A multimillion-dollar yacht owned by Ron Pattenden, the founder of a funeral fund that collapsed owing millions in unpaid policies to thousands of low-income Aboriginal families, has sailed to tax haven Vanuatu, as questions escalate over his involvement in the company from which he received $20m in tax-free income over a decade.
On Saturday Pattenden’s yacht, Dream Catcher, was moored at a pier outside the Blue Marlin fishing lodge, which he formerly owned, in Vanuatu’s capital, Port Vila. The yacht had made a five-day trip from New Zealand, where Pattenden has been living and owns a property portfolio.
Guardian Australia has sought to confirm whether Pattenden is in Vanuatu and intends to take up residency there, and has submitted detailed questions to Pattenden via his Vanuatu legal representatives about issues raised by the fund’s liquidator.
Pattenden’s Vanuatu lawyer, John Malcolm, declined to answer when asked to confirm if Pattenden was on the island.
Malcolm said his client “respectfully declined” Guardian Australia’s request for answers to a series of detailed questions about Pattenden’s involvement over decades with the company. He said Pattenden “doesn’t want an interview, formal or informal”.
Youpla, formerly known as Aboriginal Community Benefit Fund, collapsed in March.
In his report to creditors filed with the Australian Securities and Investments Commission last month, liquidator, David Stimpson of SV Partners said he intended to notify the corporate regulator of potential breaches of the law by former directors.
Stimpson said in the report in June that he was investigating whether more than $40m paid to companies associated with Pattenden and other unknown recipients can be clawed back.
“There are possible legal actions to take against former directors, however, the amount and chances of success is currently uncertain. I will be seeking funding and/or assistance to pursue these claims,” Stimpson said.
He declined to comment on the Dream Catcher’s move to Vanuatu.
“Investigations into Mr Pattenden and his related entities are ongoing, including liaising with the appropriate government bodies to assist,” he told Guardian Australia.
Pattenden recently sold a 4,400ha estate in New Zealand’s Bay of Islands for more than NZ$5m. He owns property in Vanuatu including a house and land that locals say he plans to develop into a tourism business.
Pattenden has received more than $20m, tax free, from Youpla, formerly known as Aboriginal Community Benefit Fund or ACBF, through companies he controls in Vanuatu.
In his report to creditors, Stimpson said his preliminary investigations indicated that various directors of Youpla may have committed offences, including using their positions to gain advantage at the expense of the company and failing to act in good faith.
Misuse of position is a crime that can result in up to 15 years in jail.
Stimpson said he would provide a detailed report to Asic and the NSW Office of Fair Trading, which has oversight of funeral funds, on almost $20m in “purported dividends” he has uncovered as having been paid by ACBF-Youpla to recipients including Pattenden’s Vanuatu companies.
These transactions include $750,000 paid between 3 December 2018 and 4 February 2020 to Blue Marlin Lodge – where Dream Catcher was anchored on the weekend. Pattenden sold the lodge in late 2019.
The NSW OFT said it had not yet received such a report.
ACBF-Youpla targeted Indigenous people using marketing materials in the distinctive red, black and yellow colours of the Aboriginal flag, including stuffed toys and colouring books for children, and by conducting door-to-door sales.
Guardian Australia previously reported that the company had knowledge of at least one salesperson’s aggressive tactics, with management notified by email of an allegation that the salesperson used racist slurs when describing Aboriginal clients, and allegedly telling a colleague: “We aren’t here to show them respect or dignity. We are here to get money from them”.
At its peak, ACBF-Youpla had about 25,000 members. Data released last week showed that in some communities, about 30% of people, including children and babies, had been signed up to the fund. The worst affected was the north Queensland town of Yarrabah, where 786 people have been left facing the loss of everything they had paid into the fund.
Yarrabah Aboriginal shire council mayor, Ross Andrews, called it a “massive betrayal” of his community.
The collapse has also left at least 31 families without the money needed to bury loved ones. The Save Sorry Business Coalition of consumer groups, representing thousands of affected policyholders, estimates that those 31 families are owed $236,089 in unpaid funeral entitlements, amid reports that families are crowdfunding and collecting cans to pay for burials.
Pattenden’s association with Vanuatu began in the early 2000s, after ACBF’s insurer, French group Axa, told the company it no longer wanted to continue the relationship, due in part to “the level of ongoing complaints” Asic had received regarding ACBF.
To replace Axa, Pattenden in 2002 set up his own insurance company, Crown Insurance Services, in Vanuatu, where capital requirements were lower than Australia.
In March 2010, he embarked on a complex restructuring of his business empire that resulted in ownership of ACBF and Crown moving from him personally to another Vanuatu company, Just Solutions.
The effect was to transform the streams of dividends from ACBF and the profits from Crown’s insurance premiums into repayments of a loan, rendering them free from tax. As a result, over the decade between 2010 and 2020, Pattenden received almost $21m that ultimately came from ACBF customers, and was able to legally avoid paying any tax in NZ, Australia or Vanuatu.
Pattenden also owned assets in Vanuatu – the Blue Marlin lodge, apartments behind the lodge known as Hanson House, and a pub in Port Vila – all of which he has since sold. However, he retains ownership of a block of waterfront land in Havannah Bay, which locals say he intends to develop.
The federal government has said it was “deeply concerned” about the effect the collapse of ACBF-Youpla is having on vulnerable Indigenous families and was “committed to finding a solution”.
The finance minister, Stephen Jones, said he has met with members of the Indigenous community and consumer group representatives in far-north Queensland “and assured them that the government is aware of the full scale of this issue and is taking action.”
Guardian Australia understands a compensation scheme is one option under consideration.
“The government is actively working on potential solutions to address this issue and I hope to share more on these in coming weeks,” Jones said.
The Save Sorry Business Coalition said investigations of Youpla’s former directors should continue, but a compensation scheme for affected families was essential and urgent.
“There are strong views from community that First Nations people affected by Youpla’s collapse should receive urgent compensation from the government and that Youpla directors should be held to account for their harmful conduct,” a spokesperson said.
Asic, which is investigating the role of Pattenden and others involved with Youpla, declined to comment.
Last week the federal court gave Asic permission to continue a lawsuit against ACBF-Youpla alleging misleading and unconscionable conduct. Permission was required because the company is in liquidation.