LWP has been suspended from buying and selling for greater than a 12 months and has been topic to a number of ASX queries and investor complaints to ASIC. Its market capitalisation dropped from about $50 million in 2015 to $6 million in August final 12 months when buying and selling in its shares was suspended.
The Brisbane-based firm was common with retail traders enticed by its the potential of its fracking know-how to crack the huge United States oil and gasoline fracking market.
LWP had patented a “proppant” constructed from fly-ash waste, a bi-product of coal-fired energy stations. A proppant works by opening tiny fractures in shale rock attributable to the fracking course of to permit oil and gasoline to cross by way of.
The corporate had initially advised traders its proppants had been independetly scientifically examined solely to be compelled to later admit the testing had been finished by LWP’s former chief scientest.
Over the previous 12 months, as severe considerations emerged concerning the actions of a handful of LWP’s previous administrators, a bunch of federal politicians – together with Scott Morrison throughout his time as treasurer – have raised the corporate’s issues with ASIC.
ASIC’s senior govt, Warren Day, advised a federal parliamentary committee in August the regulator had obtained details about alleged “insider buying and selling, undisclosed associated get together transactions, manipulation of the share value… and deceptive statements” involving LWP.
The ASX in 2016 queried LWP over breaches of disclosure guidelines in relation to share placements with shell firms related to LWP’s former chief govt, Sean Corbin, former chairman Siegfried Konig and members of their respective households.
The share placements occurred with out LWP searching for shareholder approval and the ASX required all shares acquired by way of this course of to be offered inside a month and the proceeds donated to a registered charity.
The ASX additionally questioned a big share placement association with an exterior firm related to Mr Konig.
A failed $770,000 funding in an Indian-based three way partnership and shares issued to key employees shortly earlier than the three way partnership was introduced to the market was additionally raised with ASIC.
Regardless of the intense allegations, Mr Day has mentioned ASIC is not going to be pursuing anybody related to LWP due to an absence of documentary proof to assist proceedings in opposition to the individuals of curiosity.
“It appeared a lot of the potential documentary proof or witnesses could also be abroad and tough to entry,” he wrote to Liberal senator for Victoria, Jane Hume on October 26.
ASIC’s resolution to not pursue key figures in LWP’s rise and fall is unlikely to impress Steve Irons, the Liberal MP who’s assistant to Mr Morrison and till not too long ago chaired the Companies and Monetary Providers Committee.
It was solely after Mr Irons wrote to ASIC in January that the company watchdog began to look at the collection of curious occasions at LWP.
Mr Irons advised Mr Day on the committee’s August listening to that he couldn’t settle for ASIC’s reply to his preliminary inquiry that “privateness circumstances” prevented him from advising the MP on the standing of the LWP inquiry.
“Sadly, I can’t settle for that as a solution, and I believe that mum-and-dad traders and other people round Australia have to believe in our monetary system and that you simply, as the company cops on the beat, are ready to pursue folks,” Mr Irons mentioned.
“Certainly sooner or later these mum-and-dad traders who’re throughout Australia, whether or not or not it’s within the firm we’re speaking about [LWP] or any firm, have gotten to have some sense of safety that there’s a physique that may pursue drastic decapitalisation or insider buying and selling…is ASIC that physique, or does it should be anyone else?”
A LWP shareholder motion group is bitterly upset by ASIC’s resolution. A spokesman for the group, who requested to not be named, mentioned shareholders needed ASIC to pursue former administrators over allegedly deceptive statements to the ASX relating to its money place and analysis and growth rebates.
LWP had many instances throughout 2016 and 2017 publicly claimed it had a robust money place and was owed $2.7 million from the tax workplace within the type of analysis and growth rebates.
However on September 11 final 12 months it amended its analysis and growth claims to simply $597,588.
Mr Corbin, the previous chief govt of LWP, went on to discovered failed Brisbane firm Franchise Retail Manufacturers. LWP’s former chairman Siegfried Konig was additionally a founding director of FRB.
FRB went into administration in January. Mr Corbin then registered a brand new firm known as Phoenix Franchising Pty Ltd.
Mr Corbin mentioned ASIC’s resolution to not pursue him and different former LWP administrators confirmed the allegations made being made in opposition to them couldn’t be substantiated. He did admit there have been some company governance points at LWP throughout his time there, largely referring to the location of shares with grownup kids.
“There have been some minor breaches. We have been slapped over the fingers and we rectified our company governance coverage,” he mentioned.
Mr Corbin mentioned he was upset Mr Irons had made his feedback on the committee listening to with out chatting with him or Mr Konig. He additionally felt assured ASIC wouldn’t be taking motion in relation to occasions at FRB.
Mr Konig didn’t reply to inquiries. He has beforehand mentioned he personally misplaced greater than $2 million in LWP’s downfall.
Mr Day advised Senator Hume in writing that ASIC was nonetheless assessing allegations of FRB’s “alleged unlawful phoenix exercise”.