ASIC has grounds to probe Palmer’s business deals

The Fairfax MP has left a trail of disasters.

Australian Securities and Investments Commission chairman, Greg Medcraft, has a strong case for the corporate watchdog to investigate Clive Palmer’s deal to retake control of his Townsville nickel refinery. Mr Palmer is boasting that he has “saved the Yabulu Refinery for a second time” after snatching back control from voluntary administrators appointed in January. Mr Palmer is injecting $23 million to support a new company to manage the refinery, Queensland Nickel Sales Pty Ltd. It is to be run by Mr Palmer’s nephew, Clive Mensink and James McDonald, Mr Palmer’s chief of staff. But Mr Palmer’s close involvement (he says he will lead Queensland Nickel Sales) debunks his claim that he has retired from business and is a full-time politician. Not that he has convinced his constituents in Fairfax, where polls show his support is just 2 per cent.

As reported today, the new company has no valid environmental authority or licence to run the major hazard facility. The creation of the new company has also raised concerns about possible “phoenix’’ business activity. In its latest “enforcement outcomes’’ report, ASIC said “illegal phoenix activity generally involves current or previous directors of an indebted company intentionally and dishonestly transferring assets of the company to a new company to avoid paying creditors, tax or employee entitlements.’’ Such activity, ASIC said, cost Australia as much as $3 billion in 2012. On Monday, Queensland AWU state secretary Ben Swan called for ASIC to investigate whether Mr Palmer had engaged in “phoenix” activity. That concern was taken up yesterday by Doug Dunstan, who was an internal auditor at Queensland Nickel before being made redundant along with 236 other staff in January. Mr Dunstan, who has written to ASIC, said yesterday he believed the new company, Queensland Nickel Sales Pty Ltd had unleashed phoenix activity.

The prima facie case for an ASIC investigation is clear. The $23m injected by Mr Palmer falls far short of what is needed to cover the $70m Queensland Nickel owed its trade creditors and millions of dollars in other debts, including $5m reportedly owed to the Australian Taxation Office. Adding in staff entitlements for those made redundant — or those who could be made redundant in future — the liabilities would be about $100m. The staff entitlement costs, however, seem likely to be borne by the public purse.

At this stage, the only upside of the expected liquidation of Queensland Nickel is for the 237 former refinery workers made redundant in January. They should soon be able to access their entitlements — about $16m — under the Federal Entitlements Guarantee scheme, funded by taxpayers. Far from being reassured by Mr Palmer’s claim that he had saved 550 jobs, remaining employees have good reason to be nervous that they, too, will face a long wait for payouts should Mr Palmer’s latest entity fail. If it does, taxpayers could be landed with an even larger impost under the FEG scheme. There is no chance, unfortunately, of the drain on the public purse being offset by the Palmer United Party refunding the $15m it received from Queensland Nickel before the 2013 election.

Mr Palmer’s business shambles matches his woeful political record. ASIC should probe his questionable business affairs, starting with the refinery. The Australian’s Hedley Thomas, who has scrutinised Mr Palmer’s businesses for years, aptly summed up the latest deal yesterday as “lipstick on a pig’’.