ASIC investigation into Firepower fuel-saving products; case listed for hearing on 16 October
Posted by gasweek on 4 October, 2007
In September 1992 an early version of Firepower’s Tim Johnston’s fuel-saving products was the subject of a critical exposé by the New Zealand Automobile Association, reported The Sydney Morning Herald (29/9/2007, p. 44).
Little blue pill that does nothing: The association conducted tests on a small blue pill, being marketed by Johnston, that was claimed to reduce fuel consumption and harmful emissions. The matter reached the New Zealand High Court after Johnston’s company, Power Plan International, failed to prevent publication of test results that showed the pill did not work.
Tax havens a common thread: Undeterred, Johnston started the first in a series of other NZ fuel saving companies, each of which proved unfortunate for investors who bought the dream. NZ records show many of the companies had unusual share structures that involved entities in tax havens such as Vanuatu and the Isle of Man – also a feature of Firepower. For example, the 92-page document given to investors outlined 15 existing or proposed entities spread across the world, including companies in Jersey and Hong Kong.
From haven to Heaven: A second confidential document obtained by the Herald – Operational Plan 2007 & Strategic Business Plan 2008-2012 – outlined a complicated joint venture arrangement with the Russian partner Luchansky, involving entities in the British Virgin Islands and a “debt financing” arrangement in Cyprus. The Herald also understood millions of shares in Firepower were held in an overseas trust, and millions more by a Virgin Islands company called Heaven City. The company is controlled by Johnston.
Audit promised: In March, after Firepower drew unwanted attention from the Australian Securities and Investments Commission and Western Australia’s Department of Fair Trading, it held shareholder meetings in Sydney, Melbourne, Perth, Darwin, Adelaide, Hobart and Brisbane. The meetings were fronted by Finnin, the then chief executive, who pledged a second round of meetings by the end of this month to make “global audited financials available to shareholders”. He added: “We have been outraged at the accusations levelled against us, especially as much of it is pure insinuation.”
CEO dumped: But Finnin soon faced a different kind of accusation after the Victoria Police raided his home over possible child-sex offences. The allegations, which he denies, remained secret until court hearings last month that revealed Finnin was also being investigated by the Australian Federal Police. Within hours of the allegations being made public, Finnin was dumped by Firepower, despite the company insisting he was “entitled to the presumption of innocence”.
Shareholders distracted: Firepower chose the day after Finnin’s departure to announce it had appointed Nomura Code Securities Limited of London to advise the company on “an appropriate financial strategy going forward”. This was welcomed by shareholders and distracted from the fact that the promised financial figures had not been produced and September meetings had not been organised. By the time of Finnin’s departure, a number of shareholders had been drawn into ASIC’s investigation into Firepower.
Mid-October court date: Court records show the commission is looking at possible offences including offering securities without a disclosure document, operating without a financial services licence and making misleading statements. The case has been listed for a hearing on 16 October, but whether it will be followed by another kind of listing to match the optimism of the January cocktails remains uncertain.
The Sydney Morning Herald, 29/9/2007, p. 44