Armed with evidence bags and bright blue gloves, officers from the Australian Federal Police descended on the Australian HQ of hyped-up investment firm Scale Facilitation on Friday, in a joint operation conducted with the Australian Taxation Office.
Details were kept tight by both agencies but the AFP confirmed the raid was conducted by the Serious Financial Crime Taskforce and that multiple warrants were executed, including on Scale’s North Geelong offices where officials spent the day thumbing through documents and chasing accounts.
An AFP spokeswoman said the warrants were related to “alleged taxation fraud”.
The surprise development follows this column’s reporting, over the past fortnight, of significant financial dysfunction and cashflow shortages at Scale Facilitation’s enterprise, led by the wheel-spinning entrepreneur David Collard.
Collard directs the firm from a tower in New York City, with staff spread globally. The business itself involves big-game investments in the ‘‘gigafactory’’ production of electric car batteries – a concept that’s attracted praise from Deputy Prime Minister Richard Marles and Opposition Leader Peter Dutton. Both have visited Scale’s offices in the US, and just last month Marles gave a lengthy commendation of 38-year-old Collard during a speech at the American Chamber of Commerce in Australia.
The Financial Review has also spent much energy pumping up Collard, writing lengthy pieces about him, or his company, once and sometimes twice a month since January. Amusingly, Collard himself has spoken of using the newspaper to help recast the firm in a positive, productive light during times of distress.
When The Times of London published an unflattering profile of the businessman a fortnight ago, querying whether he was suitably qualified to run gigafactories in multiple countries, including Australia and Britain, Collard moved quickly to counter the narrative.
Three days later an AFR article talked up the latest developments in Scale’s gigafactory concept for Britain, with Collard announcing that he’d redeployed staff, hired a CEO, and secured a cash injection from real estate fund manager Tritax.
“Very, very quickly got on the front foot,” Collard told a town-hall meeting of staff last week, in a recording obtained by Margin Call.
“We knew we had to get the Tritax-Abrdn (joint-venture) signed, knew we had to get the AFR piece run, so we did that within 24 hours.
“So it just shows what we can do when we need to, to get ahead of anything negative that we got wind of.” Smooth indeed.
Margin Call subsequently reported the same day that Scale’s Australia-based staff weren’t being paid, that suppliers and contractors were chasing invoices, and that the company’s lease on the Geelong office was in arrears. Scale confirmed as much on record at the time, saying this would all be paid soon, but the company didn’t respond to queries about Friday’s police raid.
We can’t imagine the development is going to be all that helpful if Tritax is still conducting due diligence on the bridging finance we’re hearing so much about.
And yet, as though none of these problems exist, Collard told the same town hall gathering that the company’s financial outlook was on a track for outstanding results in the immediate future.
“We are a revenue company that’s going to be booking $180m in Aussie revenue very, very quickly,” he said.
“Four months max and we’ll have committed funding for a gigafactory.” This while staff were given “annual leave” from work this week, because they haven’t been paid. Some said super payments haven’t been deposited in months.
And as for those airing their grievances to journalists (about not being paid), Collard’s message was a bollocking. “I’ll remind you all of your confidentiality agreements. I’ll remind you of your colleagues,” he said.
“I’m telling you, no matter what happens I’ll just start another business and do it again. So you’re not going to stop me from doing things but you are really going to damage your colleagues’ careers and everything that we’re building for Australia.”
That’s not much of a threat, however, because nothing has been built yet.
Racing to Royal Ascot
No shortage of Australian racing administrators absconding to Royal Ascot for the week, even while their industry has been so perilously on the nose over the past 24 months.
It brings to mind how chaps like Peter McGauran and Neil Wilson can even afford to stand next to King Charles and Queen Camilla, as they did for a happy-snap posted on Twitter.
The Australian Turf Club, of which McGauran is chair, made an operating loss of $7m last year and axed almost all of its executives under a restructuring of the brand that, as McGuaran cheeped, was for the “future benefit of racing”. (He subsequently told Margin Call that he had paid for the entirety of the trip himself and “not charged the ATC a single cent. I agree that it would be hypocritical to do so.”)
Meanwhile, the Victoria Racing Club, of which Wilson is chair, banked losses of $30m over the past two years, as Margin Call reported some months ago.
So comprehensively screwed is the VRC that it’s extended its borrowing facility with ANZ by $10m in October – after borrowing to the limit of a $53.5m loan already granted by the bank.
Plenty of others in attendance, too, despite their balance sheets not exactly looking hale at the minute (some are just on holidays, to be fair).
Spotted among the silly hats were Herbert Smith Freehills partner David Sinn, KPMG’s John Blight and Jarden’s Adam Lennen, all hailing from the board of the Moonee Valley Racing Club (Lennen being its chair), not to mention CEO Michael Browell, who’s rumoured to be paid more than Peter V’landys gets to run Racing NSW – and he was there too, naturally.
Not to mention Melbourne Racing Club chairman Matt Cain, Country Racing Victoria CEO Scott Whiteman and Thoroughbred Breeders Australia CEO Tom Reilly. Brisbane Racing Club CEO Tony Partridge and GM of racing Matt Rudolph made it over, too, and that’s while they have a Group One race at Eagle Farm on Saturday, one of only eight or so held each year. Guess we know where they’d rather be!
Racing Victoria’s Andrew Jones didn’t make it but thankfully he can watch it from home, courtesy of the live telecasts provided by racing.com (owned by Racing Victoria) and Sky Racing – even Entain is on location with a film crew.
All this fuss when, from what we hear, the broadcasts are generating sweet FA in terms of betting revenue.
More wrongs than rights at the AHRC?
A case of curious priorities over at the Australian Human Rights Commission where hand-picked appointee Giridharan Sivaraman seems to prefer playing politics over action on anti-Semitism.
Freehills partner given notice over synagogue tweet
Herbert Smith Freehills leaders have voted to remove one of its longstanding partners, Damien Hazard, over a ‘deeply offensive’ tweet targeting Jeremy Leibler.