Queensland Nickel: Clive Palmer financial practices detailed in court

QN CFO warned Clive Palmer of multi-million dollar shortfall and inability to pay debts in September 2015 | UPDATES

Queensland Nickel's former chief financial officer Daren Wolfe (L). Picture: AAP.

Clive Palmer’s Queensland Nickel chief financial officer warned him of a looming multi-million dollar cash shortfall and the inability to pay debts as early as September 2015, but the words “insolvent trading” were not uttered.

Former QN chief financial officer Daren Wolfe said the first time he heard Mr Palmer or Clive Mensink — Mr Palmer’s nephew and QN’s sole registered director — talk about insolvent trading was December or January.

The definition of insolvent trading is when a company can’t pay its debts when they fall due and still continues to trade.

Mr Wolfe said he met with Mr Palmer in Brisbane or the Gold Coast on about September 15 to discuss a cashflow document which showed the company had $6m in debts owing to rail company Aurizon. A cash shortfall was projected between October and April.

Barrister Tom Sullivan QC for liquidators PPB Advisory: “Did you discuss with Mr Palmer at that time that there were creditors due and owing, that could not be paid with the current cash reserves?”

Mr Wolfe: “Privilege. Yes.”

Mr Sullivan: “Did you discuss solvency or insolvency with Mr Palmer ... on 15 September 2015?”

Mr Wolfe: “What I talked about with Mr Palmer and or Mr Mensink was a forecast cash shortfall.

“I don’t believe the word solvent or solvency was discussed.”

Mr Sullivan: “Did they ever discuss in your presence insolvent trading?”

Mr Wolfe: “I think that occurred, that that discussion was, that topic was discussed in either December or late January.”

Mr Wolfe said Mr Palmer met with financial experts Hall Chadwick to discuss restructuring at that time. During the meeting, the company said they would undertake analysis into QN’s solvency.

Mr Wolfe was also grilled about where QN’s sole director Clive Mensink was.

The Australian revealed today Mr Mensink is enjoying a months-long round-the-world holiday.

Mr Wolfe said he believed Mr Mensink was “somewhere in Europe”.

He said he had spoken to Mr Mensink only three or four times in the past three or four months. That is despite Mr Wolfe doing consultancy for Queensland Nickel Sales, for which Mr Mensink is the sole director.

He said he was receiving his instructions from Mr Palmer and Ian Ferguson.

Mr Sullivan: “Do you know when Mr Mensink would be returning to the country?”

Mr Wolfe: “He didn’t indicate that to me.”

Clive’s “just in time” buying policy

Clive Palmer delayed buying crucial materials for machinery overhauls at his cash-strapped Queensland Nickel refinery in the months before the company collapsed.

Former QN chief financial officer Daren Wolfe, entering his second day in the Federal Court witness box, defended the practice as Mr Palmer being “very much a fan of just in time purchasing”.

The court was shown an email where Mr Palmer, using his Terry Smith alias email address, wrote about a $7392 upgrade to insulators for roasters.

“When overhaul is scheduled, delay it to December. Clive (sic),” Mr Palmer wrote.

Mr Wolfe said this was a poorly worded sign Mr Palmer has delayed purchasing the item, not that he had delayed maintenance itself.

Barrister Tom Sullivan QC for special purpose liquidator PPB Advisory asked Mr Wolfe: “Is that an example of Mr Palmer giving directions on the day-to-day operations of Queensland Nickel Pty Ltd?”

After being pressed, Mr Wolfe said: “It could be interpreted that way”.

Mr Palmer was not a registered director of QN with ASIC in 2015. He has denied acting as a shadow director.

The hearing continues.