Regulator Investigates Queensland Presbyterian Church Fund As $ 26 Million From Investors Frozen | Queensland
The business regulator has launched an investigation into a collapsed Queensland Presbyterian Church-run investment fund that took $ 26 million from investors, including church employees and the clergy.
The Queensland Supreme Court appointed receivers at the church earlier this month. Guardian Australia has learned that the church has approximately $ 101 million in debt, mostly related to its elderly care business, Prescare.
Parishioners say they fear the sale of individual churches and land owned by congregations will be needed to pay off debts and recover frozen investments.
The church has important assets, including the heritage-listed Ann Street Presbyterian Church in the heart of Brisbane’s business district.
For decades, the church has managed a capital fund to enable it to purchase new properties, modernize and expand buildings. It promises to pay investors annual interest of between 2.75% and 3.75%.
The fine print on a brochure indicates that the fund is intended for investors whose primary objective is to “support the charitable purposes” of the church “and for whom profit considerations are not of paramount importance”.
An exemption for charities allowed the church to operate the fund without a financial services license and allowed it to give out less information to investors than other funds are required to.
However, Guardian Australia understands that the Australian Securities and Investments Commission is reviewing the governance issues surrounding the investment fund, including whether the use of this exemption was appropriate.
Asic raised concerns about the existence of the exemption for charities in 2013, but ultimately decided not to revoke it.
In a statement, the receivers, PwC partners Michael Owen and Phil Carter, said they were still assessing the condition of the fund. In the meantime, all deposits and withdrawals have been frozen.
The fund is theoretically aimed at so-called wholesale investors, but accepts smaller deposits from individuals with an association with the church – including clergy, staff and volunteers.
Guardian Australia understands that some have put their savings into the fund. Receivers have told investors it is too early to say whether they will be able to get their money back.
The fund’s most recent financial report, from 2019, shows it has over $ 26 million in demand deposits and only $ 8.7 million in short-term assets – “insufficient working capital” of $ 18 million.
“The board of directors is convinced that the fund is able to continue operating because the fund has had insufficient working capital for more than 20 years,” says the 2019 financial report. “History has proven that only a small one part of the liability is invoked each year. “
About $ 11 million of money paid into the fund is linked to a series of loans, including $ 3.68 million loaned to individual religious congregations and $ 5.35 million to a church-owned business, Credere Services. , which reported a net liability of $ 24 million in 2019.
Credere is not in administration. However, it is the owner of Contented Chef, which fell into administration in January with debts totaling more than $ 13 million.
When Owen and Carter were appointed receiver of the church, its moderator, Reverend Dr Philip Strong, said: “While our team has worked hard for over a year to restructure operations, historic contractual agreements have made this extremely difficult.
The church made a deal with real estate firm Catalyst to develop a 100-bed retirement home in Corinda in 2018, followed by another to develop a 140-bed home in Townsville.
Company records show that funds managed by Catalyst hold security on both projects.
It is understood that the development agreement involved the church selling the projects to Catalyst and then re-letting them.
However, it is believed that the church did not pay the rent. A deal to sell three houses to make up the shortfall would have failed.
Catalyst chief executive Justin Laboo declined to answer questions about the fund’s relationship with the church or the receivership, saying it was “bound by confidentiality.”
The situation has raised serious concerns among parishioners, including many from the Korean community in Brisbane.
Of most concern is the church’s most valuable asset, the Brisbane City Church on Ann Street. The building dates from 1872 and was heavily modified in 1897. The town’s land has been owned by the congregation since 1854.
Guardian Australia has reached out to Strong, Prescare CEO Wayne Knapp and the church office for comment. The church forwarded the inquiries to a public relations firm, which provided a response from the liquidators.