Blue Chip - the missing millions

Mark Bryers is bankrupt, but a look inside apartments in the luxury Sydney block in which he lives shows he is still enjoying a five-star life. Photo / Doug Sherring

Blue Chip founder Mark Bryers is believed to have access to at least $1 million in trusts, despite the collapse of his business empire.

Investigators are understood to be satisfied that the bulk of Bryers' fortune once put at $70 million on the National Business Review Rich List was lost in his business failures.

But they believe between $1 million and $2 million may be in trusts that owned properties and shares.

The former property investment boss was accustomed to living well big houses, expensive cars, international holidays and visits to prostitutes were once part of his luxury lifestyle.

He is now a bankrupt who claims his only assets are clothes, furniture and golf clubs, but he still lives comfortably in a five-star hotel and apartment block in Sydney's The Rocks.

Investigating authorities have focused on tracking $22 million which trusts associated with Bryers made selling Blue Chip shares in 2007, the year before the group collapsed owing $85 million.

They are understood to have discussed the possibility of insider-trading charges over these deals.

A knowledgeable source told the Weekend Herald: "Is there $40 million around? No. $20 million? No. One or two million? Possibly, and it will possibly be in one or two of these trusts."

Bryers is likely to be pressed by the Official Assignee for evidence of what became of the few million not yet accounted for when he is next interviewed. That is expected to be in May, when he returns from Sydney to be sentenced on 31 bookkeeping charges.

The Official Assignee has the power to seize a bankrupt's passport if he considers him to be unco-operative.

A Weekend Herald investigation has also found that when former Cabinet ministers Wyatt Creech and John Luxton resigned as Blue Chip directors in 2006, both wrote letters to the board clearly stating they did not trust Bryers. Mr Luxton directly questioned Bryers' honesty.

The board also received a 13-page briefing late in 2006 which detailed the amount of money draining to Bryers' interests and how it was dragging Blue Chip towards insolvency.

It recommended that Bryers be sacked, and said retaining him created the risk of a walk-out by senior staff.

"An undesirable culture is being fostered involving poor communication, deception, mistrust and poor governance," the briefing said.

"Mark is too heavily conflicted ... to do what is best for Blue Chip."

Mr Luxton was similarly concerned, writing that $17 million had flowed out to Bryers that year and more was being lent, contrary to assurances to the board.

When Mr Luxton left, a Blue Chip statement suggested his departure was because of time constraints and the company's growing focus on the Australian market.

Neither was mentioned in Mr Luxton's resignation letter, in which he made his reason clear: "I no longer have confidence in the advice, judgment and frankness of the managing director ... I am not willing to have my reputation dependent on a key director whose reports and work I would require to have continually verified."

The following year, trusts associated with Bryers sold almost half their shares in Blue Chip in two trades in February and July.

The sales came at a time when Bryers knew the company was in a perilous state but the share price was high after positive but highly misleading releases by the company.

On February 1, 2007, Blue Chip announced an unaudited profit of A$19.1 million a 51 per cent rise. The share price rose sharply from its range of between A75c and A90c.

Six days later, Bryers' trusts sold 9.4 million shares at A$1.25, receiving A$11.8 million.

At this time, the Blue Chip board was trying to address serious problems the central issue being Bryers and the money draining from Blue Chip to his companies.

Buried in Blue Chip's announcement of its impressive profit rise was news that Bryers, the company's founder, had resigned as an executive and a director. The wording gave no hint of what was occurring within the company.

In June, Blue Chip moved to ease the cashflow problem by issuing 14.5 million shares, after which the share price hit its high of A$1.85.

A month later, a Bryers trust sold the second bundle of shares, receiving A$7.5 million.

These share sales were the biggest and third-biggest trades during the six months when the Blue Chip share price was near the top of its range.

Bryers was the only director associated with the sale of large share packages in this period.