What happened to the millions of dollars in related party loans that churned through Damian Griffiths’ hospitality empire?

At least $9 million of related party loans in the failed business empire of Damian Griffiths remains unaccounted for and there are fears it will stay out of reach of his bankruptcy trustee.

UNACCOUNTED FOR

What happened to the millions of dollars in related party loans that churned through the complex and now-failed Brisbane hospitality empire of Damian Griffiths?

At least $9 million of that money remains unaccounted for and there are fears it will stay out of reach of his bankruptcy trustee.

His cousin, Murray Griffiths, would like to know what transpired—and he’s doing something about it.

Murray, who grew up with Damian in Dalby and now runs the Mr Organic food store in Toowoomba, was instrumental in tipping him into personal insolvency in March last year.

Damian Griffiths Pic Mark Calleja

He and another relative had loaned Damian $1.35 million in 2014 to acquire the Limes Hotel in Fortitude Valley.

After Damian repeatedly defaulted on repayments, they won court orders in late 2017 to recover nearly $560,000 outstanding but have not clawed back a cent of that money.

Murray then commissioned a report which, for the first time, examines the entirety of Damian’s sprawling and extraordinarily convoluted business empire, which included Doughnut Time, Les Bubbles bistro, Alfred & Constance bar, Chester Street Bakery and Mr Fitz’s Finest Ice Cream.

The study, by business consultant Ken Murphy, found that related party loans across just three of those entities—Bubbles, Alfred and Limes—amounted to $9 million but the total amount could be much higher.

“As a result of the multiple companies and trusts, unreconcilable related party transactions across several liquidators, close family/colleague involvement and various overseas transactions, an overall total has not been able to be achieved at this stage,’’ he wrote.

“In many cases, there does not appear to be a corresponding related party loan payable across the entities. The whereabouts of the outward cash has not been able to be identified at present.’’

ENTER ASIC

Until now, getting a bird’s eye view of dozens of Damian’s business entities had been extremely difficult because seven different accounting firms have acted as administrators and/or liquidators.

That meant each worked on a small piece of the pie in isolation without having the authority to look at the bigger picture and connect the dots, a problem exacerbated by a lack of funding to probe deeper.

Enter the corporate watchdog.

Murphy has dispatched his report to ASIC in the hopes that it will commit the time and resources needed to get to the bottom of the mystery.

ASIC has acknowledged receipt of the report but, as usual, won’t confirm if it’s taking the matter further.

“(Damian) Griffiths was establishing new trading companies, including new overseas companies, whilst allegedly trading insolvent with existing companies,’’ Murphy told the regulator. (Indeed, bankruptcy trustee Raj Khatri said in a report this month that 18 of the entities were trading while insolvent.)

“The numerous foreign jurisdictional transactions in the United Kingdom, France and the United States…hinders investigations and tracing of the destinations of the large sums of money transferred out of the multiple companies, as well as the proceeds from the sale of UK companies.’’

LIFE IN LONDON

Damian has now upped stumps and relocated to London, where he is understood to be working for a confectionery company.

He registered Doughnut Time (UK) Ltd there in early 2016 and it has grown to have 12 outlets across the city.

Records show he ceased acting as a director in mid-2017 and, later that year, sold his stake in the business, which is now controlled by a Chinese bloke named Hudson Leung, who resides in Hong Kong.

But City Beat spies allege Damian is still closely involved in the UK operation and say he continues to enjoy the use of his two heavily-mortgaged apartments in Paris.

Meanwhile, as revealed by your diarist this week, he has lobbed a paltry offer of just $129,500 to his creditors if they agree to annul his bankruptcy at a meeting next Wednesday in Brisbane.

With almost $30 million in debts across all his entities, that amounts to just a tiny fraction of 1 cent on the dollar.

Damian could not be reached for comment yesterday.

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