archival custody.)

Structure

The Royal Commission operated with the following structure.

The Commission
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Counsel Assisting the Commission
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Solicitors to the Commission
The Solicitors acted for the Commission. They provided legal advice and assistance based on the material flowing from the investigations program, and prepared briefs and instructions for Counsel.
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Director of Investigations
The Director of Investigations had responsibility for the investigation teams consisting of lawyers, accountants, bankers, computer professionals and investigators. They conducted investigations, prepared reports and details of findings.
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Secretary to the Commission
The Secretary had responsibility for hearings administration (clerks of court etc), information and systems (including Registry), management, corporate services, personnel, finance, office services and support. The Secretary provided all administrative and support services to all units of the Commission.


Operations

The Commission sat and conducted hearings on 157 days between 29October 1990 and 7 July 1992. The continuous presentation of evidence began on 24 January 1991.

A team of counsel assisting the Commission was led by Mrs Susan Crennan Q.C.. The firm of Clayton Utz was appointed as solicitors to the Commission. A firm of solicitors was used because the Victorian Government Solicitor, who might usually have been expected to act for a Royal Commission, was already committed to providing the Government with advice on matters that would or could arise during the Inquiry.

Investigations were undertaken by a team of investigators led by the Director of Investigations, Mrs Noreen Megay. Investigators included lawyers, accountants, bankers, financial specialists and a senior police officer.

To a large extent the investigations depended on documentary material which needed to be obtained from a variety of sources. The majority of such documents were obtained by summonses issued under powers vested in the Commission by the Evidence Act 1958. A smaller, but significant number of documents were obtained by powers delegated under Commonwealth companies legislation. These delegated powers were exercised primarily by Mrs Megay, Director of Investigations. These documents were obtained by notices issued under the Companies Code, to the end of 1990, and the Australian Securities Commission Act from January 1991.

The Commission's powers to compel the attendance and examination of witnesses and the production of documents were limited territorially to the State of Victoria. The use of Australian Securities Commission (ASC) delegated powers allowed the geographical jurisdiction to be extended to cover the whole of Australia.

Background to the Appointment of the Commission

The following extract from the First Report of the Royal Commission into the Tricontinental Group of Companies provides background information for the reasons the Commission was established.

1.1 The appointment of the Royal Commission on 7 September 1990 arose out of the collapse in 1989 of the merchant banking business conducted by the Tricontinental Group of Companies. This Group comprised the parent company, Tricontinental Holdings Limited, and its wholly owned subsidiary companies.

1.2 When Tricontinental Holdings Limited was formed in July 1978, the State Bank of Victoria (`SBV') acquired a 25% interest. In July 1985 the board of SBV resolved to increase SBV's interest to 100%. This was achieved in September 1985. Until the repeal of the State Bank Act 1988 by the State Bank (Succession of Commonwealth Bank) Act 1991, SBV was a statutory corporation of the State of Victoria. Before 1980 SBV was known as the State Savings Bank of Victoria.

1.3 Tricontinental operated with a high degree of independence from SBV until 21 May 1989. On that date problems relating to lending activities, liquidity and corporate management led the board of SBV to absorb Tricontinental's operations into SBV's own operating structure and accept responsibility for Tricontinental's financial affairs.

1.4 Tricontinental ceased to conduct new business as from 21 May 1989, but bad and doubtful debts owed by clients increased, as time went by, requiring provisions in the SBV group of accounts of $351m as at 30 June 1989, $1,114m as at 31 December 1989, and $1,712m as at 30 June 1990.

The failure of clients to repay moneys due to Tricontinental meant that, in turn, Tricontinental would have been unable to repay moneys due to its lenders and depositors had SBV not taken over its liabilities.

1.5 The rapid escalation of Tricontinental's inability to pay its way was financially disastrous for both SBV and the State of Victoria. Just as SBV had accepted responsibility for meeting the obligations of Tricontinental, so too the State Government had accepted statutory and commercial responsibilities to support SBV.

1.6 On 31 December 1990 the State Government sold SBV to the Commonwealth Bank of Australia, as provided for by the State Bank (Succession of Commonwealth Bank) Act 1991.

The proceeds of the sale enabled the State Government to cushion the impact of Tricontinental's actual and potential losses upon the finances of the State of Victoria.

First Report of the Royal Commission into
the Tricontinental Group of Companies. pp 1-2

Report

The exact date on which the Royal Commission ceased to exist is slightly confused. A State election had been called prior to the Commission's report having been tabled in Parliament. The Final report was delivered to the Attorney General in September 1992. The report was not at that time tabled in parliament.

The Final report consisted of four volumes. Three were made public in response to a Freedom of Information Request made by the Herald Sun newspaper and after the Premier obtained legal advice. The fourth volume was not made public at that time. It was claimed to have contained information the release of which could jeopardise possible legal actions. It was also claimed it would be inappropriate to release the document without the protection afforded by parliamentary privilege that the volume being tabled in Parliament would provide.

Location of Records

A number of series of records of the Royal Commission have been transferred to the Public Record Office. They are records created by the Commission in exercising its authority as provided by the Letters Patent of its appointment and by Victorian legislation. Records not transferred include records created by investigative staff as delegates of the ASC. Such records were deemed to have been created by the ASC and were therefore not public records of the State of Victoria. They are believed to be in the custody of the ASC. Administrative records of the Commission are located within the Department of Justice. It is also possible that other records are held by that Department.

Some records from both groups were destroyed by authority of the Commission or the ASC delegates (see, for example, VPRS 8387, Registered Correspondence and Documents Obtained) but without authorisation under the provisions of the Public Records Act 1973. Other records, for example records created by the solicitors to the Commission, Clayton Utz, that were not incorporated into the records of the Commission, remained the property of that firm. In addition, some records, particularly outward correspondence, may not have existed in hard copy (paper) form, and only existed on one of the several PC networks operated by the Commission. Similarly no, records of the Commission's investigative process, which was based around the use of a leased main frame computer and investigative software, are in custody. It is understood that system and software specification documentation is held by the Department of Justice.