CSIRO chief executive Larry Marshall has refused to reveal the beneficiaries behind a Channel Islands trust he filled with technology company shares worth up to $7 million when they were sold in a series of off-market trades.
Details of the structure used by one of the nation’s highest-paid public servants have come to light after an examination of the accounts of failed laser-technology company Arasor, of which Dr Marshall was at one time managing director.
Shareholders in Arasor are suing Dr Marshall, former Arasor chairman Simon Cao and other former directors of the company after it was delisted and went into liquidation in 2011.
A group of shareholders claims Dr Marshall was a central figure in the company’s collapse, alleging he and other directors engaged in misleading and deceptive conduct, as well as serious breaches of the corporations and ASIC acts in relation to the company’s financial reports and a disastrous $81m float.
An investigation by The Australian revealed Dr Marshall had 1.4 million shares paid into Grantley Limited, a “charitable trust” based in one of the world’s largest tax havens, Jersey in the Channel Islands. Grantley also appears to be registered in another tax haven, the British Virgin Islands.
Grantley and its holding company, NovaTrust, appear to be managed by Channel Islands-based financial planning company Stonehage Trust Holdings, which claims to be a “multi-family office and trusted adviser to international ultra-high-net-worth families”.
Documents reveal Dr Marshall, along with Mr Cao, was the owner of a company JJR Management that was the sub-underwriter of the Arasor float in late 2006. That deal earned the pair the right to share in 9.3 million shares in the company.
Despite the Arasor float structure allowing Dr Marshall to contribute up to 6.4 million Arasor shares to Grantley Limited, the company’s annual report and disclosure statement showed he only held about 20,000 shares.
The 2006 Arasor prospectus reveals that Dr Marshall entered a $US12,000-a-month “consulting agreement” with Arasor-Cayman, Arasor’s Cayman Islands-based operation.
“In June 2006, Mr Marshall was granted 1,400,000 options in Arasor-Cayman,” the prospectus states. “Mr Marshall subsequently exercised the option and transferred the ordinary of Arasor-Cayman into Grantley Limited, a charitable trust.
“Mr Marshall does not hold any interest of any nature in the trust or the trustee of the trust.”
All shareholders in Arasor-Cayman had shares converted into shares in the Australian-listed Arasor International in late 2006.
The prospectus also stated that Dr Marshall and Mr Cao “have an interest in JJR Management LL” and were entitled “to be issued 9,333,333 shares, giving it a shareholding interest of approximately 10 per cent”.
The shares held by the pair were not subject to restrictions, meaning they could be sold as soon as the company was listed.
In a statement to The Australian, Dr Marshall denied he was a beneficiary of Grantley or was involved in shares traded by the tax haven trusts. “Litigation about Arasor is currently before the Federal Court, which limits my ability to comment,” he said.
“I can say that I was not involved in any share trades made by Grantley, received no distribution from Grantley and am not a beneficiary of Grantley. I believe the 1.4 million shares issued to Grantley were never sold.”
Dr Marshall did not reply to questions as to why he first contributed the shares into Grantley, how many shares he was entitled to under the sub-underwriting agreement or whether these were later contributed to Grantley. Neither did he reveal the beneficiaries of Grantley or Novatrust.
Dr Marshall has been CSIRO’s chief since January. The CSIRO will receive just more than $5 billion in funds from taxpayers and the private sector over the forward estimates period. According to its latest annual report, its chief executive stands to earn up to $800,000 in salary, superannuation and bonuses.
Despite Grantley Limited’s holding of 6.2 million shares in Arasor and being Arasor’s second-largest shareholder, Dr Marshall was not on the list of top 20 shareholders when the company listed in September 2006. At listing, its shares were worth $9.3m.
The holding by Grantley Limited was eventually disclosed to the ASX in a document dated February 6, 2007 — five months after Arasor listed. However, on the same day this document was lodged another disclosure to the ASX revealed the sale of two million shares by Grantley Limited in an “off-market trade”, reducing the holding to 4.2 million shares or 4.44 per cent of the company.
These trade documents were signed by a financial planner with Jersey’s Stonehage and a lawyer based also in the Channel Islands.
Based on the Arasor share price on February 5, 2007, the two million Grantley shares were worth $6.8m when sold. Grantley Limited is not mentioned in any further statement or financial reports, despite still holding 4.2 million shares in Arasor.
After reaching a high of $3.90 in March 2007, Arasor’s shares plummeted throughout 2007 and were worth almost nothing by the end of 2008. Dr Marshall resigned from Arasor in 2008 and it was delisted and in liquidation by 2011.