Page 4711 - Week 15 - Wednesday, 7 December 1994
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We have all heard complaints against the banks, and I could mention many such cases. However, today, I will run with the details of one story that in some ways represents the many. These stories are far more than just figures in a ledger book; they have a human face that represents the dreams and hopes of thousands of bank customers, and thus affect the very livelihood and prosperity of our nation. This story begins in 1972 when Mr Tony Rigg and Mrs Dorothy Rigg established a manufacturing business in Nowra, on the New South Wales coast. Their company, Tony Rigg Welding and Manufacturing Pty Ltd, fabricated modular steel roofs, walls and floors for houses, factories and commercial and farm buildings. Over a 14-year period, the company became one of the most successful in its field in Australia. BHP Steel, the Big Australian, said that Mr Rigg's experience and expertise in the building industry, particularly related to steel framing, was highly regarded. Because of the long-term success of the Rigg company, valuable export possibilities opened up in a number of Asian countries. Lysaght Brownbuilt Industries was urging the Riggs to expand their business to Canberra.
In 1985 the Rigg company employed 15 people and had a turnover of nearly $1m. The Riggs made a decision to expand the company and move into construction in Asia. They began this expansion by purchasing a 3½-acre industrial site on which they planned to build eight to 12 factory units. When we look at an internal report by the Commonwealth Bank of 6 May 1985, we see that it demonstrates the viability of the Rigg business. The report stated:
Mr Rigg has proven management ability and the Company has shown it can operate profitably ... the arrangement with Lysaght Brownbuilt Industries and the assistance of the Department of Trade should ensure that lucrative overseas markets will open up. There have already been a number of interested parties from overseas countries expressing an interest in the product ... The overall project is considered viable as it will be the only warehouse of its type south of Wollongong where the majority of building trades will be represented. The complex will be open seven days a week ... the industrial units will be under cover ... tradesmen will always be on hand to give expert advice rather than just sales personnel.
What an excellent idea - a complex called Building World! To finance the building complex, the Commonwealth Bank offered the Riggs a bills facility, including a simulated foreign currency loan option, for a total loan of $700,000. Because of the loan conditions offered, the Riggs changed their bank from the State Bank of New South Wales to the CBA.
Let me explain what a bills facility is. It is money that the bank borrows, on the open market, to lend to a bank customer. Each bill would mature in a few days, weeks or months. The Commonwealth Bills of Exchange Act 1909, subsection 22(2), says:
An acceptance is invalid unless it complies with the following conditions, namely:
(a) it must be written on the bill and be signed by the drawee.
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