Austrade set to ask about ‘skeletons’

Austrade officials will be required to ask any businesses seeking support whether they have any corporate skeletons.

Austrade officials based in 51 countries will be required to ask any businesses seeking support whether they have any corporate skeletons that “might discredi­t the Australian govern­ment”, as the federal trade agency reels from its connection to a major Ponzi scandal.

But despite a “detailed invest­i­gation” into how its officials came to spruik India’s $10 billion Pearls Group Ponzi scheme to Australian businesses, no employ­ees will be sanctioned becaus­e most of those involved have “since left Austrade”.

Austrade, which costs taxpayers about $200 million a year, has made “a number of changes” in response to the Pearls issue, including “detailed checking procedures” of companies attend­ing its large business missions, and asking all businesses to self-declare any problems.

“Employees at all posts are require­d to ask those seeking Austrade assistance — regardless of size — to confirm that they comply with relevant legal and regulatory obligations, and that they declare they know of nothing in their businesses affairs which might bring discredit to the Australian government,” said spokesman Paul Sanda.

Austrade’s activities hit the spotlight last year after The Australian revealed it had spruiked India’s now defunct Pearls Group Ponzi from early 2009 to Australian businesses despite being investigated by Indian authorities since the late 1990s.

The agency put forward to Pearls two Gold Coast businessmen, Peter Madrers and Paul Brinsmead, who had recently presided over the collapse of property developer Resort Corp.

Pearls and the two men established an Australian arm and at least $82m of Pearls money was brought here to buy and refurb­ish the Sheraton Mirage on the Gold Coast. The property is now being sold for a mooted $140m and about 46,000 Indian invest­ors and the Indian government are embroiled in a legal battle with Mr Madrers and Mr Brinsmead over the proceeds.

Mr Madrers and Mr Brinsmead had criticised Austrade, saying they had paid thousands of dollars to the agency to conduct­ “due diligence” on Pearls and had been encouraged to do business with the company.

Austrade responded saying it never conducts due diligence on companies it endorses, raising questions as to how it could then offer them the “badge of the Australian government”, as noted in its advertising materials.

It has restored some vetting procedures — historically Austrade substantially vetted the companies it dealt with — but still does not offer comprehensive “due diligence”, which is the responsibility of companies.

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