THE TRUTH ABOUT FINCORP INVESTORS

THE TRUTH ABOUT FINCORP INVESTORS
If you call them greedy or gullible, shame on you.

Opinion by Neil Jenman

Have you ever noticed, when a big company goes bust - and thousands of people lose their life's savings - that many of those who didn't invest in the company seem somewhat, well, smug?

It's almost as if those who didn't get caught are suddenly successful. As Gore Vidal said, "It is not enough to succeed, others must fail."

Oh, we love the financial failure of others because it makes the rest of us look smarter.

In some quarters, the failure of Fincorp (in which 8,000 investors look like losing $200 million) is not seen just as the failure of a large investment company, it's also the failure of those who invested in Fincorp.

Losers, the lot of them, say the smarties. It's their own stupid fault.

We've all heard the saying about something that looks "too good to be true" and yet the fools keep falling for the same old traps.

Or so say the smarties.

Well, this form of thinking is, to me, truly sickening. Something is really wrong in our society when we blame victims for being cheated. And that's what I believe happened with Fincorp.

Thousands of people were robbed. And, just because they were robbed by an advertisement instead of a gun, it doesn't make it any easier.

In fact, it's worse.

At least when you are robbed with a gun, you get some sympathy. And you get the police chasing the villains.

With these financial robberies, the villains (most of them) get away with it.

I don't believe Fincorp ever looked "too good to be true". Indeed, it looked safe, conservative and oh-so alluring, that's why 8,000 people got caught.

Fincorp placed ads in respected financial magazines and in the trusted sections of major newspapers. These ads often appeared alongside columns written by respected journalists who were warning about companies such as Fincorp. What a sick irony.

I remember one journalist telling me he literally felt sick at seeing "these sorts of ads" in the finance section of his newspaper.

In another case (which I will mention in my next book, Stitched!), I interviewed a dodgy character (sorry, I mean a crook) who admitted that when his ads were placed near a respected person's column, he got a better response.

"A lot of the 'cred' spills over," he laughed.

Dodgy companies are getting better at flying under the 'instinct-radar' of those people who are almost derisively known as "unsophisticated investors".

Sophisticated spivs know that the higher the interest rate they offer to unsophisticated investors, the more suspicion they arouse.

They know that the lower the rate, the lower the suspicion - just keep it a point or two above what the banks are paying. It will make the public feel safer and more money will be invested.

These finance spivs are like germs that become resistant to medicine.

In another case (one I will also include in Stitched!), a developer (who, at time, was on the Rich List) wanted to raise several million dollars. He was prepared to offer 20% return to investors.

A financial planning guru (one of the most well-known in New Zealand), whose huge firm was going to recommend this investment to its clients, persuaded the developer to offer a lower rate.

A rate of 20% would sound "too good to be true". A lower rate sounded safer.

And so, based on the advice of the financial planner, the developer offered a lower rate.

It worked. The combination of a not-too-high interest rate plus a well-known and trusted financial planning firm induced 1,700 investors (mostly retirees, just like with Fincorp) to invest tens of millions of dollars.

And yes, most of them lost most of their money. And yes, the developer and the financial planner are still in business today. Robbers and thieves, the pair of them. And yet, their victims are often blamed for being naïve.

It's sickening.

Every time I see that aerial photo of Eric (the former Fincorp boss) Krecichwost's mansion, I feel sick.

Oh, sorry, Eric, it's not your house, it's your wife's. And it wasn't your money that built it. I wonder how you feel about people who are losing their modest homes so that you could build your monstrous mansion.

Well, how do you feel, Eric Krecichwost (send me an email and not a lawyer's letter). I can't wait to meet you.

To me, one of the most upsetting factors in both the Fincorp and the Westpoint collapse - which between the two of them involve losses of more than half a billion dollars of savings of more than 10,000 ordinary mum-and-dad investors - is seeing these investors labelled greedy and/or gullible.

The ancient Egyptians described greed as "an incurable, fatal sickness with no remedy".

I have yet to meet a single mum-and-dad investor - and I have met plenty - who even comes close to fitting that description.

Such a description, I feel, is more fitting to many developers and financial planners, those who build mansions out of the savings of the battlers whose lives they ruin. And whose faces they never see. How many Fincorp directors turned up to Friday's creditors' meeting? None.

And yet, instead of going after the corporate cowards who rob the elderly, many people are blaming the elderly for being robbed. They were gullible, say the smarties.

Well, as for being gullible, most of the Fincorp investors were attracted by advertisements - often radio advertisements read by a presenter they trusted.

We all know the typically Aussie saying, "Mate, I'd trust him with my life."

Well, that's exactly how thousands of retirees feel - they weren't trusting Fincorp, they were trusting the public personality. With their life's savings.

I'd be more inclined to label the public personality with the word "gullible".

No, I'd go further than that. I'd use the word "shameful". (And yes, I will compile a list of all of the public personalties, including the one I sent a warning message to and got a message back along the lines of, "I got my fifty grand and that's the end of the matter". And then, when it all collapsed - as I told you it would - you said you had no idea). How could you?

Sometimes, I despair.

If the public trust a public personality, then I believe, ethically, that person has a duty of care on what comes out of his or her mouth.

The question anyone in a position of trust needs to ask themselves is this: "Are you being paid or are you being bought?"

What about Westpoint, the multi-million dollar collapse from last year?

Most of the people who placed their money in Westpoint were persuaded to do so by financial planners.

These investors had been given one message ad-nauseum by commentators, advisers and the regulators themselves. "Make sure you always deal with financial planners or advisers who are licensed by the Australian Securities and Investments Commission (ASIC)".

Now, get this: All of the financial planners who recommended Westpoint to investors were licensed by ASIC.

So, is it gullible for elderly retirees to follow the advice of the corporate regulator and seek the advice of a licensed financial planner? And, then, when they take that advice and lose their money, they are labelled stupid. Give them a break!

Is it greedy for investors to be attracted by a modestly higher rate than normal when they are told by an admired and trusted high-profile figure that this is the place to invest?

There are a lot more people who deserve the gullible and greedy label than the investors.

Anyone who disagrees with me, here's a message for you: Come to the homes of elderly folk who have lost their life's savings and are on the verge of tying plastic bags over their heads.

See how they live. See how they worked all their lives, many selflessly raising families, paying taxes and being an asset to society. Not like the spivs who prey on them.

And now, when these decent hard-working, salt-of-the-earth battlers get cheated, some people label them greedy and gullible.

Shame on you. If they were hit by floods or bush fires, or if they were from another country and got hit by a tsunami, we'd all be sympathetic.

To show lack of compassion when good people are suffering is to be almost as bad as the people who caused their suffering.

So, let's turn the focus where it really belongs - on the corporate cowards who, through dishonesty and incompetence caused the losses. The trusted personalities who accepted payment to endorse the cowards; and the Federal Government for not issuing specific warnings about specific companies and their cowardly directors.

And, finally, let's show some compassion to our fellow Aussies.

They just got hit by a man-made financial tsunami.

***************************
This article was written by Neil Jenman, Author & Consumer advocate.


<< Back to Latest News

Articles