Questions over Nant Angus and whisky investment schemes
Perhaps it was the ads in The Australian Financial Review. Or the slick website, showing glossy Black Angus cattle grazing serenely in green paddocks. Or maybe it was just the promise of a 9.55 per cent per year return – guaranteed – for five years. Whatever it was, people were investing in “herds” of 10 cattle in Queensland, through a company called Nant Angus.
But for one investor at least, the bucolic dream depicted in the publicity material has become a source of anxiety. Not everything, they discovered, was as it seems.
In November last year, the couple from Melbourne, who asked not be named because they are so upset about their decision, put their savings of $120,000 into Nant Angus. They bought 40 head of cattle – four herds for $30,000 each. But once they had signed the contract and handed over their money, their problems began.
The paperwork showing they were the “registered owner” of the cows turned out to be a document printed on Nant letterhead and signed by Keith Batt, a bankrupt. It listed the National Livestock Identification System (NLIS) numbers – a system used for the tracing of sheep, cows and goats in this country. But the promised access to the NLIS system to check them, which the couple say they were assured of by the sales team, never eventuated. It also took months to get photos of their tagged cows.
The couple became particularly worried in February, when they read reports about the problems some investors were having in getting their money out of the Nant whisky scheme, a similar sale and leaseback arrangement in which investors buy barrels of whisky, store them at Nant Distilling Company, then sell them back to Nant distillery on maturity in four years’ time, for an identical 9.55 per cent.
The brains behind Nant is the undischarged bankrupt Batt, though the actual companies in the group – and all of the assets previously controlled by Batt – are owned by Margaret Letizia, his wife. The companies were extensively restructured in 2015, before Batt filed for bankruptcy at Christmas.
Batt is being chased for $16 million in personal guarantees after his previous business venture, a development company called Queensland Property Partners, collapsed leaving debts of about $20 million.
When the Melbourne couple read of Batt’s bankruptcy and the issues being encountered by the Nant Whisky Club investors, they stepped up their efforts to get what they believe was the paperwork promised. They are adamant that one of the promises made was to give them access to the NLIS system, so they could “watch their cows moving around”.
They have since discovered that the NLIS system offers no such capabilities, nor is it an ownership register. It is a biosecurity tool to keep track of cattle on properties.
The promised “title” is simply a piece of paper listing the NLIS numbers of their cattle signed by Batt.
In response, Batt said this is completely in line with normal practice, that transfer of ownership of cattle is effected on the issue of a receipt, in this case a certificate of ownership.
He told The Saturday Paper the investor “was provided with the information he requested in timely manner taking into account the need to muster his 40 cattle from the rest of the herd on an 18,000-acre property, particularly given the very wet season we have had, and photograph each one of them”.
Batt continued: “His lack of knowledge and understanding of the cattle industry is evident in the accusations he has made. Most importantly I have on several occasions now invited [the investor] to the property to inspect his cattle and verify their existence and condition. The latest offer was made today.”
But there was to be more worrying news. When the investors checked the NLIS numbers first provided by Nant, they discovered the cattle with these numbers were not at the designated property, Aubigny station, near Augathella in Central West Queensland. The numbers belonged to cows at another property, in nearby Tambo, and the owner there was adamant he owned the cattle.
They have now gone to lawyers, Holding Redlich, and to the stock and rural crime investigation squad of the Queensland Police in an effort to get their money back. The Australian Competition and Consumer Commission has also been contacted.
Nant last week provided a new set of NLIS numbers, which appear to be for cattle at Aubigny, though there has been no explanation for the initial mistake.
“The numbers were provided in error,” Batt told The Saturday Paper. “Upon [the investor] bringing the error to our attention, the correct NLIS numbers being those allocated to his cattle were provided. Again, if the investor would come to Aubigny station, he could see this for himself.”
The investor is now verifying these latest numbers: “Nant claims that you own your cattle outright, but we’ve found it incredibly difficult to establish our ownership, even though Nant promises to give you a ‘title’, says that you are the ‘registered owner’ and commits in the contract to providing all the NLIS identification numbers for your cows at the date of purchase.”
The Nant investment offerings illustrate the problems investors face when they stray into exotic territory such as cows or whisky barrels. Because this “investment” involves a sale and leaseback of real property, it’s almost entirely unregulated. The Australian Securities and Investments Commission says it does not regulate people or entities that provide investments in personal property, unless there are associated financial services offered.
ASIC confirmed last week that, as with the whisky scheme, the cattle investments are not a “financial service” that comes within their bailiwick.
The state fair trading offices have responsibility for ensuring the sale of goods comply with the law, but the Nant offerings involving sale and leaseback of whisky barrels and cattle have so far proved too complex for any one state to take on.
The investors in Nant whisky have also faced headwinds in dealing with Nant.
After the news of Batt’s bankruptcy was revealed, dozens of investors contacted this journalist asking about their investments. Several of the early investors alleged they had had difficulty redeeming their barrels, with the company either slow to respond to emails or saying their barrels were not yet matured.
The terms of the whisky offer say Nant is the sole arbiter of whether the whisky is matured. While the company indicated that four years was the usual maturity, several investors were told their whisky was not ready. Since the publicity, Nant Whisky Club has been more responsive to its investors.
This might all sound like a mere nip in a teacup, but according to Nant, the whisky scheme has raised $18 million in barrel sales so far, with investors both large and small drawn by the promised 9.55 per cent return. Two barrels of premium whisky require a $25,000 investment. It is not known how much investors have ploughed into the cattle scheme.
For the most part it’s been self-managed super funds that have been lured in, with Nant claiming that 50 per cent of barrel sales are to such investors. But there are others, such as the Melbourne couple, who have put in their life savings.
“We wanted to grow some funds for our young child, just like any parent would,” they explained.
Meanwhile, bankruptcy and a litany of unhappy investors has not slowed Batt. In 2015 a company controlled by his wife bought a sprawling five-bedroom Queenslander in Brisbane’s upmarket Clayfield, complete with full-sized tennis court, for $3.6 million. Nant has also bought Syd Fischer’s original Ragamuffin, which Batt sailed in the 2015 Sydney to Hobart after a renovation that would not have left much change from a million dollars.
The 24-metre yacht, renamed Maxi Ragamuffin, now sports Nant livery and according to the Nant website is used to entertain investors in the whisky and cattle schemes.
Then there are the whisky bars. Nant has opened two in Tasmania, two in Brisbane and one each in Melbourne and Kuala Lumpur, although plans for a bar in Sydney appear to have stalled.
Cattle from Nant are destined to end their days on plates in Nant bars and restaurants.
Batt is dreaming big. “The Nant Angus operation,” the brochure for the cattle offer says, “will realise a projected herd of 30,000 cattle by 2020.”
Batt has described his bankruptcy as a “personal matter” that is separate to the Nant business. The company says it has advice that the Nant business is not within the reach of the bankruptcy trustee. Batt’s trustee in bankruptcy, Andrew Scott of PPB Advisory, refused to comment.
Batt, through his lawyers, has told the Melbourne investors there is no basis on which they can seek to have their money returned.
“I’d say to anyone with a nest egg,” the investors said, “that if you want to save for your kids’ future, just stick your precious, hard-earned dollars in the bank.”
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This article was first published in the print edition of The Saturday Paper on Sep 24, 2016 as "Batt out of dell". Subscribe here.