ABC Fact Check unit's Palmer report riddled with errors

THE ABC's Fact Check unit has made mistakes in its analysis of Clive Palmer's business interests, wealth and companies.

THE ABC's Fact Check unit has made a series of factual mistakes in its analysis of Clive Palmer's business interests, wealth and companies and relied on accounts that are almost 17 months out of date.

After what was described as a forensic and lengthy investigation of the Palmer United Party leader's companies, the ABC Fact Check unit yesterday issued a detailed report titled: "Doing the sums: how much is Clive Palmer worth?"

The report, which claimed that Palmer was worth $1.13 billion, made a number of false statements and errors. It wrongly claimed that Mr Palmer's company, Mineralogy, had been paid a total of $US272 million by the Chinese company Citic Pacific for the right to mine some of Mr Palmer's iron ore tenements.

It is a matter of public record that Mineralogy has been paid a total of $US415m by the Chinese for these rights. These numbers have been reported and confirmed on numerous occasions in the Australian press, corporate filings and in public statements by Citic. In a statement released to The Australian yesterday, Citic Pacific president Zhang Jijing said: "Citic has already paid Mineralogy $415m for the right to mine and develop the project."

While ABC's Fact Check unit made the mistake, the network's Four Corners correctly reported last night that "Palmer was paid $415 million up front by Citic, a Chinese state-owned enterprise for rights to mine low grade iron ore".

Another mistake by the Fact Check unit concerned Mr Palmer's company ownership structure and how he had arranged entities relating to his Queensland Nickel group of companies.

The unit reported that one of Mr Palmer's major companies, QNI Resources, "holds most of Mr Palmer's leisure and nickel businesses". "This includes the Palmer Coolum Resort, Coolum Country Club and Palmer Nickel and Cobalt Refinery in Townsville," it said. "It also includes the dinosaur park which is located at Palmer Coolum Resort".

This assertion is wrong. This month, The Australian revealed that Mr Palmer had "pulled his Sunshine Coast tourism resort and dinosaur park from the corporate ownership structure of his failing Queensland nickel refinery, which has been racking up increasingly heavy losses of tens of millions of dollars a year".

The ownership changes were made three weeks before the September 7 federal election after the renaming of a key entity controlled by the resources tycoon, searches of documents filed with the Australian Securities & Investments Commission show.

Mr Palmer has a house in the Coolum resort, in his federal seat of Fairfax the venue for the dinosaurs and vintage cars. The effect of the changes is that this property and tourism asset has been legally distanced from the financial woes of the refinery in Townsville. The resort and its adjoining championship golf course, a potentially valuable land-bank near the beach, would not be available to a liquidator or creditors if the refinery collapsed.

A filing to ASIC on August 15 this year by one of Mr Palmer's top managers shows that Palmer Leisure Coolum Pty Ltd is the new ultimate holding company of the resort, replacing QNI Resources. Searches of the documents show Mr Palmer became the beneficial owner in his personal name of all of Palmer Leisure Coolum's 100 shares, meaning he directly owns the resort rather than through any companies tied to the nickel refinery and its entities.

Another mistake by the ABC Fact Check unit was in its statement that "Mr Palmer owns shares in 27 Australian private companies; in some of them, he is the sole shareholder."

Searches show that Mr Palmer owns shares in more than 60 Australian private companies.

The ABC Fact Check unit concluded that Mr Palmer was

a billionaire with wealth of

$1.13 billion.

According to the ABC Fact Check unit, more than 80 per cent of Mr Palmer's purported $1.13 billion wealth comprises his investment in his beleaguered Townsville nickel refinery, which is owned and controlled by two of his companies, QNI Resources and QNI Metals. The ABC states these are worth $675m and $190m respectively.

Mr Palmer is ascribed this QNI-related wealth of $865m based on his valuation of his nickel companies last year. However, in 2009, when the nickel price (and potential profitability of the nickel companies) was higher than it is now, BHP "sold" Mr Palmer the refinery for, effectively, zero dollars. This is omitted from the Fact Check report.

None of Mr Palmer's major businesses is profitable, nor do they provide royalties or positive cash flow. As the Chinese are not paying Mr Palmer the iron ore royalties he claims to be owed, cash-flow has dried up. The funds needed to run Mr Palmer's dozens of companies and businesses and pay more than 800 staff are vast.

Neither the accounts nor the explanatory analysis by Fact Check reflect the impact on Mr Palmer's paper wealth due to a slumping nickel price and a collapse in the real value of his loss-making nickel refinery in Townsville. Nor do they reflect the threat to his paper wealth raised by a Supreme Court battle with Citic Pacific, which rejects his claim to be owed hundreds of millions of dollars a year in iron ore royalties.

The Fact Check unit's conclusion also rests on accounts that are almost 17 months out of date.

Mr Palmer's three main companies are again late in filing financial records with the corporate regulator. Mineralogy, QNI Resources and QNI Metals were due to file accounts with ASIC by the end of last month but have failed to meet the deadline.

Mineralogy's 2012 accounts show net assets of $146m and $88m of related party loans due to Mr Palmer, contributing $234m to his estimated wealth. The accounts, filed in June, count the payment of $193m in (unpaid) royalty as a current asset, which implied it would have been received before June 30, 2013. But the payment did not occur.

The accounts note that the company is classified as a going concern because the due royalties are listed as a "current asset" and both the company and the group "rely on the financial support of Professor Clive F Palmer".

The collapse in commodity prices is also expected to have hurt the QNI Nickel and QNI Metals operations. Since QNI Metals and QNI Nickel ruled off accounts for 2011-12 with losses of $7.1m and $34.9m respectively, the London Metals Exchange fell another 19 per cent and analysts have estimated as much as 40 per cent of current nickel production around the world is unprofitable.

The Fact Check unit report stated: "The company recorded a loss of $35m in 2011-12, the most recent result available, mainly due to operating expenses exceeding sales of nickel and cobalt minerals."

But in an affidavit sworn by Mr Palmer in April and published repeatedly since, the resources tycoon said the actual loss of the company and the refinery for the year to June 30, 2012, was $58m.

The Fact Check unit did not respond to a request for comment.