James Atkinson The Shout 10/08/2012
A former publican has used parliamentary privilege to detail shocking allegations of unconscionable conduct by Bankwest and receiver Taylor Woodings, which he claims cost him more than $10 million.
At this week's Federal Senate inquiry into the banking sector, Sean Butler, who owned the National Hotel in Fremantle as well as the Lighthouse Beach Resort in Bunbury, said he had enjoyed a good relationship with Bankwest until 2010, when the bank reportedly overhauled its commercial loan book under new owner, the Commonwealth Bank of Australia.
Senators today said they were gobsmacked at the claims by publicans in the inquiry.
Butler said he had previously been told by Bankwest that he was a "model customer".
"All interest was paid over an eight-year period," Butler said.
"We had record forward bookings and the profits in the June 2011 quarter were the best on record. Turnover for the year was the best ever and profits were trending upwards."
In spite of this, Butler, who is one of numerous publicans who made submissions to the Senate inquiry, claimed that Bankwest under its new lending regime slashed the value of his properties before doubling and then quadrupling his interest rates.
He said the bank then demanded he pay back the entire amount he owed within a two-month period, and issued him with a deed of forbearance after he was unable to comply.
"They advised us that if arrangements were not made to pay all the money back in one lot, penalty interest rates of 18 per cent would apply," he said.
"Our profits were at record levels but I simply just could not afford to pay the 18 per cent interest rate."
Butler said he received an offer of $13.5 million for the Lighthouse Beach resort which would have paid off most of his debt.
"Unfortunately Bankwest said they wanted all their money back in one lump sum. They knocked that offer back… then they brought their receivers in."
Receivers "charged me $1 million"
At the time receiver Taylor Woodings was appointed, Butler said his annual salary was about $87,000.
"We found out afterwards that Taylor Woodings had been charging us, to do what I did, $110,000 a month… $1.055 million for 9.5 months work," he said.
Butler said the receivers subsequently sold the Lighthouse Beach Resort for $9.5 million, $4 million less than he was offered just months earlier. The National Hotel was offloaded for $3.6 million, about half of a previous valuation of $7 million, and $1 million less than a recent offer of $4.5 million.
"In summary, Bankwest have artificially devalued our business, doubled and quadrupled their interest rate margins, and demanded all the money back in one sum, making refinancing virtually impossible," he said.
"We were forced to sell and the receivers gouged our business and lined their pockets, it's a disgrace. Our losses to date total over $10 million as a result of this. The regulatory bodies seem powerless to act, appeals to lawyers and politicians for transparency are ignored - where can we turn?"
Butler said he was continually kept in the dark by Bankwest and Taylor Woodings, and he said the receiver pressured him not to appear at the Senate hearings.
"I think there are some aspects of what's happened with me that are criminally corrupt, and I'm being told to 'shut up', so you've got to wonder why?" he said.
"I believe it's economic vandalism, a massive transfer of wealth from a productive entrepreneur to accountants who act in an unregulated and seemingly corrupt environment."
"I was naïve. I didn't think this sort of thing happened in Australia."
A Bankwest spokesperson said in a statement that the bank assisted many customers between 2008 and 2011 when property values and property development in general suffered due to the global financial crisis and the broader economic environment.
"Mr Butler was impacted by [the] GFC and despite extensive attempts to reach an amicable outcome the situation could not be resolved and the assets were sold," the spokesperson said.
"The matter is still ongoing between the Bank and Mr Butler and his business partner."
A Taylor Woodings representative told TheShout it would be inappropriate to comment on the inquiry.