Anger brews as Orange Finance investors vote for moratorium
Orange Finance investors will receive an initial payment of 15c in the dollar after today voting in favour of a proposed moratorium plan at a meeting on Auckland’s North Shore.
The plan will save the troubled company from the receivers but whether it will actually benefit its investors remains unclear.
Investors will receive their first payment next week, but today Orange Finance could not definitely say when or whether there would be another payment.
Auckland business owner John Simmons has been advising his father who invested his lifesavings into Orange Finance and who stands to walk away with nothing.
Mr Simmons, who has a law and finance degree, advised his father to vote in favour of a receivership, as it would make Orange Finance and its director Doug Somers-Edgar calpable.
He criticised Mr Somers-Edgar’s lack of knowledge and understanding of the proceedings and the dire situation Orange Finance is in.
“There has been no transparency, even now Orange Finance will not disclose who their 18 loans are with.
“The moratorium was totally inadequate, biased and lacked objectivity. The Securities Commission should have reviewed the proposal.”
Mr Simmons said the government and the Securities Commission have shown no interest or even concern at the thousands of pensioners who could be left penniless as a result of Orange Finance.
“The average age of investors [at the meeting today] was 70. I don’t think they know who to trust. They have been sucked in and are victims of this machine. Something didn’t smell right from the start. They don’t have a strong or united voice. The government is always saying that as a nation we don’t save enough but then this is what happens.”
Auckland receivers KordaMentha have been called in to review the moratorium process and Mr Somers-Edgar’s other company Matrix Funding Group will manage Orange Finance during the moratorium.
Matrix Funding Group will be paid around $27,000 every month for a two-year period to manage Orange Finance.
Mr Simmons said this was a gross conflict of interest and "wrong" that Mr Somers-Edgar should financially benefit from the moratorium plan.
Mr Somers-Edgar’s family trust has bought one of Orange Finance’s 18 loans off it for $1 million that comes with an 18% interest rate.
“He is buying a loan off his own company and his trust will benefit. It’s kicking people when they are down. I don’t believe the investors read the documents properly, or understood what was happening and I don’t think it was ever clear to them [what the moratorium plan entailed].”
“It’s quite surreal to have the same finance director of one company manage the dealings of his other collapsed company,” Mr Simmons said.
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Comments and questions18
I agree with Cashby....Anonymous needs to spill the beans.
Regardless,Chris Lee's website will be sure to give a no holds barred report on the dreadful MoneyManagers organisation.
Meanwhile,Doug laughs all the way to the bank.
Lots of suckers in NZ to suck money out of.
The problem is,most people don't know anything and we have an environment where the unscrupulous can take their capital without penalty.
The Government's stance is..."This is a deregulated economy..It's every man for himself...".Tough luck for the investors..Pat on the back for Doug and the boys..
On the other hand,they spend ridiculous amounts of money having the police achieving their speeding fine quotas instead of real police work...
Doug Somers-Edgar has invariably "clipped the ticket" at every opportunity between the investor and the final investment. What surprises me, is that anyone is surprised that he is taking yet another opportunity to charge the gullible to spend their money for them. If investors had done their research they could have clearly seen his modus operandi.
Is it true that Matrix Funding Group will be paid around $27,000 every month for a two-year period to manage Orange Finance? Do you think that is fair compensation?
Another blow to the credibility of market regulators. Huge conflicts of interest, gaping disclosure holes and yet more disillusioned investors. What sort of Trustee will not form a view on such a huge issue? Who is protecting the investors? It is no good just regulating those left in the market while those who have collapsed are left to perpetuate their existing practices.
Lemon Finance more like. As long as there's enough "lemmings" in NZ to follow the piper, nothing will change. Receivership and nothing would have been a much better result than allowing Somers-Edgar to have any input in calling the shots and continuing to line his pockets.
Receivership would have been better. The receivers could then have investigated the loan book and potentially taken proceedings against Somers-Edgar if breaches have taken place. Then was a need for an impartial investigation into the running of Orange and its relationships with the Somers-Edgar netwrok. That is now not likely to take place.
I was at at the meeting today. How many of you were? This story and the comments below it bear absolutely no resemblance to the meeting itself or the contents of the moratorium documenation.
Then why hide behind your anonymity. This guys deeds go way beyond Orange Finance.
just the same old story - the fools who invested and even more foolish - how any of these toilet businesses got to moritorium i will never know. they are all run by people who are only interested in themselves, they fund their crap projects that wouold never work anywhere else, and all the suckers pay for it. when will the folk who let their money make these companies run ever learn. the sooner one actually ends up being liquidated the batter. look at hanover, the same MO from the owners / directors. DSommers just enjoyed it while it lasted - looks like it will now keep lasting.
A great article by Kelly Gregor. Perhaps the follow-up article could question the ineffectiveness of the Covenant Trustee Company who is supposed to be looking after the interests of the investors? Why are the details of the loans not being released ? We can assume that they are probably related party loans to Somers-Edgar and he doesn't want anyone to find out? What other reasons could there be for not releasing the details?
The investors are desperately in need of good investigative journalism in order to open the can of worms completely and totally expose the failings of all parties involved.
Another Ponzi kind of scheme of the local New Zealand home brew nature goes bust. Why are these middle men accountant always getting away with fleecing the little pensioner, and even after they go broke they can continue to do so. No wonder the New Zealand is going down the tube, nobody visits here any longer, nobody buys from here. It becoming a “desolo terra”, abandoned land where only the laidback and lazy thrives, and of course all the legal thieves masquerading as accountants and lawyers, and well protected by defamation laws and systems of legal intimidation.
Close Call...We pulled our First Steps $$ out when MM agent could not explain where our dollars were (safely ?) spread.. Six months later it was frozen...Phew!
I am the person quoted in this story.
I suggest that Anonymous should check out the Dominion story which said investors "appeared angry and bitter" - which about sums it up.
Like most of you I am tired of reading these types of stories and intend to step up and push for change.
Writing outraged emails are great but how about putting your hand up to help.
You could start by contacting EUFA (www.eufa.co.nz).
You could also let you feelings be known by sending a letter to the Securities Commission (seccom@seccom.govt.nz - attn Jane Diplock) or by contacting your MP with your story.
A Receiver or Statutory manager similar to what was arranged for the PSIS years ago should have been appointed for all defunct finance companies. Including Orange instead of giving control back to the directors who oversaw the original position
Have lodged a complaint , although we were lucky and pulled our money out because we had made another purchase and needed the cash, however the whole company was a sham with their investments , where the dollars were spread etc etc, etc...
The "Shortform Prospectus Relating to the Moratorium" is available for public viewing via Orange Finance Ltd on the NZ Companies websight.
This document is a total scam and designed to fill the pockets of Somers-Edgar. For him to claim that he is not receiving any renumeration is blatantly false and misleading the investors. He and his wife are the sole owners of Matrix which is receiving $27,000 per month under the management contract.(They have been receiving $75,0000 per month but have graciously agreed a pay cut)!!
The only winners in this scam are Somers-Edgar, Covenant Trustee Co and KordaMentha, all of whom are receiving sunstantial fees at the expense of the investors. This group also has the facility to arbitrarily extend the moratorium period if they wish !!???
Perhaps the authorities need to be having a thorough investigation of Covenant Trustee Co Ltd, as well as Somers-Edgar, Money Managers, Orange Finance etc.
Therein lies New Zealand's version of Bernard Madoff.... and it surely needs to be revealed to the thousands of investors who have lost everything.
The advisers throughout the MM franchises are generally nice people. However, they are unfortunately now tarred with the same sham attitudes as their "leader" Doug Edgar. There are only a very small number of them who have had the combination of wisdom and balls to stand up to him and question his antics over the years. I suggest that we are going to see evidence of more of them arising with the required wisdom and balls to help enlighten us all to more of Doug Edgar's 'matrix' of shams.
We are waiting, ....but not forever?
By the way, what happened to the few comments which disappeared off this column last week??
yes korda were paid 27,000 per month i to have lost money in orange finance 72yrs
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