Angry customers are expressing their frustration towards ASIC for neglecting to act on whistleblower complaints prior to the collapse of Zone RV, a luxury caravan manufacturer.
Zone RV, located in Sunshine Coast, entered administration on December 1, facing debts totaling $42 million, which includes $18 million owed to approximately 180 customers who had either partially or fully paid for their caravans. Tragically, around 140 of these customers have been informed that they will not receive their caravans, leaving some families financially devastated—one even lost up to $190,000.
This situation has sparked outrage, especially since a whistleblower complaint from a former senior employee at Zone RV was seemingly ignored. In September, Kim Hodgkins, the former chief financial officer, alerted the Australian Securities and Investments Commission (ASIC) about alleged misconduct and insolvency issues within the company during late 2023.
Emails obtained by ABC reveal that Ms. Hodgkins warned upper management in November 2023 about the company’s dire financial situation, highlighting a significant cash shortfall. "As previously discussed, our current [cash] position is we have $527,000," she wrote, adding that there were overdue payments totaling $2.1 million. Moreover, a communication indicated that Redarc, a major electronics supplier, had suspended credit to Zone RV due to unpaid bills. When the company collapsed, it owed Redarc nearly $2.5 million.
Despite these serious allegations, ASIC informed Ms. Hodgkins via email on October 30 that a formal investigation would not be launched. The regulator stated, "[We] are selective about the matters we pursue to ensure we use our resources to target misconduct effectively," and concluded that no further action was warranted at that time.
Ms. Hodgkins pressed ASIC to reconsider its stance, but when she received no response, she directly contacted ASIC's chief executive, Scott Gregson. In turn, senior executive Peter Witham confirmed on November 17 that ASIC would review the assessment of her report. Notably, just two days later, on November 19, documents indicated that Zone RV's corporate advisor was already discussing potential insolvency with administrators. This raises questions about whether ASIC’s review of the whistleblower's claims influenced the timing of the administrator’s appointment.
Customers are understandably furious about this lack of action. Trudi Wight, who runs a kitchen business with her husband in Kempsey, sold their investment property to purchase a Zone RV caravan. She described the loss of their life savings as "very distressing" and expressed her anger over ASIC's initial refusal to investigate the alleged misconduct. "We pay taxes to fund ASIC, and I feel really let down—they're supposed to protect us in situations like this. If ASIC had acted more swiftly, perhaps many wouldn’t be suffering so much now," she lamented.
Brook Waugh, who owns a sawmill in northern NSW, echoed similar sentiments, stating he felt "pissed off" with ASIC after making over $150,000 in progress payments for his caravan. "What is the point of ASIC if they were notified yet did nothing for months? They could have saved so many people from losing their life savings. Those responsible should be ashamed; it's disgraceful," he asserted.
Eduard Planken OAM, representing 86 customers who are out of pocket, expressed strong criticism of ASIC, stating, "This is a government body meant to act in the best interests of all. They should have intervened to prevent innocent people from losing their money."
An ASIC spokesperson responded to inquiries by explaining that while they receive over 10,000 reports of misconduct annually, they can only formally investigate a few hundred cases due to resource limitations. They also clarified that external administrators must report any potential misconduct to ASIC, and it falls upon appointed directors to prevent insolvent trading under the Corporations Act, which carries various civil and criminal penalties for violations.
Some customers are now contemplating a class action against ASIC, although the regulatory body enjoys broad immunity from litigation. Additionally, at least four customers are known to have submitted fraud reports to the Australian Federal Police, who have responded by stating that this matter does not fall within their jurisdiction.
Cor Cordis, the appointed administrators, is expected to present a report to creditors in January detailing the circumstances surrounding Zone RV's collapse.
