b'The Powles affairThe Powles affair left Allen Allen & Hemsley shaken forIn London, Powles was approached by two businessmen years. Many were surprised the firm survived.Fijian accountant Dr Gopal Nair and Canadian lawyer Patrick Madden QCwho were looking for a lawyer to On 12 November 1992 managing partner John Lehaneact as escrow agent for Linpar, their newly established received a call from Jim Dunstan, the firms resident partnerinvestment company based in the Bahamas. Powles agreed in Hong Kong, to tell him about a troubling conversation heto help. In December 1991 Powles assisted with their first had just had with the Croatian Governmentsomethingmajor transaction, which was for the Nauru Phosphate about a scam and millions of dollars of the governmentsRoyalties Trust. money missing. As Lehane and Dunstan were soon to discover, the Government of Nauru had similar concerns.The Republic of Nauru is a small island in the Pacific Ocean. The common thread was the involvement of Adrian Powles,When mineable phosphate was discovered there in the a partner in the firms London office.early 1900s, its economy grew exponentially. The Nauru Phosphate Royalties Trust was established to invest the Powles was a senior partner. He had joined the firm in 1961proceeds from mining the phosphate to provide Nauru and progressed quickly. A good, practical lawyer with awith future income as the phosphate reserves depleted. commercial, property and finance practice, Powles had aFollowing a few years of poor returns, the managers of the natural ability to connect with people, from the most juniortrust fund were looking for new investments to improve the office staff, to the senior executives of Australias largesttrusts financial performance. Nair and Madden believed companies. He was the firms first managing partner fromthey had the solution: prime bank instruments, standby 1980 to 1983, before becoming the resident partner in London.letters of credit and complex investment structures. It was well known that Powles loved to bet on the greyhoundsTwo days before Christmas in 1991, the trust transferred and horses. It was not known that his interest in gamblingto Linpar its first tranche of funds for investment. Over the had developed into a pernicious addiction. As his debtsnext year more than US$60 million was transferred. The grew, he began to misappropriate money from the trustplan promoted by Linpar was to purchase the instruments funds of a number of individual clients. Mabel Burns,then trade them on a secondary market for an immediate an eighty-five-year-old family friend who gave Powlesprofit, but Linpar and Powles quickly lost control of the $455,000 to invest, was one example. Between 1983 andfunds. It took ten months for the trust to realise something 1992 Powles evaded the firms trust account procedures tohad gone wrong. The money had in fact disappeared within steal around $3.5 million from clients who trusted him withthe first two months.their savings. They thought he was investing their money. He was actually using their money to hide his financialBy July 1992 the trust managers were becoming nervous problems and fund his gambling. and asked for the investment funds to be returned, but the money was scattered across the world. Powles wrote letters 198'