Gilham has tried to settle with the bank, offering to pay back the $115,000 he borrowed by borrowing money from his extended family and selling assets, to no avail.

Like hundreds of others, Gilham's debt is with Bendigo and Adelaide Bank which had a cosy relationship with Great Southern that gave it the inside track to lend to would-be investors. When it all went bad Bendigo came looking for its money.

“Some days, I get in a dark space, and think dark thoughts, that’s the headspace I get in,” he says. “It’s a huge struggle. I wake up every morning at 4 o’clock in a state of anxiety wondering how I’m going to cope… Why won’t they answer my cry for help?”

Gilham, who was advised to borrow to invest in the schemes, is saddled with debts that have almost tripled in the years since due to interest and penalties.

Gilham believes he was the last of the 52,000 investors who sank money into one of the many disastrous schemes flogged by one-time ASX200 member Great Southern, which collapsed under more than $600 million in debt in May 2009.

For almost a decade Dave Gilham has dragged around 20 kilograms of documents in a battered suitcase. The forensically compiled folders hold evidence of inappropriate advice, doctored loan forms and more than one hundred items of correspondence pleading with a bank for mercy.

A Fairfax Media investigation has examined the stories of dozens of such investors, who say they were misinformed about the risks of investing in Great Southern by financial advisors who incorrectly told them the loans were non-recourse, which means if debt was called in, Great Southern was on the hook, not the investors.

For thousands of burned Great Southern investors like Gilham the past decade has been marked by financial devastation as Bendigo, the country’s fifth largest retail bank, determinedly pursues them over hundreds of millions of dollars in loans taken out to invest in the ill-fated forestry giant.

The commission has shone a spotlight on aggressive, unethical and potentially illegal behaviour by financial institutions in Australia but will not consider Great Southern.

Great Southern’s plunge into administration and infamy laid bare toxic conflicts within the accounting and financial advice professions, led to a series of explosive parliamentary hearings and, eventually, added to momentum for the royal commission now underway.

“They know my loan was doctored and I didn’t meet the loan criteria, but still they pursue me,” he says.

Over the years he has compiled a spreadsheet of 150 emails and letters of correspondence with Bendigo pleading that his loan was improperly struck.

Naughtin said she and her husband invested in Great Southern in 2008 on the advice of their accountant.

“I am covered in psoriasis and had two heart scares with the stress. I’ve lost everything,” she says. “They’re a bunch of pricks.”

One such investor is Deb Naughtin. At 53, she is broke and a full time carer for her terminally ill mother. In October she became bankrupt after being unable to repay Bendigo.

The loan process and paperwork was sometimes so slapdash that, in some paperwork viewed by Fairfax Media, investors’ birth dates, addresses and other personal information were incorrectly entered, without their knowledge.

These tactics inflated the size of the loans for the investors, allowing them to buy more product thereby boosting the commissions paid to their advisers.

The investigation has obtained evidence that a number of loans were based on doctored loan applications - filled out by financial advisors, accountants or their staff - that inflated assets, understated liabilities and in some cases forged signatures.

“The bank provided no financial advice to any investor or borrower that invested in the schemes... it was also open to the bank to accept that all the information provided was true and correct," it said in a statement.

Bendigo says any loans with a suggestion of fraud are investigated. But it says that cases of inappropriate advice and fraudulent loans “are matters that should be addressed with… advisors directly”.

“Banks cannot outsource their responsible lending obligations to third parties such as the financing arm of an agribusiness MIS,” the inquiry's landmark report, titled Bitter Harvest says. “A number of red flags should have alerted the banks to the potential for inappropriate lending.”

A 2016 parliamentary inquiry found this kind of investment lending was “instrumental” in causing significant financial loss to retail investors who borrowed to invest in agribusiness managed investment schemes and that banks needed to take responsibility for their role.

As the nominated "preferred lender" Bendigo was in the box seat to get business from Great Southern investors and also bought bundles of securitised investor loans from Great Southern’s finance arm.

“The loan application is not in my handwriting, and I really can’t remember much about that at that time,” she says. Her and her ex-husband’s assets, as stated in the application, were inflated massively by an unknown party, she says.

But its reputation took a hit recently when the royal commission heard evidence critical of its handling of loans to Queensland cattle farmers and failures to properly investigate a case of signature fraud and an improper witnessing of a loan document.

Bendigo Bank is one of the nation’s most trusted brands - ranking above the likes of Bunnings, Qantas and the ABC, according to Roy Morgan research published this month. It also prides itself on being a “community bank” and a "reputation for trust, customer advocacy and service".

Multiple cases are now before the courts, testing Bendigo’s right to enforce its loans to Great Southern investors.

Now, evidence has emerged in a court victory by a Great Southern investor highlighting deficiencies in records kept by the failed investment scheme spruiker, and which, Sydney lawyer Tony Cordato says, may well exist in more of the dozens of projects run by Great Southern.

Against that backdrop, Bendigo has continued to chase down Great Southern loans using tactics branded “hard nosed” and “un-Australian” by observers.

The bank is charging interest of at least 10 per cent per annum on loans, some of which have ballooned to three times the original loan amount.

Bendigo has ignored calls by that 2016 parliamentary committee for it to appoint an independent hardship advocate. This is in sharp contrast to Timbercorp, which also collapsed, where liquidator KordaMentha and the ANZ Bank appointed an independent advocate to negotiate hardship cases.

Bendigo deems an internal “customer help centre” it set up in 1996 to be adequate.

Bendigo Bank has aggressively pursued people who have lost their life savings... This is really unconscionable Lawyer John Berrill

“They liaise with [the Financial Ombudsman Service], stakeholders and customer appointed representatives and we extended their scope to include Great Southern cases to meet the Senate Inquiry recommendation,” the bank says in a statement.

But it isn’t enough, says John Berrill, a lawyer works on the Timbercorp hardship program. He says Bendigo’s program is a long way from what was recommended and “a million miles from what Timbercorp has in place”.

He says Bendigo’s general dispute program isn’t up to the standard of some of the big banks, such as Commonwealth Bank which has a customer advocate unit.

“Bendigo Bank has aggressively pursued people who have lost their life savings and many of whom are suffering severe distress. This is really unconscionable and they should set up a robust hardship program immediately,” says Berrill.

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One of the reasons the process continues to drag on is that thousands of Great Southern investors pinned their hopes on a class action mounted by lawyers M+K, which ended in a settlement in late 2014 that has attracted criticism.

The terms of that settlement included a bar on those class action members ever contesting their Bendigo loans. Under the settlement, M+K pocketed $20 million and $3.5 million was paid to the thousands of investors.

M+K advised members of the class action not to make repayments on their loans, which meant their debts swelled while the class action continued. M+K did not respond to questions.

Sydney-based Cordato has represented some of these investors and says the settlement means class action members “have no rights to challenge the loans - none at all".

Forgotten people

For Dave Gilham, time has run out. On July 23 he received a letter saying that unless he pays $336,650 (almost three times the original amount borrowed) or a payment arrangement is reached within seven days, legal action will commence and he may be made bankrupt.

Dave Gilham has been given an ultimatum. Credit:Anna Kucera

Gilham invested in Great Southern after receiving advice from his trusted financial adviser Steve Navra, who was described by the 2016 senate committee report as a “disreputable advisor”. Navra was bankrupted after Great Southern’s collapse but was later discharged from bankruptcy.

When Gilham signed up for Great Southern his income was $85,000 a year.

“My wife had just had a baby with special needs and she wanted to stop working to look after the kids, so we decided to get advice on how to plan for our future,” he says.

Gilham has spent years trying to reach a settlement so he can get on with his life. He has met senior bank executives and went to a financial counsellor who independently assessed his finances, after which Gilham offered the bank $70,000.

Steve Navra Credit:Rebecca Hallas

He says Bendigo has rejected all his offers. “I offered to sell my car and my investment property but it has negative equity and so they said they didn’t want it,” he says. “I have sent them my financials so many times and I have been told we will resolve this, but they never do.”

He recently asked his extended family to lend him some money so he could pay back the principal, $115,000, but he says that has also been rejected.

In a letter sent to a politician who tried to advocate for Gilham, Bendigo said Gilham’s various settlement offers “have fallen well short of reaching a mutually acceptable outcome”. The letter suggested he hadn’t provided enough financial information about his situation.

Gilham is one of many. More than 52,000 investors around Australia poured in excess of $2 billion into Great Southern’s managed investment schemes in the years between the company’s beginnings in the late 1980s and its collapse in 2009. Many borrowed to invest.

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The royal commission has so far ignored them, despite receiving dozens of submissions urging it to examine the scandal. They are forgotten people.

The investments were encouraged by government policy as the Howard government aimed to triple Australia’s plantations through private investment.

“Great Southern played a significant role in delivering on the global forestry and plantation obligations of successive governments,” Bendigo notes.

Regulators and politicians have largely turned their backs, amid perceptions that all Great Southern investors were high-income individuals who were only seeking to reduce their tax bills. But this was not always the case.

Stephen Baume, a director at Financial Resolutions Australia a company that specialises in financial services disputes, has helped victims of Commonwealth Bank Financial Planning scandal and many others and believes the majority of Great Southern investors were low or middle income earners who relied on their advisers - often accountants licensed by Great Southern - to steer them.

"The lack of sophistication shows - what they paid for the product was 2–2.5 times more expensive than comparable products,” Baume says.

“This would certainly suggest that these were vulnerable [people], and had been taken advantage of."

Great Southern’s investment schemes bankrolled a buying spree of 180,000ha of tree plantations across Australia, as well as land for olive groves, vineyards and cattle farms. The company’s toppling exposed flaws in its business model - it relied on continually drawing in new money from investors, and when its plantations yielded far less than projected, it topped up payments to investors with company funds.

Jeff Morris, a former financial adviser and CBA whistleblower said the Great Southern schemes were based on a tax ruling that should never have been given in the first place.

"When this ruling was withdrawn the flow of new money dried up and like any Ponzi scheme it was only a matter of time before the schemes collapsed," he said. “The excessive commission payable on these products would in itself indicate that they were never genuine investments, just a scheme to rip off the financially naive”.

The Australian Securities and Investments Commission probed its collapse (ASIC) but took no action. Liquidator Ferrier Hodgson sued over multiple alleged breaches of directors duties against members of the board resulting in a confidential settlement believed to be $50 million.

ASIC also found “no systemic mis-selling of Great Southern schemes by financial advisors warranting enforcement action”, but made some advice firms write to clients in cases of “potentially inappropriate advice”.

The extent of the failure of the regulator to act in cleaning up Australia’s scandal-plagued financial advice sector was later exposed in a series of Fairfax Media investigations, including CBA, National Australia Bank and IOOF.

Bank on it

Justice Clyde Croft presided over the Great Southern class action, and approved the 2014 settlement. Although the case was settled, his judgement was released, in which he labelled Bendigo an innocent third party in the Great Southern fiasco. It is a characterisation that Bendigo has repeated in the years since as it has pursued the loans.

Great Southern investor John Toohey spent years fighting Bendigo trying to get copies of loan applications made in his name for timber schemes. “The bank finally admitted in January 2015 that it didn’t have one, and sent me a copy of my May 2008 [grape] loan application instead,” he said.

He says he was horrified to see the extent of the doctoring, which he believes was to shoehorn him into a loan he should never have been granted. He reported it to the NSW Fraud Squad.

“The anomalies were stark: my liabilities were grossly understated and assets grossly overstated, meaning my net assets were recorded as four times larger than reality; my capacity to repay based on my income was overstated; and even my birthdate was incorrect.

“I also have proof I was 1000kms away from the office on the day the document was supposed to have been signed by me and witnessed by someone I’d never met,” he says.

He eventually reached a settlement with Bendigo, and signed a gag order on disclosing the amount he had to pay, but believes justice is yet to be served.

Deep relationship

When Great Southern collapsed, Bendigo held more than $550 million worth of Great Southern loans owed by 8200 people. In an investor update in December last year, Bendigo revealed 1033 people still owed a collective $86 million.

It has booked provisions of $23 million against the outstanding debt, which over the years have been closely scrutinised by shareholders concerned about the potential impact on Bendigo’s bottom line and share price.

Its debt collection efforts were paused as the M+K class action played out. But it restarted following the settlement of that case in late 2014.

“The vast majority of borrowers have made arrangements to repay the bank following the… settlement deed,” the bank says.

Senator John Williams Credit:Louie Douvis

Its behaviour in calling the debt is now being questioned. Nationals Senator John Williams describes Bendigo’s treatment of some victims of Great Southern as “un-Australian.” He questions why the bank continues to charge interest rates as high as 11 per cent when debt is much cheaper.

“It’s a blatant rip-off,” he says. Senator Williams says it can’t be compared to personal loans because it was supposed to be secured by assets.

The bank strongly rejects criticism that it is being unfair, saying it has allowed a “significant period of time” for people to settle their debts.

“We appreciate these circumstances are frustrating and difficult for some remaining borrowers, however we have provided reasonable opportunity to work with us to find ways to repay their loan,” the bank says.

“Interest is charged relative to the risk of a loan, and these loans were assessed as a higher risk than a housing loan, for example, and this has proven to be the case,” the bank says, adding that current personal loan rates stand at between 11 per cent and 13 per cent.

In response to questions from Fairfax Media about how much interest it had collected on the loans, Bendigo says this is “not relevant”.

Senator Williams also wants to know why the bank never complied with the senate committee’s call for Bendigo to open a hardship program with an independent advocate.

He isn’t alone. “The victims have been dragged through the mud and it’s ruined a lot of their lives - they don’t trust the banks,” says Tasmanian Greens senator Peter Whish-Wilson who, like Senator Williams, was on the Bitter Harvest inquiry.

“It’s important for the victims [to have someone] they know is at arm’s length from the process.”

One investor, Justin Bone, who invested just over $30,000 in Great Southern products, was bankrupted earlier this month.

Bone is the sole supporter of two children, one 10 and one 15, after his wife died of cancer two years ago. He is living in a rental property in the north-east Victorian town of Wodonga and his only assets are a second hand car and roughly $40,000 in super.

He said he told the bank on numerous occasions he wanted to settle the debt, which has almost doubled from the original debt, but could only afford to pay back $140 a week. “They wanted $250 a week and I couldn’t afford that,” he says.

Bendigo says it has another specialist area that “processes financial difficulties”, which required borrowers to provide financial information so it can assess their ability to repay.

A vacuum of information has made meeting the expectations of the borrower difficult Bendigo Bank statement

It said that some borrowers had “not returned the minimum required documentation” and believed, in Justin Bone’s case, that “a vacuum of information has made meeting the expectations of the borrower difficult”.

Bone disagrees saying: “I sent them the full information about my personal circumstances and financials on a number of occasions but they ended up sending me a writ to go to court.”

Cordato says he has noticed a step up in the bank's bankruptcy pursuits in recent months, following an unsuccessful case in the high court.

"I think they have decided not to hold off any longer - they are just going after everyone now at full speed," he says, describing them as "hard-nosed, and they will bankrupt you if you don't pay or come to payment agreement".

Bendigo strenuously denies that it has ramped up its debt collecting efforts, and says it has not kept a “running total” on how many people have been bankrupted. It denies “in the strongest terms” that it has been aggressive or unethical in its pursuit of debts.

Courting success

In the wake of the failed class action, legal battles over Great Southern loans have stretched from the NSW local court all the way to the High Court. A glimmer of hope for some Great Southern investors has emerged.

Michael Howard took on Bendigo Bank and won. Credit:Louise Kennerley

Wagga Wagga pilot Michael Howard, 57, is a self-described "working Joe" and father of five. But his recent legal victory against Bendigo Bank "shines a light" that may help other Great Southern investors, says Cordato, his lawyer.

Cordato says deficiencies in the loan documents kept by Great Southern were “exposed” in the Howard case. “The [bank] inherited those deficiencies when it bought the loan book,” he says.

The case hinged on Howard’s $24,000 loan that he planned to invest in Great Southern’s 2006 organic olive project. More than a decade later, Howard was was being pursued by Bendigo Bank for more than $66,000, due to interest charges.

He won the first round last year, when a NSW magistrate concluded the loan deed signed by Howard was not enforceable by Bendigo.

And then he won round two in April, when an appeal by the bank before the NSW Supreme Court was unsuccessful and the bank ordered to pay Howard's costs.

Howard hopes his victory can be used for the benefit of other burned Great Southern investors. "In the end, the result was good, but it was a very high legal risk," he says. “I’m just a guy from a Wagga who took on the big end of town.”

Cordato says Howard’s case has implications for Great Southern investors who, like Howard, are not bound by the class action settlement. Cordato is representing about 30 such cases.

Bendigo says Howard was “an isolated case”. “Certain factual matters relevant to Mr Howard’s borrowing are unique to his circumstances alone,” it says, adding that it is “confident there were no systemic issues in Great Southern’s record keeping in relation to these loans”.

Some are fighting on. Sydney lawyer Sasha Ivantsoff is representing 120 Great Southern investors who were part of the class action. They are arguing that their loans are not enforceable by the bank, because of what they argue are critical "defects" in the documents.

Justice Croft has reserved his decision on one such case. "If the deeds are found to be unenforceable, it could have a significant impact on the financial well-being of hundreds, if not thousands of families," Ivantsoff says.

Series of failures

The collapse of Great Southern exposes flaws in the regulatory system and the urgent need for a compensation scheme of last resort for victims who received inappropriate advice from their advisors and accountants, but are left carrying the bill.

The Turnbull government received a report from the Ramsay Committee in late 2017 recommending the launch of such a scheme. The report also recommended compensation for victims of past wrongdoing. But the government has shelved the report until after the royal commission hands down its final findings in February 2019.

In the meantime, the victims are left out on a limb.