The Australian Securities and Investments Commission says it has never given Uglii a “clean bill of health”. Photo: Paul JeffersAustralia’s corporate watchdog will examine concerns from angry investors that Victorian online search company Uglii has lied about its activities amid revelations that banking giant HSBC has accused the firm of “false and deceptive” conduct.
The Australian Securities and Investments Commission has also denied claims by Uglii’s chief executive, John Knorr, that ASIC gave the company a “tick of approval” in April this year, stating that ASIC has never given Uglii “an endorsement or a clean bill of health”.
“ASIC will take a look at any new information presented to it, including any evidence from aggrieved investors,” ASIC spokesman Matthew Abbott said.
ASIC’s comments come after Fairfax Media reported last week that Mr Knorr had misled Uglii’s 3600 shareholders about the firm’s dealings with several multinational firms, including HSBC and Nokia.
The revelations prompted lawyers for HSBC to write to Mr Knorr and Uglii’s global liaison officer, Joanna Kiminade, stating that “HSBC has serious concerns regarding certain false, misleading and deceptive representations made by Uglii and certain of its directors, officers and employees”.
The letter outlines several allegedly false claims that Uglii has made about HSBC’s relationship with the Victorian firm, and demands that Uglii “cease and desist in such conduct”. On Monday night, Nokia also issued a fresh statement dismissing Mr Knorr’s public claims involving Uglii and a patent dispute with the telecommunications giant.
Fairfax Media can also reveal that an Uglii linked firm previously run by Mr Knorr was in 2009 found by the Federal Court to have breached the Corporations Act by unlawfully selling $1.3 million worth of shares.
ASIC said in a statement at the time that it had launched court action to prevent “SISS Business Systems Limited and a director of the company, Mr John Christopher Knorr … from undertaking unlawful fundraising”.
“ASIC alleges that SISS has unlawfully raised in excess of $1.3 million by offering securities for sale without a disclosure document, in breach of the Corporations Act (the Act).”
This week, Fairfax Media has been flooded with complaints about Uglii from former employees, shareholders and creditors.
Uglii claims to be a competitor to internet giants such as Google and has raised at least $25 million from unsophisticated investors, including thousands of Victorians.
A former CEO of an Uglii subsidiary, Andy Walker, said he was sacked by Mr Knorr after raising concerns about Uglii’s management, which he said was at times “exceptionally poor”.
“It is never going to make money,” said Mr Walker, who claims he is still owed thousands of dollars in entitlements from Mr Knorr.
Another former senior Uglii employee provided Fairfax Media with a copy of a formal complaint they made to ASIC this year. The ASIC complaint states that “I was made to tell lies to the shareholders about deals with global corporations in order to sell more shares.”
An Uglii contractor in Europe, Valerie Galichon, has also claimed that Uglii has failed to pay her and her partner $4500 for translating services. “They are simply ignoring me,” she said.
In October, Croatia’s consul-general in Melbourne, Dubravko Belavic, wrote to Uglii on behalf of several Croatian translators, requesting “information about the failure of payment”.
Fairfax Media reported on Sunday that a leaked confidential September 2014 draft review by business consultant Leigh Kennedy raised serious concerns about Uglii’s operations, warning that its financial forecasts “are extremely ambitious and lack substantive data”.
Economist Alen Allday, who also worked briefly for Uglii, said he was “very surprised” at Uglii’s revenue projections and “angry” his name had been used on a press release promoting the firm.
In its 15 years of operations, the Uglii business empire has never made any money, while three subsidiaries have been the subject of court action initiated by the Tax Office over unpaid debts.
The Victorian Supreme Court recently forced an Uglii subsidiary, Regional Growth Services, into liquidation, owing the Tax Office more than $1 million. It is understood that liquidators are struggling to sell Uglii shares, which Mr Knorr values at around $1.45.
Several shareholders said they had previously complained to ASIC about Uglii, but received little or no response.
They include West Australian shareholder Diane Pope, who invested in the firm in 2002, said she was concerned that Uglii was a “con”. “It is like a pyramid scheme, except no one gets paid.”
Ms Pope said when she complained to Uglii, a senior staff member threatened her with legal action.
Another shareholder, Chris Maliko, said that he too had complained to ASIC and had also been threatened with legal action by Uglii after raising concerns about the company. “These guys are bullies. As a shareholder, I’m allowed to question the company,” he said.
The son of another Uglii shareholder, who didn’t want his name used, said in an email: “Uglii is akin to a multi-level marketing scheme. It attracts respected members of the community who invest thousands of dollars with the hope of financial reward.”
On Monday, Mr Knorr sent a newsletter to shareholders with further misleading information. The newsletter attacked Fairfax Media’s reporting about Uglii, and criticised shareholders Michael Kaloudis and Julie and Ian Gilroy-Scott for speaking out about the firm’s activities.
Lawyers for Fairfax Media, Minter Ellison, have written to Mr Knorr about his latest misleading claims. Mr Knorr refused to answer questions when called by Fairfax Media on Monday.
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