Farrow Driven By Greed, Says Qc
The Age
Wednesday July 5, 1995
Greed drove the former chief executive of the Pyramid Building Society, Mr Bill Farrow, to disregard Building Society Act regulations and lend millions of dollars in illegal, unsecured loans, a prosecutor told the Geelong Magistrates Court yesterday.
Mrs Susan Crennan, QC, told the court that Mr Farrow had encouraged building societies within the Farrow group to increase the amount of unsecured loans beyond legislated limits, because ``the more the building societies lent, the greater the amount of fees to . . . Mr Farrow".
Earlier, the magistrate, Mr David McLennan, ruled against Mr Farrow's application that the charges be stayed permanently and said he had found no evidence indicating that Mr Farrow was in a state of poverty.
``On all the evidence produced to me . . . I am unable to find that the lack of representation in this case is such as would bring about an unfair trial of these matters and attract an order staying the proceedings," Mr McLennan said.
Last week, Mr Farrow applied for a permanent stay of the charges, saying he was unable to afford legal representation and had been refused legal aid.
Mr Farrow was charged with 12 offences under the now-defunct 1986 Building Societies Act. They relate to alleged breaches of lending limits by Farrow group building societies between June 1989 and April 1990 and carry a maximum penalty of $10,000 on each charge.
Yesterday, he formally entered pleas of not guilty to each charge.
During yesterday's hearing, Mrs Crennan said Mr Farrow had received $600,000 a month in management fees during the 1989-90 financial year, when the offences were alleged to have occurred.
Mr Farrow later denied receiving the fees and repeated claims that he had received an income of only about $6000 from the Farrow group in the 1989-90 financial year.
He said unsecured loans had ``nothing to do" with his personal wealth and described Mrs Crennan's claims as ``one-sided accounting".
Mrs Crennan explained that statutory requirements contained in the Building Societies Act meant that a building society could only lend six per cent of its assets in unsecured loans. She said the figure of six per cent was calculated on the assets held by the building society at the end of the previous year.
The Farrow group of building societies had calculated this figure of six per cent on a monthly basis ``in defiance of the act", Mrs Crennan said.
By way of example, Mrs Crennan said that on 30 June 1989 Pyramid Building Society had unsecured loans equal to 11.4 per cent of its total assets at the end of 1988, which amounted to $52 million dollars in illegal unsecured loans.
She said on 1 July 1989 the society had $10 million in illegal unsecured loans, about $100 million worth on 31 December 1989 and about $87 million worth on 30 April 1990.
Mr Farrow told the court yesterday that people within the Building Societies Registry, solicitors and auditors had been unable to interpret the Building Societies Act.
Mr Farrow repeated claims that the charges had been unlawfully laid for malicious and political purposes.
The hearing continues.
© 1995 The Age
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