Chinese legal system will be hard to crack for local developer

A BRISBANE developer’s attempts to recover about $40 million from China Railway Construction Group’s failed local building venture, CRCG-Rimfire, faces serious hurdles.

Mick de Brenni, Minister for Housing and Public Works. Picture: Liam Kidston

CHINA’S legal system is infamous for being opaque and mercurial.

So it would appear Brisbane developer Murray Thornton’s attempts to recover about $40 million reportedly owed to subbies and others from China Railway Construction Group’s failed local building venture, CRCG-Rimfire, faces several serious hurdles.

CRCG’s defence, set to be argued in the Federal Court on April 1, is essentially that it has no assets in Australia and good luck chasing it for the money in China because it is a big state-owned company, presumably with big friends in Beijing.

That may be so, but City Beat spies tell us a company as big as CRCG must have assets in other jurisdictions, namely Hong Kong and Singapore, where an Australian court order is likely to be more respected.

Beijing-based CRCG’s parent China Railway Construction Corporation is in fact listed in Shanghai and Hong Kong, with a registered capital of 13.58 billion yuan ($282 billion).

An Australian judgment in Hong Kong could be enforced under the Foreign Judgments (Reciprocal Enforcement) Ordinance. The ordinance applies to 15 jurisdictions including Australia, Austria, Belgium, Bermuda, Brunei, France, Germany, India, Israel, Italy, Malaysia, Netherlands, New Zealand, Singapore and Sri Lanka. Watch this space.

DEED DONE

THE CRCG-Rimfire case has the potential to throw a bit of egg in the face of Housing and Public Works Minister Mick de Brenni who has built his political career on reforms to protect subbies.

Unfortunately it was under De Brenni’s watch that the Queensland Building and Construction Commission (QBCC) undertook a “deed of covenant and assurance” with CRCG that purported to guarantee debts up to $1 billion if the Chinese company’s Australian venture was liquidated. The Chinese side is now arguing that deed is not worth the paper it is written on. According to The Courier-Mail’s Back our Subbies campaign, the CRCG-Rimfire collapse was the third-largest in Queensland over the past four years, beaten only by the failure of Ostwald Bros and Cullen Group.

CAPITAL IDEAS

ELLERSTON Capital’s Asia portfolio manager Mary Manning was in town yesterday to address a Morgan’s breakfast about the challenges facing the slowing Chinese economy. Manning says there are some positive signs of a thaw in the US-China trade war, but the Chinese stock market was one of the world’s worst performing last year, losing about a quarter of its value. By contrast, India’s market was one of the best performers, managing to stay in the black while most global benchmarks went down.

She notes that while the Chinese economy is slowing, the deceleration was being managed by the authorities. Manning, a Canadian-born investment guru who is now based in Sydney, is a big fan of the big Chinese tech companies Tencent and Alibaba. Together those two stocks make up 16 per cent of Ellerston Asia’s equity investments.

Manning’s career has spanned stints in Russia, Singapore and the US. While working on Wall Street, an Aussie stockbroker kept trying to sell her stocks in Commonwealth Bank. “I put him on voicemail for two years until I finally met him,” Manning recalls. The broker eventually became her husband and hence the move to Australia. “His boss used to say that he never got any commissions from me but he got a wife,” she jokes.

BREAKFAST MENU

JAMIE “Working Class Man” Pherous, boss of Corporate Travel Management will be guest of honour at another Morgan’s breakfast later next month where he will run the ruler over the company’s latest results due to be released on February 20. With the company under fire from short sellers VGI Partners, the breakfast at the Brisbane Club on March 20 is set to be a well-attended event with lot of questions.