The emergency court action comes at a tumultuous time for Blue Sky which has faced questions about its governance and the valuations of assets held by various funds of the group. Several senior staff have also left the group over the past 12 months, including two chief financial officers.
Last year, concerns were raised by market watchers about the value of assets in Blue Sky’s real assets division including its water fund. The water fund had $220 million under management as of December 2018.
Established in 2012, the fund holds water rights and other agricultural investments. The fund’s trustee, BSWP holds investment mandates for Local Government Investment Australia, Super Rabo Investments, Texas Municipal and Retirement System and First State Super.
Last week, the Federal Court heard the alleged raid on Blue Sky’s confidential information was discovered during a review of Mr Waters and Mr Hayden’s work emails and telephones by forensic IT specialists at KordaMentha.
BSWP partners managing director Kim Morison instigated the review after learning that Riparian, a company linked to Mr Waters and Mr Hayden had entered into a strategic partnership with Pinnacle to set up a rival water fund, Justice John Logan said in a judgment approving Blue Sky’s request to stop any use of the documents.
Mr Hayden and Mr Waters are not listed as directors of Riparian, but Mr Waters was named in a press release issued by Pinnacle as a managing partner of the group.
Justice John Logan said the review found that over the weekend of June 28 and 29 a person used Mr Waters’ computer to access Blue Sky’s “O drive” where it held confidential information. 2.2 gigabytes of data was downloaded during the access.
“The applicants submit, and I am prepared to accept, having regard to Mr Waters’ involvement with Riparian Capital, that, prima facie, an inference arises that it was Mr Waters who undertook that downloading,” he said.
Mr Waters and Mr Blakeney left Blue Sky in January. Mr Hayden appears to have left the group in 2018.
While still investment directors at BSWP, Mr Waters and Mr Blakeney made a failed management buyout bid the Blue Sky Strategic Australian Agriculture Fund, the court heard.
[It appears] there has been conduct by the individual respondents in breach of confidentiality undertakings and that Riparian Capital and Pinnacle have each been concerned in those breaches
Pinnacle was an investor in the proposed buyout that was rejected by BSWP last August.
The court also heard that on December 21 last year, one of the investors in Blue Sky’s $220 million water fund, Texas Retirement, sought to convene a meeting to remove Blue Sky Water as the trustee of the strategic agricultural fund.
On December 29 various documents relating to Pinnacle and the management buyout proposal were allegedly accessed.
Justice Logan said he agreed with Mr Morison that the letter from Texas Retirement on December 21 “may not be coincidental”.
Justice Logan said that based on the current evidence it appeared “there has been conduct by the individual respondents in breach of confidentiality undertakings and that Riparian Capital and Pinnacle have each been concerned in those breaches.”
The defendants are yet to have an opportunity to respond to the claims. None responded to a request for comment on Wednesday.
A spokesman for Blue Sky declined to comment on the court proceeding. He added Blue Sky’s real assets business continued to manage all existing mandates and the Blue Sky Water Fund for investors. The orders continue until the case returns to court on May 7.
Sarah Danckert is a business reporter.