Watchdog Probes Bill Payer Over Share Price Claims

The Age

Thursday July 10, 2008

Mark Hawthorne and Jesse Hogan

THE corporate watchdog is investigating allegations of share price manipulation of Bill Express intended to stave off margin calls on the company's shares.

The news came as about 100 staff at the Eaglemont headquarters of the company, which operated a national electronic bill payment network, were told they had lost their jobs.

BusinessDay believes the Australian Securities and Investments Commission is investigating possible manipulation of the company's share price between December and March, to the benefit of Bill Express' major shareholder, On Q. The Australian Securities Exchange referred the matter to ASIC.

The ASX is concerned about several significant trades lodged near the end of trading late last year and early this year, as the Bill Express share price hovered near a point that would have triggered a margin call.

On Q, the holding company from which Bill Express was floated in 2004, had about 26% of Bill Express' shares held in margin-loan accounts with brokers Opes Prime, Tricom and Chimaera Capital at various stages last year.

That included 18% of Bill Express held in an account with Opes Prime, which has since collapsed. A margin call on those shares would have sent the share price of On Q and Bill Express into free fall.

On Q and Bill Express shared directors and staff, and operated from the same head office in Eaglemont. The two were, according to former staff and company directors, parts of the same business. Bill Express operated the Australian business while On Q owned the intellectual property rights to the electronic payment system and held a 37% stake in Bill Express.

The ASX has also queried a sudden profit downgrade in February, a matter that BusinessDay believes has also been referred to ASIC for breach of continuous disclosure obligations.

ASIC investigator Glen Cook is heading the investigation, with analyst Marc Falkiner. As a result of initial investigations into possible market manipulation and disclosure breaches, the corporate watchdog is also examining what happened to $35 million raised by the float of Bill Express in 2004, when it was spun out of On Q.

After the 2004 listing, Bill Express and On Q both had $10million in cash at the bank, no debt and a computer system that worked.

ASIC wants to know how Bill Express, which has reported a profit in each year of operation since, managed to collapse under an estimated $180 million of debt.

ASIC has appointed two staff to gather documents and information from former staff members of TBS - an interlinked network of private companies that operated from the same offices of Bill Express in Eaglemont - and interview former shareholders. TBS and related entities employed most of Bill Express' customer support and call centre staff. Only eight Bill Express staff remain, employed by the administrators.

The contractor was effectively controlled by Ian Christiansen and his brother, Hal, who died from cancer on July 1. TBS sold the original technology to process electronic payments to On Q in 2001.

Hal Christiansen was the chairman of On Q when he died.

Mr Falkiner has also written to significant investors and former directors of Bill Express and On Q, requesting they provide documents that might reveal where funds borrowed by Bill Express ended up.

According to administrator Craig Crosbie, of PPB, there was "a high level of interest from various parties" in parts of the Bill Express business, including its bopo prepaid credit card.

Mr Crosbie was unsure whether ANZ's plans to roll out 2600 Eftpos machines to Bill Express merchants - bypassing Bill Express' transaction equipment - would make it harder to sell the business.

On Q is yet to update the market on the financial implications for its business of Bill Express being placed in administration, despite having told the market it expected to be able to disclose that information yesterday.

former shareholders. TBS and related entities employed most of Bill Express' customer support and call centre staff.

Only eight Bill Express staff remain, employed by the administrators.

The contractor was effectively controlled by Ian Christiansen and his brother, Hal, who died from cancer on July 1. TBS sold the original technology to process electronic payments to On Q in 2001.

Hal Christiansen was the chairman of On Q when he died.

Mr Falkiner has also written to significant investors and former directors of Bill Express and On Q, requesting they provide documents that might reveal where funds borrowed by Bill Express ended up.

According to administrator Craig Crosbie, of PPB, there was "a high level of interest from various parties" in parts of the Bill Express business, including its bopo prepaid credit card.

Mr Crosbie was unsure whether ANZ's plans to roll out 2600 Eftpos machines to Bill Express merchants - bypassing Bill Express' transaction equipment- would make it harder to sell the business.

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