Sex, drugs and horseracing send $27m up in smoke

Michael Bastion

Millions of dollars which investors gave to New Zealand financier Michael Bastion - who plunged to his death from a Hong Kong highrise four years ago - have just vanished, says a team of liquidators.

The 38-year-old share trader fell from his apartment on March 16, 2000, leaving millions of dollars unaccounted for, much of it owed to investors in the Wairarapa and Hawkes Bay.

The Sydney Morning Herald yesterday reported that four-and-a-half years later, his "corporate undertaker" was about to make final payouts. It said that so far, the liquidator, Horwath's Trent Hancock, had received $7.77 million and paid out $6.96 million, at a rate of 16.32c in the dollar. There were a few more assets to sell, which will return another 5c.

But about $27.2 million has gone up in smoke. And, in the course of investigating Bastion's finances, the accountants had uncovered many a weird wrinkle, the Herald reported.

It quoted one observer saying: "It's sex, drugs and horseracing and bank accounts in the British Virgin Islands."

About 270 investors gave Bastion about $38.08 million to invest. Two-thirds of them came from the Wairarapa region - farmers, orchardists and horse breeders with connections to Bastion's wife Maureen.

Several of Maureen's family also gave him money. When the liquidator's team, headed by accountant Rudi Anneveld, went to New Zealand for the creditors' meetings, he found the farmers more embarrassed than angry.

The Herald said they had trusted a local boy made good and he had failed them.

Other investors, who put in more money than the New Zealanders, were the racing fraternity of Sydney and Hong Kong. These included noted industry figures such as David Hayes, Andrew Harcourt and trainer Lee Freedman.

The liquidator went to work soon after the death of Bastion, "one of Sydney's most legendary traders, punters and party boys".

The Herald said his fall was witnessed by someone opposite Bastion's Happy Valley apartment.

He described seeing a man climb out of the top-floor window, clamber along the ledge, slip, lose his footing and plunge six floors to his death.

Bastion was alone when it happened, having become "tense and uptight, paranoid even". Maureen had left him, taking the children back to Australia.

Immediately, rumours about the death of the flamboyant businessman started to fly. Was he murdered, did he kill himself over bad business decisions?

The Herald said the answer was much less dramatic - "Bastie" - (as he was known) fell out of the window while on drugs.

The toxicology report for the coroner came back positive for cocaine. When Anneveld opened up the flat, his team found several bags of cocaine.

"It was the one asset we couldn't sell," he was quoted as saying.

The team of liquidators also found gay and straight pornography and a few dildos.

Anneveld told the Herald he would close the books on Bastion over the next year.

"He lived a lie. He broke every law. And if he were alive, he would be in Silverwater [prison]."

The Herald said in the six years before his death, Bastion's "personal expenditure" totalled $7.72 million.

His average monthly American Express bill was $54,401. He flew first class. And when the liquidator obtained Bastion's records from the high-rollers' room in Melbourne's Crown Casino, they found that he had spent $816,015 there in 12 months.

Originally, there was little for the investigators to go on - a computer file containing the names of all his investors and a few pieces of correspondence; a list of the 102 racehorses he had bought which were scattered around the world.

After much searching, the team uncovered evidence of 30 to 40 bank accounts, many of them in the British Virgin Islands.

The liquidator successfully applied in the tax haven for access and found that millions of dollars had gone through them.

Bastion was a director or shareholder of 23 companies in Australia, Hong Kong, New Zealand, the BVI and Vanuatu.

The company structure was so convoluted that the New South Wales Supreme Court allowed the liquidator to put the assets and liabilities into one pot. Anneveld said this was the first time this had been allowed in a "cross-border insolvency".

A New Zealand Securities Commission report said: "Bastion often made contact with prospective investors through introductions through [insurance broker] Morison Guildford, with which he established close links."

When Bastion said he was setting up a private fund, Gideon Investments, which would offer huge returns to a select clientele, he was inundated.

Director Andrew Morison told the commission: "It was up to Bastion's integrity as to what he did with the funds in the unit trust."

In the four years before his death, Bastion spent $12 million on horses.

Bastion was a flamboyant share trader in Auckland in the 1980s. A picture of him on the floor of the sharemarket the day it crashed in 1987 became a classic.

In 1999, he outbid entrepreneur Eric Watson for a filly owned by New Zealand supermodel Kylie Bax, spending $350,000.

In a "confidential Information Memorandum", Bastion told investors that Gideon would be involved in horses, funds management, dealing, investments and gaming and entertainment. In fact, most of it seems to have gone into horses.

Killarney Pastoral, an Australian bloodstock firm in which Bastion was a director/shareholder, owned horses around the world including New Zealand, Ireland, France, the United States and Australia.

Bastion told his investors he could give them a return of 50 per cent. To this end, he sent out "quarterly investment reports" between July 1994 and December 1999. Every June, he gave them their "cumulative return", which ranged from 25 per cent to 54 per cent.

About 20 per cent of the investors asked for, and received, dividend cheques. The rest were persuaded by Bastion to "roll over" their money.

The liquidators said there was no evidence of any share trading. Apart from personal expenditure, the only things he bought were horses. But the liquidator sold them for a loss; Bastion had grossly overpaid.

The major assets of the estate were life insurance policies totalling about $2.82 million, Bastion's apartment in Rushcutter's Bay, Sydney, and a house in Melbourne's South Yarra which he had bought for his wife, were both heavily mortgaged.

- NZPA