Big promises undo big names
Michael McKenna | December 09, 2006
HE won the trust of the big names of Australian finance, sport and politics - using their money and reputations to become a corporate white knight with a web of glittering companies and charities.
Sports stars Allan Border, Mal Meninga and Jason Akermanis, businessmen Solomon Lew and Grant Latta, as well as federal minister Mal Brough and his former Liberal colleague Michael Wooldridge were among an elite group who gave their time or money - a $1 million loan in the case of champion cyclist Robbie McEwen - to busy entrepreneur David Catsoulis.
But three years after bursting on to the Queensland scene, Mr Catsoulis is bankrupt with debts of more than $14 million.
He was charged last week with passing a bad cheque, and is now facing questions over a charity he set up that raised hundreds of thousands of dollars from public donations.
Liquidators of his companies, which include complementary medicine start-up Healing Power and charity Blue Sky Foundation are trawling through financial records in a bid to salvage anything from the flamboyant entrepreneur - who has mansions in Queensland's most prestigious streets and who lured Australia's powerful with the promise of riches and helping the sick. "We are reviewing records we have only recently received, which do not appear to be complete," said Healing Power liquidator Grant Sparks.
Among creditors are McEwen, Akermanis, who is owed $50,000; former Brisbane Lions teammate Mal Michael; Border, a former director of Healing Power who says he lost about $35,000; Wooldridge, another former Healing Power director who sued for $6000; and a host of government and corporate entities, including the Australian Tax Office, which is seeking $1.3 million, and Griffith University, owed $70,000.
"Catsoulis had good intentions, could talk a great game, but it went bad," Border said yesterday. "I see it as a lesson in life."
Queensland's Office of Fair Trading confirmed the Brisbane-based Blue Sky Foundation - which by Mr Catsoulis's estimate raised $500,000 with the help of Brough, Border and Meninga after it started in 2003 - was not registered as a charity. "The Blue Sky Foundation has never lodged an application to be registered as a charity in Queensland, or applied for a sanction in support of any fundraising activity," said a spokesman for Fair Trading Minister Margaret Keech.
If it had been registered, Blue Sky - set up by Mr Catsoulis to raise money for renal research after his daughter Olivia developed a chronic kidney disorder - would have had to submit yearly audits to the Office of Fair Trading.
The highly educated geologist - who came from a family of respected developers and had early success with mining companies before his latest ventures - said the collapse was a "tragic tale" of bad luck and betrayal.
And by his own admission, it worsened when he took a "short cut" in a bid to reverse his fortunes. Earlier this year he says he handed over $2 million - half of which, he says, was McEwen's - to a recently paroled fraudster in a deal that disappeared, along with the money. McEwen refused to comment this week.
In an interview with The Weekend Australian, Mr Catsoulis said he felt terrible for those who had lost money, but it was always a risk with companies looking for seed capital.
"A lot of people got burnt along the way, but we were the largest burning party in the pile and lost everything," he said. "People are making allegations, but the bottom line is that the deal went bad, it blew up."
Mr Catsoulis raised millions for Healing Power, set up in 2004, with a plan to buy and consolidate complementary medicine companies, including the Byron Bay-based TP Health, and shops.
It was all going to plan, according to Mr Catsoulis and other investors, with business legend Mr Lew included in a consortium that was willing to invest $8million in mid-2005.
But at the 11th hour, Dr Wooldridge and Mr Latta, a veteran Melbourne executive - both short-term directors in Healing Power - raised concerns that killed the deal.
Dr Wooldridge, the former federal health minister, confirmed the negotiations, saying the original proposal had been very attractive.
"However, I very quickly lost confidence in anything the CEO (Mr Catsoulis) was telling me and I, and two others (including Mr Latta) had no other course of action than to resign from the company," he said. Mr Catsoulis responded by saying the "Melbourne faction" undermined him because it wanted to buy TP Health for themselves.
But Mr Catsoulis says he is still hopeful of paying out creditors - using his shareholding in a mining company he expects to list in London soon.