Mackenroth savaged over grand prix financial loss

Terry Mackenroth approved a payment of $2 million for a company one day after being told its operations in Britain had plunged into liquidation.

FORMER Gold Coast A1 grand prix chairman Terry Mackenroth, a one-time Queensland deputy premier and treasurer, approved an early payment of more than $2 million for a financially crippled motor-racing outfit one day after being told its operations in Britain had plunged into liquidation.

Damning reports tabled in parliament yesterday by state Auditor-General Glenn Poole and, separately, independent consultant David Williams exposed major shortcomings by the government-funded company chaired by Mr Mackenroth, resulting in millions of taxpayers' dollars being squandered on the A1GP debacle.

Queensland police have already been briefed by the Audit Office after "certain issues were disclosed regarding some of the communications" provided to personnel of Gold Coast Motor Events Company, which was chaired by Mr Mackenroth from 2005, the year he left parliament, until his resignation under immense pressure late last year.

"A number of matters involving the A1GP and its conduct have now been referred to the Queensland police for investigation into possible fraud," Premier Anna Bligh said yesterday.

The financial difficulties of A1GP were known well before Queensland funds were pumped in on the instructions of Mr Mackenroth, who had met A1GP executives on trips to Britain and New Zealand.

Yet GCMEC made a payment of $US1.837 million to A1GP a fortnight ahead of schedule last July, resulting in the Queensland government continuing with an arrangement for A1GP to stage a motor-racing spectacle on the Gold Coast.

Both reports tabled in parliament say that, amid increasing concerns over the financial viability of A1GP, neither Mr Mackenroth nor GCMEC general manager Greg Hooton conducted due diligence.

A former GCMEC chairman, John Cowley, yesterday described Mr Mackenroth's appointment to the body as "jobs for the boys",

and questioned whether Mr Mackenroth knew enough about motor racing to run the company.

"People who knew what was going on in the industry knew that A1GP was doomed to fail well before they did the deal with the Queensland government," Mr Cowley said.

Mr Williams, who was commissioned by the Queensland government to do an independent review of last year's debacle, reported yesterday: "It is surprising that the GCMEC partnership committee continued to show ongoing confidence in A1GP . . .

"(Sports) Minister (Phil) Reeves advised that he was aware of the rumours about the financial viability of the A1GP series, but had received repeated assurances from Mr Mackenroth and Mr Hooton that the A1GP problems were being resolved and that they were confident the A1GP would race at the Gold Coast."

The Auditor-General's report found that "despite the overwhelming anecdotal evidence that was available indicating the poor financial health of the A1GP group of companies", GCMEC did not appear to have contacted anyone independent of A1GP to corroborate or challenge reassuring statements A1GP was making.

The motor racing, to which the Queensland government contributes more than $11m annually, was cancelled after the last-minute confirmation last October by an A1GP executive that his company could not fulfil its obligations.

The Auditor-General's report is a damning indictment of Mr Mackenroth's management of the GCMEC and of the failure of the Bligh government to demand appropriate corporate governance.

Mr Mackenroth, who was paid $40,000 a year for his part-time role, and the GCMEC provided few written briefings, preferring verbal updates to ministers about key decisions. No reports from GCMEC were tabled at senior management meetings held by the government, the reports say.

The Queensland government, which has provided about $130m since 1996 to the annual event, owns 50 per cent of GCMEC while the other 50 per cent is held by International Management Group of America.

The partnership between IMG and the government was dissolved this week, IMG receiving a $4.3m commercial settlement.