Merlin Diamonds has been ordered to explain the relationship between its founder, bankrupt mining magnate Joe Gutnick, his son, Mordechai Gutnick, and a mysterious New York fund that owns 11 per cent of the company.
The Takeovers Panel has been probing Merlin following a complaint by small shareholders whose stakes were massively diluted by a series of stock issues in early September.
Mr Gutnick declared himself bankrupt in July owing $275 million after he and another of his companies, Legend International, lost a legal battle with Indian farmer’s co-op IFFCO over a proposed phosphate mine.
The panel yesterday found Mordechai Gutnick was associated with the mystery New York fund, Regals Fund, in breach of company law, and banned Regals from voting its stake in Merlin for a year.
All that was previously known about Regals is that it was run by David Slager, a hedge fund operator and philanthropist who in 2010 donated $US5m to Jewish religious charity Machne Israel.
In paperwork filed when he declared bankruptcy, Mr Gutnick said he owed Machne Israel $13.3m.
Read the full article by Ben Butler at The Australian.