The NSW Supreme Court continues to tighten the screws on the former director of collapsed outdoor advertising booking agency Ambient Advertising, Mark Fishwick, as a result of the ongoing investigation into his business dealings with various advertising agencies.
Following the collapse of the business in 2013, NSW Supreme Court-appointed special purpose liquidator Nicholas Crouch, of Crouch Amirbeaggi, was appointed to investigate the events leading to the collapse of Ambient Advertising and the formation of Revolution 360.
The special purpose liquidator is acting on behalf of all creditors of Ambient Advertising left unpaid when the business went into liquidation.
In a sworn affidavit acquired by AdNews, Crouch reveals the preliminary findings of his investigation into Ambient Advertising, which has been accused of trimming costs from media agencies.
Trimming is described as charging agencies for a certain number of posters but ordering fewer, keeping the leftover costs as profit.
Crouch states that from the sample of agency contracts he examined, 70 of the 96 supply contracts, 73% of the overall total, were for substantially fewer posters than that which Ambient had agreed to supply.
A statement of claim also includes a schedule of trimming claims, with agencies such as MediaCom, MEC (now Wavemaker), ZenithOptimedia, Frank Media, Starcom and direct footwear client Accent Group, all listed as clients that had been overcharged by Ambient.
Costs varied from total overcharges of $500 to $48,000, with a number of cases trimmed as high as double what was originally booked.
One such example, a campaign handled by MediaCom, totalling $29,837.50 for the entire campaign was overcharged by $14,322.00, almost half the total cost.
"Notwithstanding the fact that the supply contract had provided substantially fewer posters than the amount Ambient had agreed to provide in the corresponding media contract, in each invoice, provided and paid by Ambient's clients, the client had been charged for the number of posters in the media contract," Crouch stated in the affidavit.
"That is, Ambient had charged its clients for posters which it did not provide, and the client had overpaid Ambient the actual amount which it owed under the media contract."
From his investigations, Crouch calculated that the value of the overcharging, based on a sample of 32 clients, listed in the affidavit, totalled $326,398.06. A total number of clients examined was not revealed.
Following the discovery of the overcharging, Crouch contacted the agencies impacted by the sample investigation in which none of Ambient's former clients advised him that they had varied the media contract, sought credits for a reduced amount or cancelled their orders, which could have caused overcharging figures to be impacted.
"Every client advised me that they believed they were purchasing actual posters and not advertising space," he stated.
"The clients also advised me that they could not see any reason why their orders would have been reduced."
Fishwick previously told a court in 2016, that the discrepancies between the number of 'units' media agencies ordered and the number of posters Ambient Advertising ordered from its supplier, Foot Traffic Media, were due to units being accounted as 'media space' rather than posters.
This means that if a poster ran for longer than the standard one-week placement period it would count for several units.
This theory was questioned by barrister Steven Golledge at the time, who was acting on behalf of the special purpose liquidator, who pulled up evidence that Ambient Advertising staff, including Fishwick, had instructed staff to trim orders.
An industry source who places street posters across Sydney and Melbourne told previously AdNews the standard practice is that each unit booked represents one poster to be placed for a one-week duration.
Ambient Rail payments
The secondary element of Crouch's investigation into Fishwick's operations included the liquidation of Ambient Advertising's Ambient Rail business, of which Fishwick was sole director of from 29 October 2013, following the departure of then-partner Milan Bozic.
As part of his investigation, Crouch identified unexplained payments made by Ambient to Ambient Rail prior to the liquidation of the business.
Payments from $5000 to $36,000 were made to Ambient Rail over the course of three months, with the final payment made on 6 March 2014, with the company placed into liquidation on 8 July 2014. These payments totalled $178,194.00.
Crouch found the following:
- There was no evidence that Ambient Rail was a creditor of Ambient pursuant to any contractual agreement.
- No money was due and owing by AMbient to Ambient Rail for any compensation, damages, award or judgement
- There was no loan agreement identified between the two parties which might explain payment
- No evidence of any prospect that Ambient Rail would repay to Ambient Advertising for the payments made to it
- No benefit to Ambient from the Ambient Rail Payments.
The payments appear to link to the probe that is also examining whether any business was transferred between Ambient Advertising and Fishwick's new businesses Revolution 360 and Captive Vision Outdoor.
Based on the schedule of payments, Ambient Advertising, which was the guarantor on an Ambient Rail poster contract with
APN Outdoor, looked to be keeping the company afloat up until the point the contract ended.
It raises questions about whether the Ambient businesses were deliberately liquidated and re-spawned as Captive Vision Outdoor and Revolution 360 to avoid paying creditors.
Under Australian corporate law, illegal phoenixing activity can occur if a business is intentionally wound down and respawned by directors to avoid paying creditors.
In previous court hearings, when asked by barrister Steven Golledge about why Revolution 360 circulated an email to Ambient Advertising suppliers prior to the business winding up, Fishwick said "there was some handover work" before retracting the statement.
Golledge responded: "Handover to who? Not to Revolution 360?"
Fishwick said he didn't mean that but when Golledge asked if his statement was an error, Fishwick replied: "I didn't say it was an error."
Fishwick said earlier Revolution 360 and Ambient Advertising were not similar or related businesses. Fishwick and his son Michael have worked for both advertising companies.
APN Outdoor: 'contract terminated'
AdNews previously approached APN Outdoor to explain the movement of contracts between Ambient Rail to Captive Vision Outdoor.
AdNews asked the publicly-listed company why it terminated the contract with Ambient Rail, why it awarded it Captive Vision Outdoor days later, whether it was aware Ambient Rail and Captive Vision Outdoor were both run by the same person (Fishwick) and the nature of APN Outdoor’s business relationship with Captive Vision Outdoor.
In a subsequent legal letter that has been leaked to AdNews, APN Outdoor lawyers Esplins confirmed that the contract with
Ambient Rail was terminated “to change its commercial arrangements in respect of its assets, namely its right under contracts with Rail Corporation NSW and Metro Trains Melbourne, in order to enhance the value of those assets and returns to APNO (APN Outdoor)”.
The letter said that APN Outdoor acted on a clause to terminate the contract with 30 days written notice.
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