Home opinion-and-analysis Cornered! The great video compression scam - How Adam Clark hoodwinked Tolly Group, and many more

Remember Adams Platform? The Australian developed video compression technology that claimed to deliver high quality video at 56kbps. That sounds impossible, and it was. But investors lost $27m before the developer, Adam Clark, was exposed as a shonk.

I followed the Adams Platform saga in the early 2000s with great scepticism and increasing incredulity as the weight of 'evidence' mounted to support Clark's claims and those of the ASX-listed company, Mediaworld Communications (MWC), that acquired his technology and sucked in $27m of investors' funds to develop and market it.

All those memories came flooding back this morning when I read in the Sydney Morning Herald's 'Business Day' section that the dudded investors who brought a class action suit against Clark and MWC are finally getting their day in court.

Not that they have any chance of getting any of their $27m back. Clark invested most of in pubs and then went bankrupt, and has settled with the claimants for a pittance, but that's another story.

The SMH reported: "The law firm [Maurice Blackburn] will be squaring off against two men who featured heavily in MWC's April 2004 prospectus. They are the US testing guru Kevin Tolly, whose Tolly Group produced a glowing technical report saying the Adams Platform technology offered 'a radical improvement over existing commercial solutions,' and the MWC chairman, Michael Ramsden of float advisers, Terrain Capital."

Tolly will certainly be feeling the heat. As MWC told the ASX shortly after gaining access to the technology of the former privately owned Adams Platform company: "The verification of the efficacy of [Adams Platform technology] was conducted in late 2003 by the Tolly Group, which is a leading company for independent technology verification. That report was relied on by MWC when it proceeded with the acquisition of the [Adams Platform Group on 1 March 2004."

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By this time the directors of MWC, or at least those of its staff with any technical nous, were beginning to suspect that this particular Adam's apple might be rotten at the core. MWC told the ASX on 8 September 2004: "An attempt was then made by certain MWC technical staff and consultants, without the participation or knowledge of Adam Clark and without the full knowledge or consent of the board, to recreate the Tolly test. They were not able on that occasion to repeat the demonstration. The reasons they were not able to repeat the demonstration were not clear."

Today's SMH went on to quote Kevin Tolly, in his filed defence statement, saying he had "taken all reasonable and adequate steps to ensure that the Tolly Group APT testing was not compromised."

He should know. He told me at the time, when I queried is company's glowing report on the technology. "I conducted the tests personally during two visits to Melbourne in September/October of [2003]...We were able to prove the claims of the AP technology to our complete satisfaction."

What Tolly's report says is, literally, incredible. Yet Tolly must have believed it: that a 22 year old from Melbourne could come up with a dramatically better video compression technology than the combined R&D efforts of the world's electronics giants whose labours had produced the MPEG-4 standard.

The report stated as fact that the Adams Platform technology "delivers high quality full-screen streaming video over 56kbps WAN links; delivers dramatically higher quality than MPEG-4 solutions over equivalent line speeds; delivers good quality, full screen streaming video over 14.4kbps WAN links."

And it concluded: "the video compression algorithms at the heart of the AP technology provide high quality, full screen video delivered at network link speeds previously unthinkable." (Algorithms that Tolly had never come with cooee of actually inspecting: they were kept closely guarded by Clark, because they did not exist).

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Tolly's report even stressed the need to be wary that the whole thing might be a con. "The radical advancements claimed by Adams Platform technology bring with them a heavy burden of proof. Thus for this test extreme measures were implemented to guarantee the integrity of the test environment and the testing process."

These 'extreme measures' were spelt out in some detail in the report. As subsequent events revealed they were not extreme enough.

This from an organisation that describes itself as "the premier independent test lab," that has "worked with virtually every major vendor and evaluated the most important products and technologies to appear over the past decade," claiming that it alone "is positioned to furnish vendors with objective evidence that their products perform as promised."

Tolly Group also claims to "enjoy a unique position in the networking industry." That certainly is true. It would be hard to find another testing firm that has been so comprehensively and disastrously conned.

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Stuart Corner

 

Tracking the telecoms industry since 1989, Stuart has been awarded Journalist Of The Year by the Australian Telecommunications Users Group (twice) and by the Service Providers Action Network. In 2010 he received the 'Kester' lifetime achievement award in the Consensus IT Writers Awards and was made a Lifetime Member of the Telecommunications Society of Australia. He was born in the UK, came to Australia in 1980 and has been here ever since.

 

 

 

 

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