Furious customers have slammed the corporate watchdog for failing to investigate a whistleblower’s allegations against a luxury caravan manufacturer months before it collapsed.
Sunshine Coast-based Zone RV plunged into administration on December 1 owing $42 million to hundreds of creditors, including $18 million to about 180 customers who had partly or fully paid for caravans.
About 140 customers have been told they will not get their vans, with some families up to $190,000 out of pocket.
There is now growing anger that a whistleblower complaint from a former senior Zone RV employee was ignored.
In September, former chief financial officer Kim Hodgkins reported allegations of misconduct and insolvent trading by the company during late 2023 to the Australian Securities and Investments Commission (ASIC).
Zone RV sole director David Biggar, who co-founded the company in 2015, runs about 10 other businesses. (Supplied: Youtube)
The ABC has seen a series of emails where Ms Hodgkins warned senior management in November 2023 that the company was running out of cash and spending needed to be slashed, due to a $5 million shortfall in revenue targets.
“As previously discussed, our current [cash] position is we have $527,000,” Ms Hodgkins wrote.
“We have $2.1 million of payments that are currently overdue.“
Another email shows major electronics supplier Redarc put a temporary stop credit on Zone RV in October 2023 due to an unpaid account.
When Zone RV collapsed, they owed Redarc almost $2.5 million.
Investigation declined
ASIC told Ms Hodgkins by email on October 30 this year that it would not formally investigate her claims.
“[We] are selective about the matters we pursue to ensure we use our resources to target misconduct effectively,” the regulator said.
“We have considered all of the information you provided and conducted our own preliminary and confidential enquiries.
“We have determined not to take any further action at this time.“
Ms Hodgkins urged the watchdog to reconsider, and when they did not reply, she emailed ASIC chief executive Scott Gregson.
Senior executive Peter Witham, in charge of misconduct reports and whistleblowers, replied on November 17, confirming ASIC would “undertake a review of our assessment of your report”.
About 20 caravans have been released to customers who paid in full, but about 140 other people will not get theirs. (ABC Sunshine Coast: Josh Dye)
Two days later, on November 19, Zone RV’s corporate advisor sounded out administrators Cor Cordis about a potential insolvency appointment, according to documents lodged with ASIC.
Cor Cordis held several meetings with Zone RV’s sole director, David Biggar, in the following days, before the company formally entered administration on December 1.
It is unclear whether there is any link between ASIC’s review of the whistleblower’s report and the administrators’ appointment.
Customers furious
Trudi Wight and her husband run a kitchen business in Kempsey and sold their investment property to buy a Zone RV caravan.
Trudi Wight in happier times, the day she purchased her Zone RV caravan. (Supplied: Trudi Wight)
Ms Wight said losing life savings was “very distressing” and she was angry that ASIC initially refused to investigate claims of wrongdoing.
“We pay taxes to [fund] ASIC, and I feel really let down — they’re meant to protect us in this situation,” she said.
“If ASIC acted faster, perhaps people wouldn’t be in so much pain.“
Brook Waugh owns a sawmill near Bellingen in northern NSW and says he is “pissed off” with the corporate watchdog.
Brook and Katrina Waugh are angry that ASIC failed to act and say they will have to delay their retirement to make up for the money they have lost. (Supplied)
Mr Waugh had paid Zone RV more than $150,000 in progress payments for his caravan.
“What is the point of ASIC when they were notified but didn’t do anything for months?” he said.
“They could’ve saved so many people so much life savings.
“The people who were informed of this should be holding their heads in shame, it’s disgraceful.“
Eduard Planken OAM — who acts as a spokesman for 86 out-of-pocket customers — has “a major problem with ASIC”.
“This is a government body supposed to be working in the best interests of everybody,” he said.
“They should have stepped in and said, ‘Halt’ before innocent people lost their money.”
Eduard and Teri Planken have paid $154,000 towards their caravan, but feel pessimistic about recovering the money. (Supplied)
Regulator handicapped
An ASIC spokesperson told the ABC the regulator received more than 10,000 reports of misconduct each year but was only resourced to formally investigate a few hundred claims.
“External administrators are required to report to ASIC if it appears to them that a person may have committed an offence or engaged in misconduct in relation to the company,” a spokesperson said.
“It is the duty of appointed directors to prevent insolvent trading under the Corporations Act, and a range of civil and criminal penalties may be imposed by the court for any proven breaches.”
Several customers are considering launching a class action against ASIC, although the regulator has broad immunity against litigation.
The ABC is aware of at least four customers who have lodged fraud reports with the Australian Federal Police.
In response to questions, an AFP spokesperson said: “This is not a matter for the AFP.”
Cor Cordis will present its report to creditors in January, which will outline how Zone RV collapsed.