Creditors urged to liquidate cash-strapped Queensland Nickel
Clive Palmer ran nickel refinery into the ground to prop up his political party and other interests, administrators say.
Clive Palmer used Queensland Nickel as a “piggy bank” for the rest of his business empire, running the nickel refinery into the ground to prop up his political party and other corporate interests, administrators say.
After the release of the administrators’ report today, FTI Consulting’s John Park told media that if Mr Palmer hadn’t spent millions in Queensland Nickel’s money on his associated companies - including $26m to Palmer United Party and other political fundraising - the refinery may have been able to weather the weakness in the nickel price.
Mr Park said at least $200m had been taken from Queensland Nickel and funnelled to other Palmer companies, with the majority of those loans then forgiven.
The administrators found Mr Palmer acted as a shadow director of his nickel refinery, which forgave more than $189m in loans to other companies in the businessman’s empire and may have traded while insolvent..
In a long-awaited report released by voluntary administrators FTI Consulting this morning, creditors are urged to liquidate the cash-strapped company at a meeting next Friday.
FTI Consulting‘s 124-page forensic report into the downfall of Mr Palmer’s Townsville-based Queensland Nickel Pty Ltd, which found Mr Palmer and his nephew Clive Mensink may have breached their directors’ duties under Australia’s Corporations Act.
It finds the company was insolvent as of November 27 last year, but only fell into administration on January 18, after it had made 237 workers redundant. Another 550 have since been sacked.
This opens Mr Mensink and Mr Palmer up to insolvent trading claims, the administrators have found.
• Mobile users can download the creditors report HERE.
As flagged in The Australian in January, Mr Palmer’s Queensland Nickel acted as a cash cow for other companies in his empire, transferring $224.3m of QN’s funds from February 2011 to Mr Palmer’s other companies. Since June 2012, $189.3m in loans have been forgiven.
The administrators have found that an additional $26m in Queensland Nickel funds were donated to political parties and as sponsorship fees, including $21.5m to the Palmer United Party.
All of this cash might be vulnerable to recovery by the liquidators, once Queensland Nickel is placed into liquidation at a meeting next Friday.
The administrators’ report also reveals that under Mr Palmer’s ownership, maintenance spend at the refinery was more than half what it was in the final days of BHP Billiton’s stewardship. This led to “safety non-compliance”, dozens of outstanding maintenance jobs waiting to be completed, and more than 800 “critical” inspections overdue when administrators took over in January.
In the past three years, QN spent just $39m a year on maintenance on average, compared to approximately $80m spent by BHP each year in the three years to 2009, when they sold the plant to Mr Palmer.
The administrators also found that an exhaust stack at the refinery was “in a critical condition” and at risk of collapse.
As The Australian reported in January, Mr Palmer will also be considered a “shadow director” by administrators, which opens him personally up to legal responsibility for the company’s failings.
The administrators found Mr Palmer was a shadow director from February 2012 until the administrators’ appointment on January 18, excluding the times when he was an appointed director.
He was a member of the “expenditure approval process committee”, and approved expenditure, the report says. The Australian revealed in January that he did that through the alias “Terry Smith”.
Queensland Nickel Pty Ltd, the company that managed the refinery, was placed into voluntary administration on January 18, three days after 237 workers were made redundant.
FTI Consulting were appointed administrators, but in March, Mr Palmer sacked Queensland Nickel Pty Ltd as the refinery’s manager. He replaced it with another of his companies, Queensland Nickel Sales, which has mothballed the plant.
On Channel Seven’s Sunrise this morning, Mr Palmer said he did not act as a shadow director, using his alias Terry Smith to approve expenditure. The revelations were published in The Australian in January and repeated on ABC TV’s Four Corners last night.
“I remained as a member of the joint venture committee,” Mr Palmer said.
“The joint venture is made up of two companies that own the refinery, and Queensland Nickel is just a manager with no assets.”
“This is just a complete beat up.”
Asked how he would describe his role with Queensland Nickel after he entered parliament and resigned as a director, Mr Palmer said: “I’ve got an official role under the joint venture agreement to monitor what Queensland Nickel does.”
Speaking this afternoon, Prime Minister Malcolm Turnbull predicted the voters of Fairfax would “cast a very stern judgment” on Mr Palmer at this year’s election.
