UPDATE: ASIC closes in on controversial online grocer

Authorities are closing in on business identity Ross Whitehead over his involvement with online shopping start-up MySupercentre.com Pty Ltd, which was placed in liquidation by its creditors Monday.

Authorities are closing in on business identity Ross Whitehead over his involvement with online shopping start-up MySupercentre.com Pty Ltd, which was placed in liquidation by its creditors Monday.

It's understood that the company's 56 creditors, including an estimated 43 small investors who paid upwards of $30,000 each for territorial franchise rights for its trading entity, MyGrocer, are owed a total of $3.1 million.

Queensland fair trading minister Margaret Keech issued a warning about Whitehead last month after the state consumer protection authority received complaints about his conduct from four former MyGrocer franchise holders.

"I strongly advise people to be on their guard in any dealings with him," said Keech August 15.

The former founder and CEO of Shopfast.com.au has since told ZDNet Australia  that the minister's statement was "a gross abuse of her powers", and claimed a group of estranged licensees were simply trying to undermine MyGrocer to make way for a competing business launched in Brisbane Monday, 2Cherries.com.au.

However MySupercentre's appointed administrator, Gold Coast insolvency firm Downie & Associates, today confirmed that Australian Securities and Investment Commission (ASIC) had requested a copy of its report to creditors.

ASIC yesterday said it "was aware of Mr. Whitehead" but declined to provide further comment on the matter

The report's co-author, Susan Carter, today gave clear indications that Whitehead could soon be facing disciplinary action from the corporate regulator.

Carter today said that it was "no secret" that Whitehead continued to act as a manager of MySupercentre after he filed for bankruptcy in August last year.

"It would be naive to think that he wasn't acting in the capacity of managing the corporation not withstanding that he hasn't been a director on the [company] register since August last year," said Carter.

Carter also said that she had "made some comments in the report in relation to insolvent trading".

ZDNet Australia  late today obtained a copy of the creditors report and other documents that arose at the creditors meeting Monday.

The administrator said it expected that MySupercentre had traded whilst insolvent trading, but that the company's financial records were too poorly kept to determine when the company became insolvent.

Whitehead began selling the territorial licenses to deliver goods for MyGrocer in October 2003. Under the contract licensees were to be paid territorial establishment subsidy of $4,000 per month and a 9 percent commission on grocery orders.

However by April, when many of the franchises were entering their second month of operations, Whitehead began constricting the flow of subsidy payments to licensees citing difficulties drawing on the company's mortgage facility.

E-mails between MySupercentre obtained by ZDNet Australia indicate that by May the situation for licensees had not improved.

"If any one thinks that you pay a licensee fee of $30k and instantly generate the equivalent of $5,000.00 per week without effort you're in the wrong business," wrote Whitehead in a communiqué to the franchise group.

In June, MyGrocer's supplier ceases trading with the company. At this time Whitehead starts to take on the tone of a motivational speaker, using colourful clichés to sooth anxious licensees"

-Ask not, what the company can do for you, but what you can do for the company," wrote Whitehead in a letter to licensees dated June 4.

Former licensee, Gideon Jacobs, told ZDNet Australia that Whitehead consistently made promises concerning payments and the business that were never met. Jacobs decided to terminate his license agreement late in and requested a meeting with Whitehead to finalise his refund. He says Whitehead has never responded.

ZDNet Australia  was today contacted by former franchisees who claimed that other documents raised at the creditors meeting indicate Whitehead misled them about sums that he and his business partner Jacqueline Hageman -- the director of E-Biz Solutions, MySupercentre's sole shareholder and director -- personally drew from company funds.

Former franchisee, Tony Harrison, claims that one company document show the pair was paid at least $150,000.

"He made everyone feel guilty that he was working for nothing and he was really committed to [the business] and then you find out that he's taken out money [for] the two of them," said Harrison.

The document lists a payment of $158,000 to E-Biz Solutions, a direct payments of $32,000 and $48,000 to Hageman and Whitehead respectively. The company spent $48,000 on travel and accommodation.

Carter today said Downie & Associates had not accounted for all the money passing through the company as it was yet to complete its investigation.

The creditors report obtained by ZDNet Australia  indicates that the administrator has been struggling with a number discrepancies and inaccuracies in the company's books.

In the report Carter found company records valuing MySupercentre's assets at around $1 million were unlikely to be correct.

However, the administrators gave a recommendation that creditors accept a deed of company arrangement proposed by Whitehead as it was more likely to result in the recovery of funds than liquidation.

Under the deed, Whitehead proposed to trade out of debt by transferring divested territory licenses to MyGrocer Pty Ltd, paying creditors $1.65 million over 11 months.

However, the administrators' also acknowledged concerns expressed by creditors over Whitehead's business history and the active interest that regulatory bodies like Queensland's OFT and ASIC were beginning to take in his affairs.

According to Harrison, all but three members of the group rejected the offer. Harrison, who has given up hope of seeing his money again, said conditions requiring the withdrawal of complaints from ASIC and other regulators were unacceptable.

Harrison said his only goal now was to make sure that it was difficult as possible for Whitehead to restart his online business venture.

"I think he really is committed to trying to get the system working but he's like a general in an army -- he's quite happy to take casualties along the way," said Harrison.

The bankrupt founder and former CEO of Shopfast.com.au does seem to have had an untameable run of misfortune when it comes to business.

According to ASIC records, since resigning as director of Shopfast in 2000 Whitehead has been involved in no less than three businesses that found their way into liquidation.

For Sydney business gossip columnists, Whitehead's affairs became rich picking ground of rumours involving repossessed yachts and angry real estate agents after his online fulfilment and logistics venture, E-gistics, went belly-up and was ordered into liquidation in July 2001.

ASIC records also link Whitehead with MySupacentre Management Pty Ltd which was placed into liquidation just weeks before MySupercentre.com Pty Ltd was incorporated.

Newsletters

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
See All
See All