Steve Navratil aka Steve Navra

While Tristan fought for his country, his money disappeared

 

That's one of the most comprehensive reports on the fallout of the Great Southern fiasco I've read.

Personally, I believe that investors were grossly let down by the lawyers who ran the original class action which was completely inadequate and served to benefit themselves over 5x more than the investors - while also leaving the investors involved without any rights at all.

They received bad advice when investing in the loans, then they received bad advice from the lawyers who instructed them not to make repayments on their loans - which then caused the investors even greater hardship.

The fact that the original tax ruling was something that "should never have been given in the first place" and was later withdrawn (causing the schemes to collapse and trigger the issues), is also something the government takes no responsibility for.

This is all compounded by the fact that the government has been largely disinterested (other than some "stern words" at a royal commission which achieved nothing) in the plight of these people given they have received bad advice at pretty much every step of the way.

Indeed, if they had sold assets and paid back the debts when first confronted with the issues - or even just declared bankruptcy back when they first couldn't pay their debts - then many of these people may actually be in a far better financial position right now after having had a chance to start again!

I fear that some of these people are still receiving bad advice - although I also see that for some they have likely gone too far to stop fighting now, especially as outstanding debts continue to mount. At some point, regardless of how "right" they feel they are - they need to make a decision about which path will lead to the best outcome long term - and I fear that continuing to fight is unlikely to be the answer.

Either way, I think the whole debacle has been a disgrace - although rather ironically - I also believe (based on everything I recall from the information given to his clients at the time), that Steve Navra genuinely believed that the loans were non-recourse and is not entirely to blame here for causing these problems (specifically relating to Great Southern).

That being said - given there seems to be zero documentation about the supposed non-recourse loans, it does lead to questions about exactly what the basis for Navra's business believing them to be so - was it just a verbal "promise"? Really? I guess it should be rather unsurprising that the reality seems to have been somewhat different to the sales pitch which turned out to be based more on enthusiastic over-optimism than common sense.

If there was evidence that Navra's clients were fraudulently placed in loans based on falsified loan applications - then I believe that he should be in prison right now. I didn't think that was the kind of thing he did though - I consider him to be guilty of extreme overconfidence (arrogance?), and certainly for giving advice which was inappropriate to the risk profiles of some investors - but I never considered him to be doing stuff which was actually fraudulent.

 

Some key lessons learned:

1. when borrowing to invest, weigh the risk that the asset backing the debt could become worthless, leaving you with debt to repay but no asset
2. keep copies of all sales material, the PDS, all loan and investment applications and anything relating to your investment and loans in case there is ever a dispute
3. check the claims made in sales pitches against the PDS and other official documentation to see if things really are what they claimed (eg where was the documentation showing it to be a non-recourse loan?)
4. check how the advisers are getting paid and if their payment is significant and up-front, then be very very careful. Very common pattern from this era - large commission payments (10%+!!) to get clients into products.
5. Don't assume that just because a company is listed on the ASX, that they are "legitimate and trustworthy". Turns out that Great Southern was literally a giant ponzi scheme - they were using investments from new investors to pay income to existing investors!

 

From memory these were something like 20 year investments? That was my main problem with them too - you end up locking up your capital for a very long period of time with pretty much zero flexibility.

 

You'd think that would be obvious, wouldn't you? Sadly, doesn't always seem to be the case