Gambler crazy-brave to take on the Chinese

CLIVE Palmer, a tycoon with the traits of an all-or-nothing gambler, made an impossible bet in early February this year.

He told his solicitor, Michael Dunham, to slip down to the Federal Court’s registry in Perth. He started a conflagration that, once started, would be hard to douse. Palmer tried to wind up China Inc.

Beijing’s state-owned Citic Pacific group, the international financial muscle of the Chinese Communist Party, could buy and sell Palmer and his company, Mineralogy, many times over.

Palmer had been demanding it pay him about $14 million. The Chinese were being invoiced this amount for the purported costs of running the port of Cape Preston. They were being pressured to cough up.

But the Chinese questioned the invoice and demands for the $14m — and they were scratching their heads as to how Palmer and his company had spent $12.167m of China’s funds in August and September last year on the remote port, as he was neither operating nor in possession of the port.

This is when Palmer doubled down. The wind-up proceedings were started by Dunham with a $3145 filing fee that he paid at 1.12pm on February 7. Dunham spoke to Palmer’s Brisbane-based PR adviser, Andrew Crook, who had been told by the federal member for Fairfax to put out a media release about how he was bringing to heel, bringing to its financial knees, the company spending $10 billion on China’s largest project in Australia.

This crazy-brave act by Palmer, who claims he sat on Mao Zedong’s knee as a small child in the 1960s, achieved a few things.

First, it almost certainly infuriated China’s leaders up to the President, Xi Jinping. The embarrassment caused by a very public dispute with a business partner was already acute.

Palmer was salting the wound, telling the Federal Court, via Dunham’s formal wind-up application, and the public, via Crook’s clumsy media release, that China Inc should be declared insolvent for failing to accede to the Palmer United Party founder’s demands for a further $14m for him to run a port that he was not running.

Within days, China’s resolve became clear. Its company heads, and then its legal team at Allens, pushed back strongly. They wanted to know why, and how, their $12.167m was spent — they knew it couldn’t have been spent, as Palmer said, on the port.

They were already at loggerheads with Palmer over how much in iron ore royalties he should be paid. They were about to open up a can of worms around the $12.167m, which — as the evidence now shows — he spent mostly on his PUP.

Soon after his wind-up application, Palmer withdrew the action. Crook apologised for the media stunt.

Palmer must wonder if he would be under investigation today by fraud squads in Western Australia and Queensland — while defending claims of fraud and dishonesty in a civil case brought by China in the Supreme Court in Brisbane — if he had not tried to have Beijing’s overseas investment entity wound up.

If the court finds that Palmer, who denies wrongdoing, did — as is alleged — “dishonestly procure” the $12.167m (funnelling some $10m of it for the PUP’s election expenses), give the tycoon a gong for chutzpah. Because his subsequent billing of the Chinese for a further $14m followed by his wind-up attempt when they failed to pay takes the cake.