Gippsland rejected 'big bank, big city' ways

The staff and directors of Gippsland Secured Investments were dismissive of the "big bank" and "big city" approach of business consultants Ernst & Young (now GSI's receivers and managers) and the Melbourne-based property valuers brought into revalue properties used as collateral for development loans that were in arrears, the Supreme Court of Victoria heard yesterday.

GSI's managing director, Glenn Sanford, told auditor Joanne Loh of LSM Associates that EY had a "big bank approach" and didn't really understand GSI's business when they wrote the 2013 report, Loh told the court.

Similarly Sanford told Loh that the Melbourne property valuers brought in by EY to revalue some properties underlying GSI loans in arrears had a "big city" approach, said Loh.

GSI failed in July 2013 with A$144 million in liabilities and EY were appointed as receivers and managers.

Frustration with banks who were reluctant to lend into country areas and who paid low interest rates on deposits was the reason GSI was founded in 1970, managing director Glenn Sanford said at GSI's 40th birthday celebration in 2010.

"Although we're not a bank, we do have a banking-style of operation, but without riskier unsecured lending," said Sanford at the time.