Mother’s home mortgaged while Serepisos warned off Swiss loan

Five properties that belong to the elderly mother of financially troubled Wellington property developer Terry Serepisos were mortgaged for $1.5 million in December.

Inquiries made by the National Business Review yesterday revealed a house listed on the electoral roll as the home of Alliki Serepisos, with a rateable value of $920,000, was mortgage-free until December 7. It was one of five properties Mrs Serepisos owns which have been mortgaged.

A member of the Wellington Greek community close to the Serepisos family said they were “shocked and surprised” to learn of the mortgages.

“That cannot be true, Terry would not go there,” the person said.

 Mrs Serepisos was an unlikely candidate for capital-raising. She had immigrated to New Zealand in 1965.

“She can’t talk English. She comes from a village society, she came here with nothing and worked hard to provide for her family – and she lives for her kids,” the source said.

“If she signed some documents, he [Mr Serepisos] would have said ‘here, sign this’ – and she would have.”

The mortgage deals come amid refinancing efforts by an embattled Mr Serepisos, who argued in the Wellington High Court this week that liquidation proceedings brought against him by Inland Revenue should be suspended.

He told the court he had arranged funding for his businesses from a source in Switzerland.

NBR has learned, however, that the funding source itself was subject to international scrutiny following a series of dubious deals, including some in Australia.

A banker told NBR: “I warned him. This [funder] had all the hallmarks requiring caution and it raised serious questions.

“I’ve been in banking for far too many years and I’ve never seen one of these overseas refinanciers come home. And I’ve seen many, many that were scams,” the banker said.

It is understood Mr Serepisos has been dealing with Western Gulf Advisory, a Bahrain- and Switzerland-based firm that made headlines in Australia last year promising $A1 billion in loans to various developments.

The source said he was unaware of WGA and Mr Serepisos appeared confident before he departed to meet his undisclosed backers.

“He was a box of birds when he got on the plane. I knew he was going to Zurich, but I didn’t know who he was dealing with. It’s all been pretty secret squirrel to tell the truth.”

WGA was founded in 2008. It bills itself as an asset and wealth management firm and advertises loans from $US25 million, carrying as little as 5% interest.

The chairman and founder of the firm, Ahsan Ali Syed, was last week reported by Indian newspaper the Deccan Chronicle as being wanted by police for a 2001 charge of “cheating.”

A Hyderabad school said Mr Ali presented himself as legal counsel for a private bank and was paid $11,393 to arrange a $427,257 loan. The promised loan never arrived, and the paper reports Mr Ali left India in October 2002.

Mr Ali then spent some time in England and made an ill-fated bid last year to buy Premier League team Blackburn Rovers. Reports in England during this time alleged Mr Ali had a string of bad debts and that regulatory authorities in Bahrain had closed his operations there.

Mr Ali last week bought the insolvent Spanish La Liga team Racing de Santander for an undisclosed sum.

The Cantabria government, which had bailed out the club in 2004, said Mr Ali passed solvency and reputation tests. The January 29 release said WGA had provided guarantees to pay back money owned to the government following significant losses made after the bailout.

WGA announced its arrival in Australia in early 2010 with newspaper advertisements promising $A1 billion in funds were available to borrowers. The firm also made media headlines with a failed bid for Australia’s largest cotton farm and a $A220 million promise to two developments north of Adelaide.

The Australian Financial Review reported in January 2010 that Landmark Business Developments, one party to the offer, paid $A21,600 in due diligence fees and 0.67 basis points in one-offs for hedging and registration costs.

According to the Australian Companies Office, Landmark was wound up in August.

Michael Hill, a lawyer and former chairman of the Newcastle Knights NRL team, was a director of Regional Land, the other developer in this deal.

He was wary of talking to NBR, and said he resigned from the company in the middle of last year but confirmed the WGA loan never came through. “As yet they’ve been unsuccessful.”Asked if he was aware of any other WGA loans being successfully delivered in Australia he said: “You’re going to have to be content with whatever you can find. It’s been difficult for everybody.”

Mr Hill declined to offer advice to Mr Serepisos.

Sydney financial broker Max Leishman said he was aware of several other individuals who had travelled to Dubai and Zurich in futile bids to borrow money from WGA.

“A developer went over and tried to borrow $A150 million and paid $A4 million in fees.”

Mr Leishman said individuals caught out by WGA were unwilling to speak out or complain publicly. “They’re businessmen who are so embarrassed. They can’t admit to being publicly had.”

‘Extraordinary puffery’

WGA’s annual report for the year ended December 2009 was obtained by NBR. It reports, exclamation mark included: “A phenomenal rise from $US64 million to $US1.2 billion!”

Victoria University emeritus professor of accounting Don Trow assessed the statements: “The financial statements would be seen by most accountants as an extraordinary example of puffery.”

Prof Trow was deeply sceptical of whether the claimed billion dollar growth existed anywhere except on paper: “The balance sheet includes funding of $US1 billion “introduced” by the chairman of the company. Here again, no equivalent amount of cash has been received by the company.”

The 2009 WGA annual report was signed off by BDO auditors but this relationship ended shortly after headlines in the UK suggested not all was as it seemed.

A reliable source in BDO Bahrain told NBR his firm was no longer associated with WGA: “Their operations were suspended by the regulators, and we withdrew our report and severed our relationships.”

Detailed questions sent to WGA in Switzerland were not answered.

Similarly Mr Serepisos did not respond to detailed messages left on the cellphone he is known to be using while abroad.

On Wednesday night Mr Serepisos’ football team the Wellington Phoenix lost 0-2 to Sydney FC.

Mother’s mortgages

The properties owned by Mrs Serepisos include Miramar houses on Caledonia St and Nevay Rd, as well as a section in Camperdown Rd and a unit in Darlington Rd.

They all had caveats filed against them at 5:05pm on December 7, granting FM Custodians security.

FM Custodians is the umbrella for a number of mortgage funds formerly run through legal firms’ solicitor nominee companies.

Of the four mortgage trusts still lending in the group, three issued firm denials of their involvement in these transactions. Tony Kinzett, chief executive of First Mortgage Trust in Tauranga, did not reply to detailed messages about the mortgages.