'The golden time for investment in Australian wine has well and truly passed. While another cycle may well occur in the future, the time for a kill occurred around a decade ago, before the rest of the world had woken to the value and quality of wine being made in this country.'
Australian wine, in particular various cult wines, are the latest wine investment rage. There are a few top Australian wines with a developing track auction record - notably Penfold's Grange and Henschke's Hill of Grace. There are an increasing number of cult wines that often sell for very high prices, especially those who have attracted high praise and points from Robert Parker. Names include Fox Creek, Greenock Creek, Hartz Barn, Mouthpiece, Neck Oil, Noon, Secret Places, Summerfield, Three Rivers, Torbreck and Wild Duck Creek Often the production is tiny and few yet have any track record for investment.
Some people have been persuaded to put part of their superannuation in cult wines. Given the lack of any track record both in how well these wines age and past gains in price, this is a decidedly high-risk strategy, which may pay dividends but, equally, could be a complete no-no. A small punt on these cult wines might be interesting but it would be most unwise to trust that they will provide a comfortable retirement.
It is hardly a surprise that this boom has created a number of Australian wine investment companies, a trio of whom - Australian Portfolio Wines (portfoliowines.com.au), Heritage Fine Wines (heritagefinewines.com.au), Wine Orb (wineorb.com.au) - have employed decidedly questionable high pressure sales tactics. They also have disturbing links to UK scamsters who have moved to Australia to seek their fortune. See below for Something fishy about Oz wine investment companies? (UK scamsters and Australian wine investment companies) (Posted 5th April 2004).
investdrinks recommends langtons.com.au - the site of Langton's wine auction and exchange.
Update from Crouch Insolvency
In a letter to creditors sent on 17th November 2005 Nick Crouch, Heritage's receiver set out the latest position. Although the majority of the 1.3 million bottles ordered by Heritage clients will be available to distribute to creditors, 350,947 bottles will not. This total is made up of 282,436 bottles deemed as 'unrecoverable'. This is wine held at various wineries which was ordered by Heritage but either not paid for or only part paid. With continuing legal processes some of this wine may be recovered. 19,442 bottles are in storage but subject to legal claims by various wineries. This may also in time be resolved. Finally there are 49,069 bottles deemed as unexplained losses - short deliveries, storage deficiencies etc. Of the wine to be distributed to creditors only 47,476 bottles are bar-coded, so can be directly linked to their owners. According to a report in The Australian (22nd November) the wine, for which Heritage's clients paid $AU70 million, is valued at $AU38 million by auction house Grays.
Crouch expects a final levy of between $AU1 and $AU1.75 will be necessary. He is currently negotiating the sale of the business, which he expects to be completed by 31st December when he will stand down as receiver and manager. Apparently there are three short-listed candidates. The wine will be transferred to the new owner, who is then expected to begin distributing the wine as required from February 2006.
The matter of the lien on some $AU4 million worth of wine claimed by the original receiver Peter Ngan for allegedly unpaid fees remains unresolved. (Full details from bankruptcy.net.au/heritage.htm)
Heritage directors due before NSW Supreme Court in April 2006
As part of the investigation into the running of the company former directors of heritage, which includes Ben and Simon Tilley friends of Australian tycoon Kerry Packer, have been subpoenaed to appear NSW Supreme Court in April 2006. The investigation is also looking into the role played by Simon Farid, who remains on UK FSA's the highly select Prohibited Individuals List.
Wine Ark Website on Heritage Fine Wines
Wine Ark, an Australian wine storage company, is launching today a website (heritageinvestors.info) dedicated to Heritage Fine Wines and its collapse. Wine Ark say that 'The Help Site has been established in response to the hundreds of calls we continue to receive from people still trying to track down the whereabouts of their wine and to ensure that "the 1.5 million bottles of wine are returned to their rightful owners as soon as possible'. The site announces that Nick Crouch, the liquidator, hopes to start returning wine to investors from 30th November.
Wine Ark can be contacted at PO Box 7148, South Sydney BC Alexandria, NSW Australia 2015. Toll Free: 1800 111 275 | T: (02) 8338 8033 | F: (02) 8338 0399 or firstname.lastname@example.org For more details about the website email: email@example.com
Wineorb: Ngan & Co start court proceedings
Liquidators Ngan & Co have started court proceedings in the Supreme Court of New South Wales to establish who has ownership of wines bought through collapsed wine investment company Wineorb and seek orders for its sale. Details of the action are on a notice from Ngan & Co.
DID YOU PURCHASE WINE & STORE WINE WITH WINEORB ?
TAKE NOTICE that the Liquidators of Wineorb Pty Limited (In Liquidation) ACN 094 949 998 (Wineorb) have commenced proceedings in the Supreme Court of New South Wales, being proceedings number 4631 of 2005, to seek orders in relation to the ownership and subsequent sale of the wine held by Wineorb.
All people who claim to be the owner of any wine, or to have a proprietary right of any kind to any wine now held by Wineorb, are required to send their claims to me in writing by 5 pm Tuesday, 4 October 2005. Any such claim should identify the precise claim which is asserted, and the factual basis on which that claim is made.
If you do not provide details of your claims against Wineorb to the Liquidators by the required date, the proceedings may be determined in your absence and an order may be made as to the ownership and subsequent sale of wine in your absence.
If you have not already done so, you may register your claims by contacting Ngan & Co at GPO Box 3705, Sydney, NSW 2000 or by facsimile on 02 9261 0922. Information can be obtained by telephone on 02 9261 0933.
Peter Ngan and Greg Parker of Nagan & Co also sent a letter to Wineorb creditors on 22nd August about the court action and what creditors need to do.
Clarification from Ngan & Co
investdrinks has advised by Greg Parker of Ngan & Co that: ‘Mr John Lehmann of the Australian was advised by Greg Parker that the computers that were sold were previously on the Company network and all information was on the Company servers and back up tapes, the computers were already in the possession of the former employees, and this was not unusual to sell assets to previous employees to maximise realisations.’
Also investdrinks wishes to make clear that there is absolutely no suggestion in the 1st August 2005 posting that Peter Ngan is in anyway ‘pliant and biddable’ only that it is possible that those who placed Wine Orb and Heritage Fine Wines in administration may have had that impression.
Greg Parker has also brought to investdrinks’ attention that Ngan & Co sent a letter (dated 15th June 2005) to Michael Stuchbury, editor of The Australian, complaining that ‘the two articles in The Australian on 10 June and 11 June’ contain inaccuracies. (See posting of 13th June 2005). ‘The headlines on both articles are untrue and factually incorrect. The body of both articles contains many matters that are also untrue and factually incorrect. We are outraged at the conduct of The Australian in respect of your blatant disregard of the facts.’
Among the complaints are Peter Ngan did not ask for permission to get a court order and that ‘a number of the investors (including the largest group of investors) supported the course of action proposed’, so the headline ‘WineOrb Liquidator Blocked’ was inaccurate. Ngan ‘has never sought a pooling order and has never sought any order that would give him, as liquidator, ownership of the wine’.
Ngan & Co has asked for a retraction and a written apology to be published and for an undertaking that The Australian will not ‘repeat the erroneous matters set out above’. Parker has informed investdrinks that ‘solicitors have been instructed in relation to this matter’.
Heritage – investigation of directors authorised
Nick Crouch, Heritage’s liquidator, has been authorised to investigate and seek top legal advice on the conduct of the bust company’s directors, which include Ben and Simon Tilley, close friends of Australian tycoon Kerry Packer. At creditors approved meetings in Sydney (28th July) and Melbourne (27th July) a levy of $AU2.20 on each bottle of Heritage wine in storage. The meeting also approved fees for Crouch’s work. A resolution approving fees totalling $AU133,135 due to Peter Ngan for his work as the previous administrator and liquidator was not carried.
During the meeting (see report below from The Australian 30th July) it emerged that former liquidator Ngan had sold four Heritage company computers to its former directors including Simon Tilley. The Australian reports that ‘Greg Parker, speaking on behalf of the liquidator Peter Ngan, said the computers were sold to the directors because "we could get more money that way" than on the open market. If they turn out to hold incriminating or embarrassing information it would be hardly surprising that the computers were more valuable to the directors than what they might fetch on open sale. investdrinks has no idea whether selling potentially incriminating evidence contravenes any professional code of conduct in Australia. One has to wonder whether Peter Ngan, who wound up whisky cask scam company Mondeley International (Gleneagles Spirit Management), was perhaps chosen as administrator by WineOrb and Heritage because he was viewed as pliant and biddable.
The Australian reports that Simon Tilley failed to bring his computer as directed to a meeting with the liquidator on Tuesday 26th July. They also report that some 300,000 bottles of wine are missing -- including bottles of $50,000 early-vintage Penfold's Grange – and some of the investment wines had 100% mark ups.
The Australian reports that ‘Some investors put as much as $500,000 into the investment scheme created by charismatic Englishman Simon Farid in 1999.’ Farid, the ‘charismatic Englishman’ remains one of a small number of elite scamsters listed on the UK Financial Services Prohibited Individuals List. On 3rd May 2005 43-year-old Farid is quoted in The Australian as saying: ``Yes, I did have a banning order,'' he said. ``I was quite young when it happened.'' That might perhaps have been phrased differently as the banning order, made in 1996, is still in place and it is remarkable that Farid achieved this feat while still quite young.
In view of the Heritage mess and Farid’s past history it might well be prudent for the Australian authorities and journalists to take a close look at Art Equity in Sydney (artequity.com.au), which involves Farid. I trust that this will not turn out to be an Australian version of the Ashley Jenkins art scam.
investdrinks has received several unconfirmed reports that some of the leading scamsters involved in WineOrb and Heritage Fine Wines have moved to Spain, where they are now plying their trade in boiler rooms selling penny shares.
Report from The Australian: Heritage goes further into red
By John Lehmann
IT was billed as a prized opportunity to make a dollar from some of Australia's finest red wine.
But now, almost five months after the collapse of the failed Sydney investment fund Heritage Fine Wines, investors are digging into their pockets again.
Hundreds of angry investors - the list is thought to include executives from high-powered firms such as Clayton Utz, Citigroup and Macquarie Bank -- found themselves this week digesting a message as palatable as a cheap bottle of port.
At meetings in Sydney and Melbourne, Heritage's administrator and liquidator Nick Crouch told investors that to have any hope of getting back their wine they would have to spend more money to enable him to fully investigate the company's activities.
With few options left, investors heeded the call, agreeing to pay a levy of up to $2.20 a bottle to cover a range of costs, including Mr Crouch's fees and expenses, which already top the $600,000 mark.
They also gave the teetotal accountant permission to spend up to $95,000 on legal advice from Queens Counsel barristers.
The sign-off pays the way for Mr Crouch's team to launch an investigation into whether Heritage directors -- among them Kerry Packer's poker-playing buddy Ben Tilley and his brother Simon Tilley -- broke the law by selling $69 million worth of wine at inflated prices.
With 300,000 bottles of wine missing -- including bottles of $50,000 early-vintage Penfold's Grange -- investors hope the probe will allow them to get their wine back as well as build evidence for a possible civil suit against directors.
Some investors put as much as $500,000 into the investment scheme created by charismatic Englishman Simon Farid in 1999.
The probe came as The Weekend Australian learned that another liquidator -- engaged by Heritage on its collapse in March -- allowed four company computers containing detailed financial information to be sold to former directors, including Simon Tilley.
Mr Tilley, 40, had so far failed to make a computer available to the administrators, a member of Mr Crouch's team said.
Greg Parker, speaking on behalf of the liquidator Peter Ngan, said the computers were sold to the directors because "we could get more money that way" than on the open market.
Mr Tilley, who declined to comment about the issue, did not follow a directive to bring the computer, a desktop, to a meeting with administrators last Tuesday, the Crouch team member said.
"We don't have closure on this issue," he said.
Company documents show the Tilley brothers offloaded their shares in Heritage two months before it crashed.
Mr Crouch said his team would try to determine whether Heritage directors made false representations by promising investors significant returns on wine that was being sold to them at prices inflated by up to 100 per cent.
"We would be looking into potential breaches of the Trade Practices Act, the Corporations Act and, maybe, the Crimes Act," he said.
He claimed financial records showed wine sold to investors for $68.9 million returned a gross profit to Heritage of $33.2 million.
His team is now tracking whether the profits were dispersed to shareholders or spent by the company.
Mr Crouch said it was difficult to understand how investors could have any hope of making a return by on-selling wine that had been sold to them at such a mark-up.
Sydney lawyer Mark Doble, representing 90 investors who sank about $4 million into the fund, said they were "very shocked" to learn they had invested in wine at such a large mark-up. "These are astute investors -- they understood they were getting the wine at a good price," he said.
Mr Crouch assured investors he would inform police and the Australian Securities and Investments Commission if he found evidence of improper behaviour. But he added that he had to be "very careful" in making public comments because "a godson of Kerry Packer is involved here", referring to Simon Tilley.
Contacted by The Australian at his home in Sydney's harbourside suburb of Rose Bay, Mr Tilley said such a reference was a "gross misrepresentation". But he spoke about the operations of the company, admitting investors would not have known they were being charged inflated prices.
"I don't think we would have told investors what the mark-up was ... that's not normal business practice," said Mr Tilley, who became a director in 2002, 18 months after the firm was registered.
He resigned as a director last December, just over two months before the collapse.
Asked if he was aware the wines were allegedly sold at an average mark-up of 100 per cent, he said he could not be sure, as thousands of wines were sold at different margins: "The glaring thing is that the storage and insurance was a very large cost (to Heritage). But the vast majority would have been sold at or below cellar door prices.
"The reason we did get good deals was that we had massive buying power."
Financial statements show the company in 2003 sold $19.4 million of wine at a gross profit of $8.2 million.
The company paid about $600,000 in insurance and rental expenses and $3.8 million on "employee benefits, commissions and consultant fees".
Mr Tilley said he believed "everyone acted appropriately" but declined to say why he left the company just before administrators came in.
His brother, Ben, 39, was an early director of the company, until November 2003.
He is regarded as one of Kerry Packer's two closest mates, and often accompanies the big man on his global gambling romps.
Years after attending Sydney's Cranbrook school with James Packer, he picked up a $750,000 finder's fee from the dying HIH insurance group for knocking on Packer senior's door and asking if he wanted to buy properties the insurer was trying to sell.
Langton’s issue Classification IV
Australia’s highly reputed auction house, Langton’s, has issued the fourth edition of their classification of Australian wines. The first edition of Langton’s classification of the top Australian wines was in 1991 when 34 wines were listed. The second classification in 1996 listed 64. This rose to 89 for the third edition in 2000 and this latest edition lists 101.
The classification is based on ‘the essential elements of track record and reputation, both of which are measured through auction market presence, consistency, volume of demand and price realisations’. For inclusion there must be at least 10 vintages and an auction track record.
There are four categories – Exceptional, Outstanding, Excellent and Distinguished. These are Langton’s definitions: ‘Exceptional: the most highly sought after and prized Australian wines on the market; Outstanding: benchmark quality wines with a very strong market following; excellent: high performing wines of exquisite quality achieving slightly lower values and market strength; and Distinguished: secondary market staples or emerging classics. Sometimes undervalued by the market.’ There are 11 wines classified as Exceptional, 22 as Outstanding, 34 as Excellent and 34 as Distinguished. Red wines dominate the list. Off these 39 are pure Shiraz, including Seppelt’s Great Western Vineyards Show Sparkling Shiraz.
Of the 89 wines that made the third edition 67 are included in 2005. New entrants into the exceptional category, which includes Penfolds Grange and Henshke’s Hill of Grace, are Bass Phillip Reserve Pinot Noir, Cullen Diana Madeline Cabernet Sauvignon, Rick Kinzbrunnerse Giaconda Chardonnay and Robert O'Callaghan's Rockford Basket Press Shiraz.
Langton’s issue a warning about investing in Australian wine. ‘The last five years has been a period of slow growth. While there are some individual wines that have performed extremely well, Langton’s advises investors to keep well away from the wine investment market unless they know what they are doing.’ It is clear that from the recent collapse of investment companies WineOrb and Heritage Fine Wines that many recent investors in Australian wine have had little or no knowledge about the fine wine market.
The complete classification is available on langtons.com.au.
WineOrb creditors meeting
At a heated creditors' meeting on 9th June Peter Ngan, the liquidator for collapsed WineOrb, had to agree to apply to the NSW Supreme Court for a deadline for all claims for wine to be submitted against the failed fine wine merchant.
According to a report in The Australian by Teresa Ooi and Michael West about 100 angry investors in failed investment fund WineOrb blocked liquidator Peter Ngan from making a court order to get ownership of 162,500 bottles of fine wine, believed to be valued at more than $8 million. Mr Ngan wanted investors to grant him a "pooling" order that would have given him, as liquidator, ownership of the wine. Instead they voted for Mr Ngan to apply to the NSW Supreme Court for a deadline for all claims for wine to be submitted against the failed fine wine merchant.
The Australian reported that 'Mr Ngan told the meeting that about 7000 investors had paid WineOrb a total of about $11 million for premium wines, such as vintage Penfold's Grange Hermitage and Henschke's Hill of Grace, many of which had since gone missing. WineOrb stored the wine on their behalf, for a fee, with a view to selling it for a profit in the future.
"The records are in a very poor state," Mr Ngan said. "There were no records of sales and the company's records were so bad, so unreliable, that we had to reconstruct a lot of things on a piecemeal basis." He conceded that he and co-liquidator Greg Park of Ngan & Co had huge problems reconciling ownership of the wine. "We have been conducting a stock count with the help of external experts and we have problems identifying who owns what wine, as there are no identification marks."
Ngan said WineOrb had sold to investors premium wine which "it did not have, and sometimes they sold the stock twice". He also said that Moet Hennessy, which was owed about $100,000 worth of vintage champagne, had repossessed its stock shortly before WineOrb was placed in the hands of administrators. There were many other discrepancies. "We understand that stock went missing from Millers," Mr Ngan said in response to a creditor's question. Millers, whose facilities were used to house the wine, is now owned by Kennards, whose managing director, Sam Kennard, told The Australian last night he didn't know anything about it. Millers is believed to be owed storage fees.'
Teresa Ooi in The Australian also reported that it emerged at the meeting that Ngan sold about $129,754 worth of premium wine to cover his fees. 'The controversial move disclosed at the first investors meeting on Thursday caused an uproar among 100 disgruntled investors who demanded to know whether any of the sold wine belonged to them. Mr Ngan, who had earlier said he had great difficulty reconciling which wine belonged to investors because of "very poor and unreliable records", explained that he "was absolutely certain" he had only sold "unallocated" wine. But this assurance did little to appease the meeting.
However, once Ngan had given an undertaking to apply to the court for a deadline for claims to be submitted Mark Doble of Raj Lawyers, who represents a number of investors, said: "This is a major show of good faith on the part of Mr Ngan. Now that he has given an undertaking he would not sell any more wine has put our minds at rest. We can now get on with reconciling the wine stock to the extent of what can be reconciled."
Ngan's conduct as liquidator in the two collapsed investment companies has certainly stirred up controversy. At a hearing in Sydney on 4th May he was replaced as liquidator for Heritage Fine Wines due to a conflict of interest.
Creditors also questioned Mr Ngan on the prospects for an insolvent trading action against WineOrb's directors, Richard Wynne and Michael Hennessy. "I have reported the affairs of the company's directors to ASIC (Australian Securities and Investments Commission) and ASIC has taken an interest," Mr Ngan said. "Our view is that there was insolvent trading." The Australian authorities ought to consider whether there is a case against William Beasley.
Looking at the Wineorb debacle it does seem remarkable that any company involving William Beasley was able to ensnare 'a number of high-profile interstate investors, including former Deloitte Australian chief Domenic Martino, who is now chairman of Sydney Gas' (The Australian 10.6.05). Beasley's well-established track record - William Buchanan & Co Ltd followed by Gleneagles/Mondeley ought surely to have warned off savvy investors.
WineOrb investors plan group action
According to reports in the Australian press (including news.com.au) some investors in WineOrb that collapsed in January are planning a group action to gain possession of their wine. They are reported to have complained that Peter Ngan, the liquidator has failed to keep them fully informed. Ngan has fixed a meeting for investors and creditors for 9th June at Tattersalls Club in Sydney.
Australian Portfolio Wines reassures investors
According to an article by Teresa Ooi in The Australian on 26th May Australian Portfolio Wines have reassured investors that their wine worth more than $AU15 million is safe and that, contrary to press reports, the company is not on the brink of collapse. APW was founded by Roland Pibworth, who sold his shares in APW and resigned as director in 2003. Mr Hetrelezis said those shares were transferred to him. Adam Dawson is the sole director of APW. The three shareholders are Mr Dawson, Mr Hetrelezis and Norman Same, an accountant based in Melbourne.
Heritage Fine Wines - New Liquidator Appointed
Following a hearing at the Supreme Court in Sydney on 4th May Nick Crouch of Crouch Insolvency in Sydney was appointed as Heritage's new liquidator. He replaces Peter Ngan, who was appointed in March 2. The case was brought by two ex-employees of Heritage who claimed successfully that, having bought $AU324,000 debt heritage owed to the ANZ Bank Ngan couldn't continue as because of conflict of interest between being the principal creditor and the liquidator. The former employees claim $AU63,720 in unpaid salary by Heritage.
It is not fully clear to what extent there is a shortfall between the wine sold by Heritage and that held in 55 stores in various parts of Australia. Heritage's company records show sales of 2.04 million bottles. However, records at The Millers Self Storage warehouses show only 919,000 bottles. Ngan had estimated that there were around 1.2 million bottles actually in store. He claimed that Millers' records were not fully up-to-date. Crouch believes that there are between 1.2 and 1.5 million bottles in store. In release to investors on May 13 Crouch explained that 'I have engaged appropriate industry experts to assist me with my fresh attempt to prepare a stock and investor reconciliation. I am hopeful that up to 80% of the wine is capable to being reconciled to investors. This process will take 2-3 months and cost around $1 - $2 per bottle. I have consented to an interim order of the Supreme Court of NSW in proceedings 20056 of 2005 that I not sell, dispose of or part with possession of the wine.' Crouch is seeking to have all the wine moved to one location.
Crouch Insolvency's has a special web page for Heritage investors: bankruptcy.net.au/heritage.htm. Also this links to a story in The Australian at the end of April: news.com.au/story/0,10117,15130699-2,00.html
Heritage - the news gets worse
From a series of reports (end of April/ beginning of May) in The Australian by Michael West it is clear that the Heritage collapse is turning into another fine mess. Creditors voted in early April to put Heritage into liquidation.
Only half of the wine sold as listed on Heritage's customer database has been found. Heritage's database shows that the company 2.04 million bottles of wine. However, only 919,000 bottles have been found at The Millers Self Storage warehouse. Peter Ngan, the liquidator believes that Millers records are not fully up to date and that the total is closer to 1.2 million bottles in storage. Even Ngan's estimate means that there are nearly one million bottles missing.
West suggests a number of reasons for discrepancy:
It may also be that Heritage sold some of the wine twice either because of faulty record keeping or because the wine was so good it deserved two or more owners. investdrinks well remembers the sales patter of Heritage salesman Will Hamilton and the half a barrique (150 bottles) of Mount Langi Shiraz 2000, which most fortuitously his line manager, Joe Baker (aka Jolyon Beasley), happened to have secreted away (see posting 5th April 2004).
Furthermore not all the wine is properly marked up, so it may well be difficult for investors to establish ownership of their wine.
There are a number of court cases now swirling around Heritage. Liquidators Ngan & Co has a claim for $150,000 against Millers Self Storage for wine missing, while Millers are claiming $150,000 from Heritage for non-payment of storage fees. Also Ngan's position as liquidator is being challenged for alleged conflict of interest by two creditors, who were former employees of Heritage. This follows Ngan's purchase of the ANZ Bank's $350,000 charge over Heritage, which makes him both secured creditor and liquidator. There is also a case bought by a number of creditors demanding access to their wine. This is due to be heard in the NSW Supreme Court on 6th May.
Australian Portfolio Wines
On May 2nd Michael West suggested in The Australian that Australian Portfolio Wines was also in trouble and in talks with a liquidators. Bryan Hetrelezis, major shareholder in APW, has since clarified that talks were held last Friday between APW executives and an insolvency practitioner. However, those talks involved a possible deal in relation to the Heritage and WineOrb wine collections. ``We are definitely liquid,'' Hetrelezis said. ``We are not on the brink of collapse. Last year we made a profit and we'll make a profit this year.'' The messy collapses of both WineOrb and Heritage Fine Wines must, however, have severely jolted Australians' appetite for wine investment.
Heritage Fine Wines
The deficiency of recently collapsed Heritage Fine Wines, is $AU2,838,689 (£1,172,961). The major unsecured creditor is Australian Cellars ($1,459.554), a Heritage subsidiary. Australian Cellars, a high-end retailer and then called Naked City, was acquired by Heritage at the end of 2001. Other significant creditors include Balnaves Vineyard Services ($130,846), Cellarit Pty Ltd ($11,695), Deutsche Asset Management ($30,749), Heathcote Winery in Victoria ($54,957), John Gilbert ($600,000), Secret Places pty ($33,374) and Wirra Wirra Vineyards ($103,057). Heritage called in the administrators on 2nd March. A first meeting of creditors was held on 8th March in Sydney and a second meeting, which should decide the future of the company, will be held on or before 5th April.
investdrinks understands that Simon Farid, formerly of Heritage and now involved with Art Equity, is now under investigation. Raj Nanda is the CEO of Art Equity.
Breaking news - Heritage Fine Wines goes bust
Heritage Fine Wines went into administration on 2nd March. The administrator is Ngan & Co, currently winding up WineOrb. The collapse of Heritage Fine Wines coming so soon after WineOrb is sure to deal another severe blow to the idea of investing in Australian wine, especially cult wines that have little or no track record. The deficiency is not known. Clearly the attempt by Andy Lyon to turn around the company since joining in February 2004 failed. Lyon had been moving the company away from wine investment towards high-end retailing.
One of the original directors of Heritage Fine Wines was Simon Farid, who remains on the UK Financial Services Authority's prohibited individual list. He resigned from Heritage last year and is understood to be involved in Art Equity of Barrack House Level 6, 16-20 Barrack Street Sydney NSW 2075 Ph: 02 9262 6660 Fax: 02 9262 6665, e-mail: firstname.lastname@example.org, Website: artequity.com.au. Art Equity 'opens the door to the world of investing and collecting artworks for pleasure and profit'.
Wine Orb to be wound up
At a meeting of creditors held on 8th February by administrators, Ngan & Co it was decided to wind up WineOrb.
Ngan & Co reported in a circular to creditors on 28th January that 'There is evidence that wine stocks were removed from the company's warehouse just prior to the appointment of the administrators. It appears that the main parties responsible for the removal of such stocks were wine suppliers. As a consequence there appears to be wine stock shortages. The administrator has also warned that 'There was no reconciliation between investor stocks and the wine stocks held in storage.'
Also in their 28th January Circular to creditors Ngan & Co report that 'The company's director, Mr Michael Hennessy advised that the reasons for the Company's administration were:
Whilst we concur in part with the director's reason for the Company's failure we are also of the opinion that based on our investigations to date, the Company was poorly managed, its overhead structure was too large, lacked appropriate internal controls, and had a deficient stock control/management system to properly manage wine stock on behalf of wine investors.'
investdrinks has to wonder whether this lack of customary structures and controls was down to sheer incompetence or whether it was pointless putting them in place as WineOrb pty was a scam from the outset.
Hennessy used to be a salesman with Ocean International Marketing, a subsidiary of Seed International Ltd and based in Rotterdam. Hennessy has an outstanding loan from WineOrb of approximately $AU38,000. Ngan & Co say that he will be requested to repay the loan.
The circular also indicates that the deficiency totals $AU956,813, of this $195,000 may be owed by client investors for wine storage and insurance. The total deficiency does not include any shortfalls in investors' wine stocks. Wine stocks in storage 'are on the basis that all wine stocks are stored in bulk and not under the name of individual clients or investors'. All investors' wine stocks, especially those for superannuation purposes, should have been properly stored under the individual's name. That WineOrb did not bother with this elementary precaution is surely highly indicative of the type of operation this was.
Furthermore it is possible that WineOrb traded while insolvent. 'Based on our preliminary investigations, we consider the directors may have traded the Company whilst it was nearing insolvency or was insolvent.' On the date of the administrator's appointment the company had approximately $AU900 cash in a bank and no cash on hand.
investdrinks trusts that the part played by William Beasley and Michael Hennessy in running WineOrb will be thoroughly investigated and that, if there is shown to be evidence of wrongdoing, that they will charged appropriately.
Heritage Fine Wines halts pre-release sales and reports tough market conditions
investdrinks has been told by Andy Lyon, md of Heritage Fine Wines that 'After the collapse of WineOrb we halted trading of pre-release wines as the market has softened considerably. Some of the Account Executives have left and where they have gone to I have no idea at this stage. We continue to sell wines via the Cellar Pointer and also "cellar door " sales on behalf of wineries. In fact we have increased the Cellar Pointer sales team by an additional five people in the last two weeks. Lyon has told investdrinks that they are negotiating with wineries, so that their clients can buy direct from the wineries. We are changing the model, so that we act as brokers for the wineries taking a small commission. Trading conditions are difficult at the moment. Although WineOrb was a small company, its collapse has had a surprising effect on our business.'
WineOrb falls to earth
It was sadly predictable that one (or more) of the Ozzie wine investment companies would soon go pop. The dubious honour of being first in line goes to WineOrb. The Australian (21st January 2005) reports that 'Hundreds and thousands of dollars worth of premium wine seems to have disappeared over the festive season - and it hasn't been drunk by the wealthy investors who were lured into buying it with promises of big profits.' The article went on to report that WineOrb had collapsed owing about $1mAU to at least 25 creditors. The administrators are Peter Ngan and Greg Parker of Ngan & Co. As the administrator of Gleneagles Ngan & Co should know where the bodies are buried and how this scam worked. Doubtless it will be wearily familiar to them. It will be interesting to see if they can establish whether the company have sufficient wine to cover what their investors had ordered.
WineOrb is the third failed drinks company involving William Beasley - William Buchanan & Company Ltd and Gleneagles Spirit Management being the two previous companies. It is frankly amazing that having stuffed a number of investors with whisky investments with Gleneagles that he appears to have been allowed to do the same with WineOrb. No wonder a number of experienced scamsters have moved from Europe to Australia. Doubtless Michael Hennessy, who took over from Beasley as a director of WineOrb, found Sydney more congenial than Rotterdam, where he had worked for Heros Global Marketing (later renamed Ocean International Marketing).
Meeting with Heritage Management
On Wednesday 15th September I met with Andy Lyon (CEO) and Chris Priddle (senior wine buyer) of Heritage Fine Wines Pty Ltd in London. Lyon and Priddle have come over to Europe to explore opportunities to sell their wines in Europe. During the meeting it was confirmed that Simon Farid resigned as director of Heritage in July and has no further contact or involvement in company. "We don't know what he is doing," Lyon told me. Heritage is increasingly developing the retail side of their business. The first issue (Winter 2004) of The Winehound, their quarterly magazine, has been published and the Summer edition will be out in October. investdrinks has been assured that the company's selling techniques have been changed and that investors and others who buy 'pre-sale or 'en primeur' will get a genuine deal substantially below the retail price.
It is good that Heritage appears to becoming a wholly legitimate company. investdrinks would be very interested to hear from Heritage's customers about their experiences of buying from the company.
Spencer Pibworth's progress: Heritage to Australian Portfolio Wines pty
One of the most experienced drinks investment scam salesmen, Spencer Pibworth, worked for Heritage Fine Wines for about a year before setting up Australian Portfolio Wines pty. Apparently Pibworth's alias at Heritage was Jack Johnson. Pibworth was with Hamilton Spirit Management, the fraudulent operation in Gibraltar, before joining the equally fraudulent House of Delacroix in Holland, selling Champagne as a millennium investment. Pibworth was a leading salesman at Delacroix. Indeed he was so jealous of his telesales' skills that some of his calls were conducted from under the table to prevent other members of the sales force from copying his techniques. Pibworth then returned to the UK and set up Bouvier UK in July 1996 to sell Thienot Champagne as an investment. The project was stillborn as investdrinks warned Thienot of Pibworth's track record and Thienot refused to allow his Champagne to be sold as an investment.
Pibworth's presence at Heritage Fine Wines rather suggests that the company was set up largely as a scam. According to an ex-employee of Heritage, Farid told the sales force to say whatever it takes to make a sale. Pibworth must have felt at home. investdrinks trusts that Farid's Art Equity company is not in the Ashley Jenkins mould. Unfortunately the link between drinks investment scams and art scams is already well established.
This also leads investdrinks to wonder whether Heritage's resident MWs (Masters of Wine) - Rob Geddes and Toni Paterson - checked out the company before adding their names and prestige to Heritage Fine Wines. investdrinks has tried contacting Geddes and Paterson but has yet to receive a reply. MWs should be aware that dubious companies will want to use their names to reassure those about to be gulled. Clearly Andy Lyon has a big job to sort out Heritage Fine Wines.
Australian Portfolio Wines sales
investdrinks has recently received two insights into the selling techniques employed by Australian Portfolio Wines.The person, who sent the first example, commented. "I dropped my jaws when some chap, who had been conned before, sent me this. A classic example of a wine shark preying on the ignorants who have loads of dollars to invest."APW's pitch:
'Attached is a portfolio of wine that APW and myself are putting our strongest buy recommendation on. It is from an established yet emerging winery named Craneford. Craneford is located in the heartland of the Barossa - (the best wine region in the country)
Owner and Winemaker John Zilm is a highly respected and well connected in the industry.
Craneford is a low production winery - these wines are extremely hard to get and much of their production is exported to the US.
Opinion in the industry is that the 2003 vintage from this winery is even better than the heralded 2002 vintage.
Robert Parker Jnr is a vocal admirer of this winery, consistently rating its wines in the 90+ category. We have strong reason to believe that the 2003 vintage will be the highest rated wines Craneford has ever produced.
We are very exited about gaining access to Craneford's larger bottle formats ie. Magnums and Jeraboams (sic). These are extremely rare and thus add a collector's item value to the wine.
There is the potential for the Merlot to be the highest rated Merlot in the history of Australia. Last year it received 95 points which is exceptional and opinion is that the 2003 will rate higher. I have tasted this wine personally and can say without hesitation that it is the most spectacular Merlot I have ever tasted.
Parker has also stated that the 2002 Petit Verdot is one of the very finest he has ever tasted - again this bodes well for the superior 2003 vintage.
These wines are pre release - you are gaining access to the market 3 months before the rest of the world snaps them up. They will vanish immediately in October when they are released.
All transactions with Australian Portfolio Wines Pty Ltd are subject to our Terms and Conditions, a copy of which is available at:
Andrew Caillard MW of Langton's comments. "Craneford rarely comes top in auction and has absolutely no track record whatsoever."
Another example: Taste the value of your investment
Some time ago, you contacted Australian Portfolio Wines requesting information about the fantastic returns available on Premium Australian Wine. In order to keep you updated, I offer you some examples of the recent successes which clients of Australian Portfolio Wines have enjoyed during the financial year just past.
To celebrate the new financial year and to encourage you further to start building a portfolio of Premium Australian Wine, Australian Portfolio Wines offer an Australian icon to any new clients during the month of August ...
Just like Penfolds "Grange" the following wines were recommended by Australian Portfolio Wines and have appreciated substantially in value in only a few months. There are many more such examples which I can email to you, but these are particularly relevant, as they are very recent examples. This will give you a better idea of how well a diversified wine portfolio could be working for you, in comparison to your current investments.
Remember that Premium Australian Wine has been the second best performing asset in Australia over the past 10 years, out-performing both the stockmarket and property, as per the attached performance charts from the Access Economics Report. Even in a worse case scenario, I think that Stuart Langton of Langton's Wine Auctions summed it up best in "The Sun Herald"
In the times I've been doing it, with a few rarities, wine's never gone backwards. Ever. In the depth of recession we just saw a flat market, whereas everything else I know - fine art, houses - all went backward.
Australian Portfolio Wines are proactively assisting clients to access foreign markets and have achieved incredible results over the past financial year.
The following examples are Premium Australian Wines which were recommended by Australian Portfolio Wines and have appreciated substantially in value in only a few months.
The Buy Price is the unit price (export option) at which clients of Australian Portfolio Wines obtained these Premium Australian Wines inclusive of all transport and brokerage and three years storage and insurance.
The Sell Price is the price that the same wines have since achieved on the US auction website - winecommune.com
The prices quoted are Australian dollars using a 0.70 exchange rate to the US dollar.
The Time Period quoted is the time between Australian Portfolio Wines releasing the wine and the most recent auction results available.
Wine Rating (0-100) Buy Price (AU$) Sell AUD/USD @0.70 Gross Profit (before shipping / auction costs) Gross Return % Time Period 2001 d'Arenberg Dead Arm 98+ $63.00 $143.00 $80.00 126.98% 6 Months 2001 Kay Bros. Block Six 96-98 $57.40 $164.29 $106.89 186.22% 9 Months 2001 Kay Bros. Hillside Shiraz 93-95 $42.50 $72.85 $30.36 71.43% 13 Months 2002 Kaesler Stonehorse Shiraz 94-96 $36.50 $46.43 $9.93 27.2% 3 Months 2002 Shirvington Cabernet 96 $58.00 $168.57 $110.57 190.63% 3 months 2002 Shirvington Shiraz 99 $58.00 $217.57 $159.57 275.12% 6 months
All of the above information, including the auction results, are available upon request.
Global demand for Premium Australian Wine has never been higher and there is no better time to start building a portfolio of Premium Australian Wine for capital appreciation. In order to start looking at the options available and start building a portfolio and recieve a free bottle of Penfolds "Grange" (whilst stocks last) simply click here to email me your best contact phone number and the best time to contact you so that we can start a very successful relationship.
The tax man cometh (Sydney Morning Herald - 9th September 2003)
Investdrinks' attention has been drawn to the following snippet that appeared in the Sydney Morning Herald last September.
'Also having a bad week is Richard Wynne. Described in the Sunday rags as a "dishy millionaire hotelier", his main claim to fame appears to be that once - rather foolishly, Sauce feels - Dicky gave a new girlfriend a Porsche with the numberplate PRUSKI. She ditched him, but kept the wheels. This week the Deputy Commissioner of Taxation applied to wind up three companies within Dicky's Wynsix group. Wynne's companies are said to owe the Tax Office more than $1 million in GST and other taxes.'
Heritage Fine Wines: New CEO, new directions, new ethos
Andy Lyon, appointed trading manager at Heritage Fine Wines pty in February 2004, was made their CEO some three weeks ago. Prior to joining Heritage he had worked for the Wynsix Hotel Corp. in Sydney for two years. His primary role with Wynsix was to manage the various business units, which included a number of hotels in NSW and Queensland within the Group and rationalise these. Once this was done Lyon resigned in November 2003 and started discussions with Heritage Fine Wines.
Last week investdrinks had the opportunity to talk and email Andy Lyon and is encouraged that aspects of the company's conduct that have caused concern will be put right. Lyon also sees Heritage reducing the emphasis on wine investment and continuing to develop its retail side of the business, which was established a year ago.
investdrinks understands from Lyon that 'Simon Farid will resign as a director within a few days. I am buying his shareholding in the company, and this will make me, Simon Tilley, Ben Tilley and Cameron Hall the major shareholders.' The directors of HFW are currently Lyon, Cameron Hall (Chief Operating Officer and formerly acting CEO), Simon Tilley and Simon Farid. Previous CEO Anthony Ghattas (a cousin of the Tilley brothers) resigned for personal reasons in October last year.
Heritage hold $AU60 million worth of wine for its clients. As Lyon explains 'at least 80% of the wine we hold on behalf of clients was purchased in anticipation of capital gain. We are trading client-owned wines at a profit. See our web site for details.
heritagefinewines.com.au/marketing/Trade%20figures0604.pdf There are also some wines being sold at a loss.
Put another way Heritage have around $AU50 million worth of clients' stock looking for a profit.
The figure of $AU60 million is based on the insurance value - ie the price clients paid. It is likely that the sale value will be some way below $AU60. Heritage is looking to sell as much as possible retail rather than by auction as Lyon explains. 'Profits are based on achieving a retail price. The auction price of most wines is at best wholesale and at worst a fire-sale price. Investment wine clients forced by circumstance into immediate sale at auction may incur losses. All investments involve risk. Some clients are incurring losses even at retail price levels. Details of losing trades are also posted on our web site. International wine markets are all in (temporary?) oversupply. The retail market here is at its most competitive in memory.'
Heritage is looking to sell internationally. 'We are partnering with Austrade (the Australian Government's trade promotion arm) in identifying suitable producers who are seeking international distribution,' explains Lyon. 'We will continue to develop the retail side of the business both in Australia (internet and bricks and mortar) and internationally (internet/wine exchange). We anticipate having people 'on the ground' in the UK representing us both on and off-premise.'
Lyon intends to expand the American operation. 'Heritage Fine Wines has spent more than A$2 million of retained earnings establishing an office in the US to market wines purchased by Australian and Asian investors. Until less than a year ago, 52c(US) bought $1(AUS). The rate has since come back 30-35%. The US office is still running at a loss. However, we remain committed to establishing a viable US import, wholesale (both on and off-premise) and retail wine business. We are also looking for partnerships in the US.'
Lyon told investdrinks that the emphasis of Heritage's wine investment will be concentrated on en primeur. 'We will continue to partner with producers (such as the Kilikanoon group and Barossa Vintners) in developing a genuinely transparent pre-release (or en primeur) business model.'
Heritage clients should be aware that there are two reasons for buying en primeur: that the price is likely to go up considerably once the wines are released or that the wines will be very difficult to buy later. If this does not apply, then you should not buy en primeur as you are bankrolling the producer and the merchant. Title to wines bought en primeur does not pass from the producer until the goods have been paid for and they have left the winery. This is certainly the case in France and it is reasonable to assume that it is also the case in Australia.
Lyon has told investdrinks that money paid in by clients for en primeur wines would be paid into a separate account.
investdrinks welcomes Lyon's determination to clean up Heritage Fine Wines and trusts that the days of senior accounts mangers finding stray parcels of Shiraz under their desks is past. Also that the mis-selling detailed in a cautionary tale (see below) will end.
A cautionary wallet-thinning tale: $18,000 becomes $8,000
The following message (passed to investdrinks by Langtons) is from a disillusioned investor with Heritage and WineOrb. $AU18,000 spent on cult wines through Heritage dropped to $8,000 when sold by auction through Langtons.
'Thank you for going to the trouble of sending me a detailed message with my wines listed. I have also checked on the Langtons' website and all the wines appear to be there.
I was very interested in your warning concerning the danger of investing with certain so called "wine investment" firms. My own, unwise, experience is just as bad if not worse that the example you illustrate.
To my subsequent great cost, I discovered both Heritage Fine Wines and Wine Orb through internet advertising on reputable share broker sites and then checked that the companies had legitimate ASIC company registration.
Both companies claimed that the investment results would at least 50% return by the so called new innovative idea of buying classy wines here with their so called links with local wineries and on-selling for investors on the American market where the market was bigger and easier to sell at higher prices. After my first purchase I told Heritage Wines that I would not be investing any further until they produced evidence of other earlier investors actually making profits - within a week I was emailed a list of about 20 so called individual sales where the profit margins were shown to be between 10% and 50%. I now really wonder if that document was false in view of the fact that both companies now admit they cannot sell any of my investment wines offshore for at " least 2-5 years".
Anyway it took me about 9 months to realise this was a very risky area of investment after finally starting to check the real local prices of the wines - some of the wines as you are very aware, I'm sure, have no history and cannot be easily sold at all - you virtually have to give them away - for example the Ringbark wines. Anyway I then spent about 6 months harassing both companies to either buyback my wines at cost price or to on-sell my wines to some of their new customers (at cost price to me after wines were held for two years). They boast how successful they are with getting new investors and how they have $50 million worth of wines in storage. I have had to give up with both companies as they soon make it abundantly clear that they are not interested in dissatisfied existing clients. They probably want to move onto new investors who in most cases will suffer the same fate.
Heritage did at least have the courtesy of admitting recently that they have substantial problems in on-selling wines and helped me to on-sell through your company and paid the selling commission. Wine Orb on the other hand virtually refused at one stage to respond to phone calls and would not assist with paying the selling commission.
I have just virtually finished selling down my wines originally purchased from Heritage and an $18,000 investment has realised $8,000 after auctioning also through Langtons.
With the current wines from WinOrb I paid $95 per bottle for the Irvine Grand Merlot 9 (approx 100% overpriced) and $42!!! per bottle for the 150 bottles of Ringbark wines - which is proving difficult to sell let alone get any money for it .
It appears their whole modus operandi is to buy up wines from selected wineries and then make at least 100% over a time span of about 3-4 weeks for the company by on-selling at outrageous prices to local investors. They are obviously not interested in continuing business with current clients as 99% of all legitimate businesses are. If there were enough other "bitten" investors able to find each other I believe it would be interesting to find out if there are any legal grounds for suing these companies as a class action for certain deceptive practices they indulge in. I cannot see how this helps the investing side of wine - it won't affect the drinking side I assume!
Your warning message is fantastic but the problem is that the majority of new investors are not aware of the problem. Anyway ASIC has been made aware of the complaints from a number of people including myself.'
investdrinks has recently received confirmation that William Beasley, ex William Buchanan & Company Ltd and Gleneagles Spirit Management, is still involved in running WineOrb. 40-year old William Beasley has long experience running drinks scams: he set up whisky cask investment scam, William Buchanan, in March 1996 in London. The company went bust in February 1997. This was followed by Gleneagles in Sydney again offering casks of single malt whisky from the Speyside Distillery. This distillery was set up in 1990 and has only recently launched its first ten-year old. When Speyside was offered by William Buchanan and Gleneagles the whisky had no track record and no one including the distillers was sure how it would turn out. Stephen Jupe of Marshall Wineries was recently imprisoned for five years in the UK for mis-selling Speyside. Gleneagles went bust in February 2002. It is now clear that Beasley has been putting his extensive experience of scams in running WineOrb - hoodwinking investors, over-charging and over-valuing their clients' portfolios.
It is surely time that the Australian authorities took a keen interest in Mr Beasley's Australian scams.
investdrinks has raised the concerns about the way some of the Australian investment companies operate with Paul Henry, the director of the Australian Wine Bureau in London. Henry told investdrinks. "There have already been discussions as we take these concerns very seriously, particularly because of the damage that they can do to the image of Australian wines and its trade. This will be an item on the agenda of the forthcoming meeting of the export council in Australia in early August."
Beware of over-hyped Australian wine investments warns Langton's
Australia's leading fine wine auctioneers, Langton's, have today issued a warning (see below) to all its clients to beware of unscrupulous wine brokers selling over-priced Australian wines for investment. Although Langton's do not mention any company names, the allegation of hard sales pitches would fit 'The Trio' - Australian Portfolio Wines, Heritage Fine Wines and Wine Orb. Heritage and Wine Orb offer the opportunity of selling Australian wine in the US.
WARNING TO WINE BUYERS!!!!!!!!!
A message to all wine-buyers from Langton's Fine Wine Auctions
Many wine investment brokers are not delivering on their promises. Indeed some brokers are blatantly misguiding their clients with unrealistic market valuations and expectations.
A wine investor (one of the many who have contacted Langton's) purchased 323 bottles comprising three collections/portfolios for $32,400.00 in June and July 2002. This price included 5% brokerage fee and storage. The investor received "Portfolio Evaluations" in April 2003 and September 2003 stating that market value was $33,083.00 and $34,493.00 respectively. Regardless of the accompanying disclaimer these evaluations are grossly exaggerated and self-fulfilling. The investor will currently expect a return of approximately $18,000.00 gross. This is half the original purchase price.
Unfortunately this is not an isolated case. Despite electronic and published retail and secondary wine market data, ill-informed buyers are being seduced by overstated media reports and over-optimistic - sometimes hard - sales pitches. Many of these wine investment schemes are based on a wing and a prayer.
Brokers are offering wines at a significant premium on release. Overpriced wine regardless of provenance, quality or supply is rarely a good investment.
Brokers are offering a storage component and brokerage fee on top of normal - sometimes aggressive margins. This may result in significant premiums factored into the sale price.
Some brokers are offering returns through establishing networks or using auction houses in the US. The complicated rules regarding the importation of wine, the possible crackdown on parallel importing, the enactment of the Anti-Terrorism Bill, transport, customs and taxes makes it difficult to bring in the wine in the first place. Also volume of demand for most ultra-fine Australian wine in the US and UK is still relatively weak.
Brokers are providing unsubstantiated valuations/estimates to maintain positive relationships with their clients.
The emerging Australian wine investment market is a valid category, but there are few wines that are able to make solid returns.
Australian Cult Wine - a relatively new phenomena and propelled by the highly influential American wine critic Robert Parker - can perform well - BUT results are based on ludicrously small offerings.
Brokers have been using "sensational" data - largely formulated out of context to push unknown wines with little or no track record.
There is a substantial amount of second rate investment wine in storage around Australia with no hope of ever achieving promised returns.
Wine buyers should seek solid advice before buying investment stock from any wine broker.
Buy earliest, cheapest, lowest. Timing is an essential element of any investment.
Buy good vintages, within strong regional paradigms
Check track record on secondary wine market langtons.com.au is an example)
A well-informed wine buyer is a well-armed wine investor
Andrew Caillard, MW
Heritage Fine Wines
Further comment from Adrian Read
We do buy wines back from clients, typically in order to obtain parcels of marketable size. It is also true that some client-owned parcels of 'blue chip' wine have been on-sold to other clients.
I refer you and your readers to our web site heritagefinewines.com.au for information on recent investment wine offers, on our growing consumption wine business, newsletter reports to clients on wine market conditions and trends, copies of our industrial risks insurance policy, terms, conditions and permits for competitions, and much besides.
We have no comment on how other wine investment companies are run. We source wines direct from producers and aim to offer them to clients at below cellar door price. We do not sell packages comprising wines from a number of different producers, or wines under a number of different labels from the same producer. We actively seek opportunities for clients to on-sell their wines at favourable prices. The best example of our commitment in this area is our establishment of (and continuing support for) a fully compliant marketing and distribution subsidiary in the US. I refer you and your readers to the web site of Heritage Fine Wines (USA) Inc at heritagefinewines.com.
Simon Farid has this week (beginning 3rd May) written to the FSA seeking to have the ban on him reviewed and lifted. He has not been required to stand aside as a director of Heritage Fine Wines as he currently enjoys the confidence of fellow directors and private equity holders. As previously advised, Simon Farid is not involved in the day-to-day operation of Heritage Fine Wines.
Jolyon Beasley changed his name to Baker following a family dispute. He is a Senior Account Manager at Heritage Fine Wines.
Heritage Fine Wines and Simon Farid
investdrinks has been informed by Adrian Read of Heritage Fine Wines that Simon Farid applied last week to the UK Financial Services Authority asking for his case to be reviewed and for his name to be removed from the FSA Prohibited Individual List. investdrinks understands from the FSA that they do not publicise a successful appeal, so unless Farid or Heritage issue a press release the only way of checking is to see, over the next few months, if his name is removed from the Prohibited List.
Something fishy about Oz wine investment companies?
In the past the UK used to export its convicts to Australia, now we appear to export our scamsters. There are disturbing connections between a number of Australia's wine investment companies and UK scamsters who moved to Australia in the second half of the 1999s.
The first company to be set up was Gleneagles Spirit Management, a whisky cask investment scam. The person behind Gleneagles, whose parent company was Mondeley International, was William Oliver Beasley (DOB: 23.4.64). Beasley had run William Buchanan & Company, a whisky investment scam selling over-priced casks of single malt from the Speyside Distillery. William Buchanan went bust in February 1997. Gleneagles also offered whisky from the Speyside Distillery and investdrinks understands that Beasley became the sole director in December 1999. Gleneagles went into administration in February 2002. Beasley set up wine investment company WineOrb in November 2000. Along with Richard Wynne and Michael Hennessy, Beasley was one of the initial directors. He resigned in August 2001 and it is not known what role, if any, Beasley still has in WineOrb.
Founded in 1999 Heritage Fine Wines Pty claims to be the leading 'investment trader of fine Australian wines'. Their wholly-owned U.S. subsidiary, Heritage Fine Wines Inc, is able to import and sell wine in America. Heritage's two directors are Simon Tilley, understood to be a Sydney hotelier and son of Ben Tilley - a mate of Kerry Packer - and Simon Farid. Apparently Farid claims to have worked for the Macquarie Bank as well as having connections with the Kuwaiti Royal family. If Farid did work for the Macquarie Bank, their due diligence needs tightening up. A search on Farid's background would soon throw up much cause for concern. Farid is one of only 41 individuals on the FSA (Financial Services Authority) banned from any involvement in the UK financial services sector.
In April 1996 an article in Offshore Financial Review by Tony Hetherington gave a detailed resumé of Farid's financial career in the UK before he left for Australia. Banned by the SIB in 1996, this clearly demonstrated talent and application by Farid to join this select band while only 35 years old. In 1987 after a four-day training course he had joined DPR Futures. Farid gave evidence in exchange for immunity in the unsuccessful fraud trial of three of the company's directors. He joined Lancashire and Yorkshire Portfolio Management, which promoted various penny shares until the financial authorities closed it down in 1991. Following the closure of this scam 895 investors were paid out £3,307,000 in compensation. In 1992 Farid set up his own company Financial Management International. The company soon started offering to carry out 'deals on clients' behalf and even running up bank overdrafts in their name. The only problem was that many of the clients denied having approved or requested the deals and denied knowing anything about the overdrafts.' In February 1995 the Securities and Investment Board petitioned successfully in the High Court in London to put FMI into liquidation.
Heritage employs a number of people with considerable experience in the wine industry including Adrian Read, formerly a PR consultant to Southcorp and now Heritage's wine manager. Toni Paterson MW is on their tasting panel. It may be that the company is correctly run. However, investdrinks' recent contact with Heritage does not inspire confidence. On 29th March Will Hamilton, a Heritage salesman, phoned me about wine investment. Hamilton was under the impression that I had entered a Grange competition Heritage was running - more likely someone else entered my details. Having got over the confusion regarding the competition, Hamilton wanted to know if I was interested in wine investment and told me about the profits that could be made. I asked him to send me details and we then exchanged a series of emails. I said that I was concerned about the lack of track record for many of the Australian wines being traded and that their reputation rested upon high Parker scores. Hamilton suggested that I go for blue chip wines and offered me half a barrique (150 bottles) of Mount Langi Shiraz 2000, which most fortuitously his line manager, Joe Baker, happened to have secreted away. It may be that Baker's date of birth is 3.11.1968 and that he is also known as Jolyon Beasley, the half brother of William.
'The blue chip wines can be hard to come by at sensible prices because of their established nature in the market. However, we were recently trading the Mount Langi Ghiran Shiraz 2000 @ 23% below the current market price. This was a unique situation and one that sold out extremely quickly. Having had a conversation with Joe this morning about you and your preference of a blue chip wine, he has been able to offer me half of a barrique (150 bottles) that he secretly kept back.' 'Stocks were of course, limited as you would expect, thus this is one of the finest situations to date. Some HFW clients have already taken good short term profits on the Mt Langi Ghiran Shiraz 1999 and we look forward to more of the same with this 2000 vintage.'
The cost? $AU6,900 to include two years storage and insurance, so $AU46 a bottle. As the 2000 can be bought for virtually the same price from Australian Wines Online in the UK for virtually the same price Will's deal was not particularly enticing. The price of the 1999 may have gone up in Australia but not in the UK. Noel Young Wines in Cambridge are now offering the 1999 Mont Langi for less than last year. It was time to end the pantomime as Hamilton was chasing me to make a decision. 'Would you like to speak about the Langi now as I'm worried Joe is going to withdraw this offer as others on my team are snapping at his heals.' I emailed Hamilton to say that I wasn't interested in the deal and pointed out the FSA ban on Farid. I subsequently emailed Adrian Read asking about the extent of Farid's role in Heritage.
Clearly anyone considering doing business with Heritage Fine Wines will want to know what control Farid exercises over the company and what assurances can be given that the company, which claims to be storing $AU35 million worth of wine for its clients, is properly run. It is not known whether Farid is also involved in Art Equity, which has the same investors as Heritage Fine Wines.
Adrian Read, Wine Manager, Heritage Fine Wines comments:
"Heritage Fine Wines operates entirely within the relevant Australian liquor licensing and corporate laws and regulations.
Heritage Fine Wines has invested substantially in the establishment of a US subsidiary that, similarly, is fully compliant with all relevant US licensing and corporate laws and regulations.
Simon Farid was a founder of Heritage Fine Wines and remains a director and equity-holder. However, he has no day-to-day role in the running of the business.
He considers his status with the UK Financial Services Authority as a reflection of events that are dead and buried in the past. He did not defend himself at the time.
In the present-day interests of Heritage Fine Wines he will be appealing to the FSA to have his name removed from the 'prohibited individuals' list.
It is impossible to give the assurance you seek regarding investing in wine. All investments involve risk. However, on behalf of its clients, Heritage Fine Wines is itself actively investing in the development of trading options in Australia and internationally."
Investors with Australian Portfolio Wines may also wish to clarify the role of Roland Charles Pibworth, a significant shareholder in the company. Charles Pibworth was a director of Bouvier Ltd, a short-lived Champagne investment scam, as was his son Spencer Gene who was previously one of the House of Delacroix's most successful salesman. It is possible that Spencer is now in Australia seeking his fortune.