The Nant whisky and Angus cattle investment scandal
The past 15 months have been a roller-coaster ride for investors who put their money into Nant whisky barrels or its associated cattle investment scheme.
But the endgame is nigh. This week, hundreds of Nant investors have been informed that an audit has revealed more than 1330 barrels – bought for as much as $14,000 each by investors – do not exist.
Chris Malcolm, the exasperated chief executive of Australian Whisky Holdings, which bought the distillery in Bothwell, Tasmania, is fielding about 100 voice messages and 240 emails a day from anxious investors.
“Last Friday night at 9pm I took a call from an anxious barrel investor who is working on an aid project in Burma,” he told The Saturday Paper. “It was my sad duty at that time of night to inform him that his barrels had not been filled and did not exist.”
He’s had scores of similar uncomfortable calls, as well as calls from investors in the Nant Angus cattle business. Malcolm is unable to help, as Australian Whisky Holdings bought only the distillery real estate rather than the entire whisky business. He’s now dealing with a conga line of creditors, disgruntled employees and investors.
The losses on the Nant investment schemes could run well above $20 million, yet investors have been frustrated for more than a year as regulators such as the Australian Securities and Investments Commission, the Australian Competition and Consumer Commission and two state fair trading commissions have dodged responsibility. Several investors have also been to police in Queensland and Tasmania. A lone policeman in the Queensland stock fraud squad has taken a serious interest. Part of the problem is that this is not a sale of a security, such as a share or bond, but a sale of property.
The way the Nant investment schemes worked was that investors bought two barrels of whisky or 10 cattle and owned them outright, with Nant promising to buy them back on maturity. In the case of the whisky, that was four to five years. In return, investors would get 9.55 per cent compounding interest – which looked very generous, when banks were offering 2.5 per cent on a term deposit.
The barrels were stored in a bonded warehouse at Nant in Bothwell, and some investors – at least the early ones – got photos of their barrels and paperwork. But as matters ran out of hand, investors found it increasingly hard to get responses from Nant’s founder, Keith Batt, on when their barrels would mature and when money would be returned. An audit has now revealed 720 barrels are missing – but there appear to be many more where there is no paperwork at all.
The warnings in the media, that Nant was in trouble and had the hallmarks of a Ponzi scheme, began 15 months ago. Yet Nant has continued to solicit investors via The Australian Financial Review and its website, even though Batt, a failed Queensland property developer, had declared himself bankrupt.
According to Chris Malcolm, Nant took two payments totalling more than $100,000 from an Australian and a New Zealand investor as late as October last year.
For one disability pensioner, the decision to put the $90,000 he inherited from his father into herds of 10 Nant Angus cattle has proved life shattering.
Similarly for Kate, who asked to use a pseudonym for this piece and whose child has a disability, the decision to chase a 9.55 per cent return from investments in Nant Angus has seen her spend the past eight months talking to lawyers, regulators and police from the Queensland stock squad. She has tracked her cattle to a property at Blackwall, Queensland, but she still hasn’t been able to get them released or get her money back.
Those with money in the whisky barrels are a mix of naive investors and the top end of town. They range from Bothwell locals to mums and dads to prominent businessmen such as John B. Fairfax. Many invested through their self-managed super funds.
They believed they had a secure investment because Nant made much of the fact that investors owned their barrels of whisky and had a guarantee from Nant to buy them on maturity. Meanwhile, the barrels were allegedly safely stored in a bonded warehouse at the Bothwell distillery, with the Australian Taxation Office looking on benignly to ensure the alcohol excises were paid.
But now investors are facing the prospect of a dog-eat-dog battle between each other and creditors over the wreckage of the Nant business. The bad news keeps pouring in.
FTI Consulting, acting on behalf of Eclipx Group, was owed money on an equipment lease and put the company into receivership last week. The company said it was seeking advice on ownership of the barrels and would be acting in the interests of all creditors.
Some employees at the distillery and the Nant bars have come forward to say they have not been paid superannuation for more than a year.
Australian Whisky Holdings had initially planned to buy the whole business but, after the period of due diligence, abandoned the plan and instead bought only the real estate in Bothwell where the historic distillery stands.
Malcolm said he struggled to get financial records from Batt. Then an audit, undertaken by whisky experts and supervised by accountants, revealed a litany of irregularities: missing barrels, unfilled barrels and barrels that had been emptied and refilled, while investors waited in vain for the call that their barrels had matured and were ready for decanting.
“Australian Whisky Holdings had to delay the completion of the Nant Estate property acquisition at the end of January 2017 due to the fact that there was an undisclosed caveat lodged just prior to settlement against the property by a financial company who financed Keith Batt to purchase a 1965 ‘S’ Model Bentley for $58,000, which was still owing,” Malcolm said.
“We had to pay that out over and above the land purchase price in order to finalise the transaction.”
Even Batt’s former lawyer and fellow director, David Dowd, has been stung. He’s severed ties with his client and resigned as a director in October. At the time of the sale he was owed $2.5 million.
Batt and his wife, Margaret, now on record as the sole owner of the Nant web of companies, did not answer their mobiles. The Nant office in Queensland has closed and the only address appears to be a post office box. A Facebook page Batt had set up to answer questions from investors has been closed down.
Meanwhile, Malcolm is advising barrel holders to sit tight and leave their barrels in the warehouse at the distillery. He has referred the matter to the Bothwell police and he’s been in touch with the tax office, which may finally take an interest now that it appears whisky may have been sold without any excise being paid.
Meanwhile, the man behind the Nant vision, Keith Batt, is being chased by several banks for $16 million in debts associated with his previous property ventures.
He put himself into bankruptcy just before Christmas in 2015 but not before he had restructured his empire and transferred the Nant property and companies to his wife.
These financial hiccups didn’t impede his sailing ambitions, however. A subsidiary of Nant bought Syd Fischer’s old Ragamuffin, which Batt restored to sail in the Sydney to Hobart – under Nant livery – with not much change from $1 million. And in June 2015 he bought a $3.6 million trophy home in Clayfield, Brisbane – in a trust controlled by his wife. It is believed to be on the market.
Kate, the investor in Nant Angus, has at least got some response recently from the Queensland attorney-general, Yvette D’Ath, who has prodded the Office of Fair Trading into action. Kate also thinks she’s found her cattle at a property in Bothwell, but now she’s worried they might have been sold several times over, to multiple investors.
As for the $64,000 question: Where’s the money gone? Only the Batts know the answer.
This article was first published in the print edition of The Saturday Paper on Mar 25, 2017 as "Over a barrel". Subscribe here.