On May 30, Spectrum has reported on the connection between the financial troubles of Australian developer Keith Johnson and the Seventh-day Adventist Church in Australia. The following was published by the South Pacific Division recently.
The Church has commissioned an independent report to review investment arrangements with the Johnson Property Group.
On May 26 the Australian Financial Review published a story claiming that the Seventh-day Adventist Church had “poured” money into a developer and that Johnson Property Group’s (JPG) survival depended on the ongoing support of the church. The article was inaccurate and misleading and a number of members have asked for further detail.
In an effort to provide transparency and confidence for church members, the South Pacific Division of the Seventh-day Adventist Church has requested Grant Thornton, an external auditing company, to prepare a report reviewing the key issues related to investments made with the Johnson Property Group (JPG).
We recognise people’s concerns and interest regarding the Church’s investment and relationship with Keith Johnson and JPG. We believe an independent report will provide the transparency some members are requesting and can address any misconceptions in people’s minds about our investment program”, says Rod Brady, Chief Financial Officer for the South Pacific Division. “It should be noted by everyone that the process of company administration in which JPG is involved is complex. The Division has received legal and other professional advice recommending caution in relation to releasing information to avoid disrupting this administration process. We need to heed that advice, as difficult as that might be. The Church’s leadership team wants to provide as much clarity around these investments as possible”.
It is significant that the commissioning of the independent review and report for the SPD, due to be released at the end of August, coincided with the Deed of Company Arrangement executed on June 16. That deed now allows JPG to continue operating under the oversight of the administrator.
If you would like a copy of the report you are welcome to send your request with your postal address to The Chief Financial Officer, South Pacific Division of the SDA Church, Locked Bag 2014, WAHROONGA 2076.
Responding to your concerns...
While there are commercial and confidentiality constraints on what can be stated publicly at this time we want to assure church members of the following:
1. The church has not “poured” money into or bankrolled the Johnson Property Group as claimed by the Australian Financial Review. At all times Church leaders have acted to ensure our investments are secure and provide the best possible return for the future.
2. The conservative and standard investment policies of the South Pacific Division have been adhered to.
3. The Church estate land at North Cooranbong and Wahroonga is not encumbered by a mortgage and is not at risk of being lost . JPG has invested its own time and funds to accomplish rezoning and other work done on the North Cooranbong land.
4. The church’s governing Board deems that adequate security for the contracts and Joint Venture agreements are in place and, at this time, no loss is expected from the administration process.
Investing for a Sustainable Future
The church in the South Pacific Division operates a number of investment funds with different investment objectives. It has always had a conservative investment policy that puts the protection of capital as the highest priority and this has served well during the extreme turmoil of the Global Financial Crisis (GFC). Investments are overseen by a Board and there has been no departure from the approved and standard investment policy. The church is listed as a secured creditor in the administration process for JPG. However, the details of what comprises that claim cannot be made public at this time due to the restrictions previously mentioned.
The Johnson Property Group has invested its own time and money as risk capital to successfully achieve rezoning outcomes on two of the Division’s key estates – Wahroonga and North Cooranbong. This outcome has been of enormous benefit to the church both in terms of adding value and being able to continue utilising the land for the use of the Church. A major expansion of Sydney Adventist Hospital has been made possible by this rezoning.
Due to the Global Financial Crisis banks have nearly completely frozen all lending to land developers and as a result many land developers have ceased business. Johnson Property Group is currently in the process of arranging other external finance in this difficult credit market with the aim of commencing development at North Cooranbong later in 2011.
This is a companion discussion topic for the original entry at http://spectrummagazine.org/node/3236