JM Kelly financial figures given to building watchdog in doubt, court told

The boss of collapsed Rockhampton building company JM Kelly has been accused of “pedalling lies and half truths” to the state’s construction watchdog.

COLLAPSED construction company JM Kelly Group “systematically pedalled lies and half-truths” to the building watchdog, saying that it was in a better financial position than it actually was, a court has been told.

Barrister Craig Wilkins, acting for the group’s liquidator, told the Federal Court that director John Murphy provided one set of financial records to the Queensland Building and Construction Commission while at the same time signing another set of records.

Mr Wilkins alleged the records provided to the QBCC was more favourable than the set Mr Murphy signed as true and correct on the same day. The court was told a profit and loss statement provided to the QBCC showed JM Kelly Builders made a loss of $726,682 in 2016 whereas the other set of financial documents showed a loss of almost $1.2 million.

The QBCC used the records provided to it to decide whether the Rockhampton-based company had the required assets to keep its building licence.

“These documents were signed on the same day,” Mr Wilkins told Mr Murphy. “Now what is your explanation for that?”

Mr Murphy denied he had signed both documents on the same day and “one could be a backdated signature date”. He said the figures provided to the QBCC were correct at that point in time.

Mr Wilkins also alleged JM Kelly had told the QBCC that inter-company loans, which could not be counted as assets, were only $1.62 million rather than more than $5 million.

“What I intend to do is … demonstrate that you’ve systematically pedalled lies and half-truths to the QBCC for years,” Mr Wilkins said.

Earlier Mr Murphy, who was giving evidence at a public examination by the liquidator into the $50 million collapse of the group last year, said the company had to meet an unreasonable deadline to provide the figures and he could not vouch for their accuracy.

“I can’t say if these figures are accurate or inaccurate,” he said. “We told the QBCC that the figures might not be robust because of the unreasonable time frame.”

The collapse of JM Kelly led to the loss of 250 jobs and a number of unfinished projects including the city’s Aldi supermarket and hospital.

John Murphy (far right)

Mr Murphy was questioned about why the group took on liabilities of almost $1 million to complete several State Government projects in 2016 following the earlier collapse of a JM Kelly company. He said the group wanted to keep faith with subcontractors who had worked on the projects and not been paid.

Mr Murphy told the court of a “round robin” system of intercompany loans that operated within the group, that involved a “treasury” company taking payments on behalf of other firms in the group and becoming indebted to that company.

Barrister Craig Wilkins, who is appearing for the liquidators, said if all the of debts owing to the various companies were no able to be paid the group would effectively be insolvent.

Mr Murphy said that could potentially be the case but would depend on other assets held by the company.

Mr Wilkins also asked Mr Murphy if he was aware of the QBCC policy requiring building companies, including those making intercompany loans, to have a consistent level of net assets to keep their licence.

Mr Murphy said he was aware of the “general thrust” of the policy but relied on accountants to sign off on the actual figures.

“From June 2016, I had a lot of things I had to deal with and some of these things can easily be forgotten,” he said.

The hearing continues.