Hidden Valley Harvest liquidation: $6m government grant still owed

A Queensland building company is owed more than $1 million as an internal department investigation has determined fraud was not involved and ASIC is no longer investigating possible insolvent trading.

Vanessa Jarrett

4 min read

January 5, 2023 - 2:33PM

Former Tropical Pineapples and Hidden Valley Harvest Director Joe Craggs, member for Capricornia Michelle Landry, Former Livingstone Mayor Bill Ludwig and ASM Builders Principal Sam Milfull at the project sod turn

Rockhampton

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The government department responsible for administering a $6.3 million grant to a now-liquidated company has confirmed it is no longer investigating the matter, while a Queensland builder remains almost $1 million out of pocket.

Central Queensland company Hidden Valley Harvest (Facility) went into liquidation in March 2021, owing a reported $6.8 million.

Jason Bettles and Michael Beck of Worrells Solvency and Forensic Accountants were appointed as the liquidators.

The directors of the company at the time of liquidation were Jim Stewart and Michael Cranny.

Hidden Valley Harvest (Facility) received a grant in 2018 of $6,388,800 under the Australian Government’s Regional Jobs and Investment Packages program for the construction and operation of a fruit processing plant in Yeppoon.

The grant was paid in full upfront and the directors advised the money was used to pay suppliers and builders to facilitate the project.

At the time, the project was spruiked as a $11.6 million, 2000 sqm pineapple processing plant at the Gateway Industrial Estate, to support 45 jobs during construction and create 26 ongoing jobs after completion.

In a new liquidation report filed on December 22, Rockhampton company ASM Builders is listed as being owed $963, 911 for the construction contract, interest and adjudicators fees (from a previous legal process) under the Building Industry Fairness (Security of Payment) Act 2017 (QLD) Act.

ASM Builders was contracted to do the build and had completed 85 per cent of the shed construction before work ceased in April 2021 due to legal issues and outstanding invoices.

In the past two years, ASM Builders’ director Sam Milfull has spent hundreds of thousands of dollars on legal fees and hours of his time trying to chase up money his company is owed.

An on-site auction of the partially completed shed was held in June 2022 by Knight Frank Rockhampton on behalf of the liquidators.

The property sold for $4.6 million to Keppel Brand, a Yeppoon food manufacturing company.

After outstanding council rates, legal fees and selling costs, a sum of $4,408,678 was left.

Under the liquidation, the Commonwealth Bank held a first registered mortgage on the property for $735,000 on a company business loan and $3.94 million in security of equipment for the parent company, Valley Harvest (Group) Pty Ltd.

According to the liquidator’s reports, the equipment still has “significant payments” due against it, with money owed to an Italian supplier.

Commonwealth Bank has debt owing against it for it to be able to release the security.

Keppel MP Brittany Lauga has questioned the criteria behind the Australian Government grant funding and the liquidation process, including an impassioned speech in Queensland Parliament in November where she slammed the LNP.

“Last week I met with a local builder who has been completely financially crippled as a result of a grant of $5.8 million through the Morrison Government’s Regional Jobs and Investments Packages Fund for the Hidden Valley Harvest project at Yeppoon,” she said in Parliament.

“This is a project which was funded by taxpayers’ money but which has never been completed.”

It should be noted, according to the liquidator’s reports, the company received $6.3 million.

The $5.8 million figure Ms Lauga refers to is the grant funding without GST.

Ms Lauga went on to say the funding program, as previously reported by this publication, was reviewed by Australian National Audit Office in 2019 and it was found the eligibility and merit assessment processes were not to an appropriate standard and the Ministerial Panel most often cited incorrect scoring by assessors.

“An assurance review contracted by Infrastructure identified that applicant claims were being taken at face value without appropriate scrutiny,” the audit report said.

“How on earth can $5.8 million land in the bank account of grant recipients without appropriate scrutiny and, when it goes belly up, why did the LNP not investigate?,” Ms Lauga said.

In communication shared with this publication, Ms Lauga’s office made enquiries with Minister for Infrastructure, Transport, Regional Development and Local Government Catherine King’s office and Queensland Senator Nita Green.

Minister King’s office advised the program the grant was awarded under closed on June 30, 2022.

In reference to the millions in funding awarded, the Department advised Hidden Valley Harvest (Facility) had met the grant outcomes and the Department was no longer investigating and did not plan any further action.

“We understand that the grantee had been placed under administration,” Minister King’s office wrote in an email to Ms Lauga’s office.

“The Department’s fraud team found that, on the available evidence, this matter was not a fraud matter that required further investigation.

“There is no further engagement between the Department and the grantee on the grant as it has been acquitted.

“We understand that issues relating to the grantee’s unpaid debts are being raised through the liquidation/administration process.”

Preliminary investigations by the liquidators, according to their reports, had indicated Hidden Valley Harvest (Facility), in addition to other breaches of the Corporations Act, may have been trading insolvent from as early as nine months beforehand, as early as June 30 2021.

The potential breach of insolvency trading was referred to Australian Securities and Investments Commission, as required under the Act.

The liquidators stated ASIC advised it would not be investigating the company’s affairs or director’s conduct any further.

“We still believe the matter should be investigated further,” the liquidators report states.

“However, given the lack of funds held in the liquidation, no further action has been taken in this regard.”