JM Kelly founder took six-figure salary before $50 million collapse

THE inside story of the collapse of Rockhampton-based building company JM Kelly Group was played out in the Federal Court in Brisbane this week.

THE founder of the failed JM Kelly Group was entitled to a six-figure salary as a consultant in the three years before the multi-million dollar collapse of the construction company.

Geoffrey John Murphy, 78, was a director of several companies in the group that were put into liquidation in 2016.

But the Federal Court heard yesterday that Mr Murphy continued to be employed as a consultant within the rest of the group that finally collapsed in 2018.

Mr Murphy told the court that he had not taken a salary for several years and some of the funds he received in the final years were payments for loans he had earlier made to the company. He was not certain of the amounts he had been paid in the lead up to the collapse of the group but his annual salary package was approximately $160,000.

Barrister Craig Wilkins, who is appearing for JM Kelly’s liquidators, produced Mr Murphy’s tax returns that showed he had been paid a salary of $167,248 in 2016, $173,812 in 2017 and a partial payment of $66,000 in 2018.

Geoffrey Murphy of JM Kelly leaves Brisbane Federal court this week. AAP image, John Gass.

Mr Murphy was appearing in the Federal Court as part of a public examination by liquidators into the circumstances of the group’s collapse.

The Rockhampton-based builder hit financial trouble in 2016, leaving more than 400 creditors owed an estimated $50 million. The collapse resulted in the loss of 250 jobs and a number of unfinished projects including the Aldi supermarket in Rockhampton and a wing at the Rockhampton Base Hospital.

The State Government, through the Queensland Building and Construction Commission, has provided $200,000 to fund the public examination.

Mr Murphy was questioned in the court about several transactions by companies linked to the group. They included rent proceeds on a $1.1 million unit in Brisbane’s CBD owned by a trust and the sale of farming equipment held by a company called JM Kelly Pastoral to a former group employee.

Mr Murphy said the unit in the upmarket The Residences complex in Adelaide St was used by family members when they were in Brisbane on business and was not rented out privately. Tax returns showed rent had been paid to the trust from other companies within the group.

Mr Murphy said the farming equipment, including a bulldozer, plough, pumps and vehicles, was sold for $70,000 to a former employee before the company was liquidated. Mr Wilkins said much of the equipment still remained on the property and he alleged it was sold to the former employee so Mr Murphy could retain use of it after the company was liquidated. This was denied by Mr Murphy although he said he has hired back a vehicle for his own use.

John Murphy and his father Geoffrey Murphy will give evidence in the Federal Court about the collapse of JM Kelly Group.

More than two weeks has been set aside for the public examination which also will hear evidence from Mr Murphy’s son John Murphy, who held the role of general manager of JM Kelly Builders, and his daughter Elizabeth, who was the group’s financial controller. The group had a complex corporate structure spanning 13 different companies.

The court heard that loans valued at more than $6 million were transferred from one company to another within the JM Kelly Group as it spiralled towards liquidation. Mr Wilkins alleged that the transfer of the loans to a company called JM Kelly Project Builders was used to prove to the state’s building watchdog that the company had the required assets to retain its building license. Mr Murphy denied this and said the arrangement was part of a strategy of stabilising the business.