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Great Southern calls are misguided, says Bendigo


17/10/2014

Calls for Bendigo and Adelaide Bank to bail out investors in the failed Great Southern company were misguided, said the bank's Managing Director Mike Hirst.

Mr Hirst said Bendigo and Adelaide Bank will offer to appear at a Senate Committee hearing to outline its actions since the 2009 collapse of Great Southern.

"Throughout this protracted matter, the bank has acted lawfully, respectfully and morally and we reject any assertions that we have not.

"It should be noted that in all the legal proceedings there have been no allegations of wrongdoing by the bank and the parties to the class actions have acknowledged that the loans we made to them are valid and enforceable."

Mr Hirst said Managed Investment Schemes, like those operated by Great Southern, were legislated by the Australian Parliament to develop agricultural projects and boost regional Australia.

"As with superannuation, these investments were made tax-effective in order to encourage investors to support the Parliament's intent, so it was entirely legitimate for our Bank to be lending to investors.

"We began our arrangements with Great Southern in 2001 and for nearly eight years the schemes were running smoothly to the benefit of investors, regional economies, the Parliament and the bank.

"It was only when the global financial crisis hit that Great Southern failed, as did many other companies in agriculture and other industries.

"Unfortunately, though, many Great Southern scheme members took legal advice that we considered unsound. Most disturbing to us was how lawyers were urging borrowers to stop making loan repayments.

"We therefore wrote to our borrowers and their lawyers, very early in the piece and a number of times, warning them of the financial problems they risked if they stopped making payments. Many borrowers unfortunately ignored our warnings and now find themselves in the position we predicted.

"It's unfortunate that investors in Great Southern lost their money, and we repeat an offer we have made numerous times that we are happy to help borrowers who might have difficulties meeting their loan obligations."