Foreign investment risk warning over Adelaide councillor comments

Overseas investment could be at risk because of comments by some city councillors, according to official documents lodged by a senior staff member.

Overseas investment in Adelaide could potentially be at risk because of comments made by some city councillors, according to an official register.

Adelaide City Council property manager Tom McCready has expressed his concerns about elected members jeopardising two council-backed projects, worth $650m, by breaching confidentiality or making public comments.

Mr McCready confirmed he had made an entry on a risk register, maintained for the council’s audit committee, under a section called “inability to attract/sustain investors”.

“The risk was raised to highlight the legal, financial and reputational risk exposure associated with dealing with developers in a political environment and the need to ensure that council’s obligations under contractual agreements are upheld and maintained by all council members,” he said.

Mr McCready’s warning followed a letter from a property developer to Lord Mayor Sandy Verschoor about a decision by a Chinese investor last November to withdraw from a $450m project to redevelop the Adelaide Central Market Arcade.

The project is still on track to start later this year.

ICD Property managing director Matthew Khoo. Picture: Dean Martin

The letter from ICD Property managing director Matthew Khoo – obtained by The Advertiser under freedom of information laws – said the decision by a Singapore subsidiary of a Chinese conglomerate, Nanshan Group, followed public comments by councillor Phillip Martin.

Cr Martin had asked a series of questions at council meetings and during radio interviews about Nanshan Group’s connections to the Chinese Communist Party and whether its funding came from mainland China.

In his letter, Mr Khoo said the Nanshan Group had originated in Shandong Province, which was South Australia’s sister state in China.

“Nanshan Singapore’s investment withdrawal comes following consistent negative and insulting allegations made by one of your council members, Councillor Phil Martin,” it said.

“These allegations were insulting, prejudicial and were impacting Nanshan Singapore’s name, reputation and broader business interests in Adelaide and Australia.

“After lengthy consideration, Nanshan Singapore determined that such statements were not conducive to Nanshan Singapore’s long-term partnership with the City of Adelaide and were concerned that this may further affect their business interests in Australia.”

Mr Khoo said Nanshan’s decision to pull out of the joint venture project between the council and ICD Property to redevelop the Adelaide Central Market Arcade was “very disappointing”.

“Nanshan Singapore’s withdrawal of investment has a negative impact on the long-term potential of this relationship and partnership, damaging potential future economic growth for the city and state from not only Nanshan but other multinational interests,” he said.

The atrium at the heart of the $400m Adelaide Central Market redevelopment, which has been approved by the State Commission Assessment Panel (SCAP).

Councillor Phillip Martin speaks during an Adelaide City Council meeting at Adelaide Town Hall. Picture: Brenton Edwards

Cr Martin recently has started asking questions about another joint venture project to redevelop the former Le Cornu site on O’Connell Street, North Adelaide. He also asked last month if elected members would be provided with legal advice involving any third-party complaints.

The questions have prompted acting chief executive Clare Mockler to call a confidential briefing with councillors early next month to discuss their obligations to keep details of contracts involving property developments private.

Ms Mockler will also have lawyers present from Norman Waterhouse to answer Cr Martin’s question about elected members being provided with legal advice.

Cr Martin said he had asked legitimate questions about Nanshan.

“I asked the kind of questions every diligent councillor should ask about our business partners and I received the answers,” he said.

Close political ally Anne Moran said Cr Martin had done “absolutely nothing wrong”. “He asked a series of questions as to the identity and make up of the Chinese company,” Ms Moran said.

“I scratch my head to wonder why Nanshan was so offended by a series of questions really just identifying where they were from.”

Mr McCready said the Adelaide Central Market Arcade project and O’Connell Street redevelopment were “two major city-shaping redevelopments”.

“The combined value of these investments is $650m and the success of these projects is vital to drive the recovery and reinvigoration of the City of Adelaide economy,” he said.

Mr Khoo said his company did not comment “on politics”.

“We are focused on creating an amazing destination for the city of Adelaide and South Australia,” he said.

“This exciting, world-class project is definitely still happening.”

Mr Khoo said his company was “extremely excited” that the announcement of a start date for construction was just months away.