Tuesday, 29 April 2014

Steamships Trading Company and NASFUND securities fraud

Steamships Trading Company (SST.AX) is a $1.1bn company incorporated in Papua New Guinea, claiming operations in "hotel management, manufacturing, property, shipping and transport". In reality, SST is a securities fraud that inflates its accounts using sham transactions between related parties, with a share price fixed by a cartel of three entities.

SST's annual report is a maze of related party transactions and assets. SST's balance sheet shows $13m invested in related companies, $42m in loans to related companies, $29m of "other receivables" and $38m of goodwill. SST added $28m of goodwill to the balance sheet in 2013 by purchasing related party Pacific Towing Limited. This sham transaction created a "profit" of $15m, constituting almost a third of the company's reported net profit of $48m in 2013. The annual report of SST is sufficiently fraudulent that it is next to impossible to gauge the company's true value.

But the true value of SST is almost certainly lower than its manipulated "market" value. SST's share price is not determined by a market. According to disclosure documents, three entities own 98% of SST and have done so for the last decade. John Swire & Sons owns 72%, Bell Potter Nominees fronts 20%, and National Superannuation Fund holds 6%. So far in 2014, SST has traded on 35 days, with an average daily volume below 500 shares. For the last decade the share price of this $1.1bn market cap company has been set by cartel, and not even the most mentally impaired regulator could pretend otherwise with a straight face. Ramped 13% overnight on 2 January 2014, SST functions as a listed securities fraud.

National Superannuation Fund (NASFUND) is a PNG-based superannuation provider that has been embroiled in scandal after scandal, engaging in various revaluation and related party frauds. NASFUND's stake in SST has been revalued upward over the last decade, creating unrealized profits for the fund, based upon which its criminal operators charge real cash fees. The NASFUND criminals pretend SST trades at a market price when reporting performance and asset figures for the fund, while being perfectly aware that SST does not trade at a market price at all. This is deliberate fraud, perpetrated on the 174,000 victims of the fund. NASFUND's inflated $69m stake in SST accounts for a significant proportion of the fund's assets. The SST scam alone accounts for 5% of the fund's net asset value, or around 12% of its listed equities. As long as contributions exceed withdrawals, the fund can continue inflating its accounts with SST.

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