The Federal Court of Australia has agreed to hear a case filed by former Sargon Capital founder Phillip Kingston, who is seeking an independent investigation by special purpose liquidators whether a Chinese state-owned conglomerate deliberately bankrupted an Australian high-profile superannuation fintech through a complex legal trap.
With more than $55 billion in assets under trusteeship and supervision and at a reported valuation of A$1 billion, Sargon Capital was all of a sudden placed into receivership by China Taiping in January, 2020 over what has since been disputed default on interests due (about A $1.7 million each in October and December 2019) on HK$500 million investment (promissory notes - worth about A$81 million at the time of funding).
The Melbourne-based business was ripped apart as a result of the complex liquidation process which was later described by former founder and CEO Phillip Kingston as “the commercial equivalent of setting your house on fire to clean the carpet”.
In August, Liberal MP Tim Wilson tabled in federal parliament a file of documents suggesting a deliberate misdirection of interest payment to trigger an event of default for Sargon’s extraordinary collapse last year. Full transcript of MP Tim Wilson speech.
In comments to Mirage.News, Mr Kingston welcomed the hearing scheduled for January 28, doubling down on his previous assertions that no default subsisted, all interest on the facility was paid up as agreed and the loan facility itself was not due to mature for almost another year.
“The documents tabled in Parliament reinforce Sargon’s position that the financing from Taiping Trustees was up to date on interest obligations at the time China Taiping appointed receivers. “
“The documents raise further questions arising from China Taiping’s continued insistence, via their Australian partners Ashurst and McGrathNicol, that interest was in default, despite what appear to be their own accounting records, bank statements and internal emails showing otherwise. “
“The goal of the Federal Court application is to enable an independent liquidator to investigate these matters thoroughly, including the possibility that China Taiping deliberately misdirected funds to engineer the appearance of a default. I hope that this investigation will lead to significant compensation for Sargon’s creditors and shareholders, but ultimately nothing can undo the damage that’s been done.”
“The fact that a Chinese state-owned lender was able to appoint receivers to an Australian company that played a key role in Australia’s retirement savings system, on the basis of nothing but a bare assertion to their lawyers that interest was in default, represents an apparent and concerning loophole in our legislation,” Mr Kingston added.
The court hearing is scheduled for 28 January 2022.
Despite being incorporated in Hong Kong, China Taiping is a red chip company 90% owned by China's Ministry of Finance with the rest held by China's National Social Security Fund.
