Calls for ASIC phoenix probe into Clive Palmer

Unions are calling for the corporate watchdog to investigate whether Clive Palmer has ­engaged in phoenix activity.

Clive Palmer on the Gold Coast at the weekend. Picture: Lyndon Mechielsen

Unions are calling for the corporate watchdog to investigate whether Clive Palmer has ­engaged in phoenix activity, after he wrested control of his troubled Townsville nickel refinery from administrators who were about to shut the plant.

Pressure was mounting on Mr Palmer last night to guarantee he would honour the entitlements of more than 500 refinery workers if they agreed to work for him, under an 11th-hour shock corporate manoeuvre to keep the plant open, backed by $23 million from a Sydney financier, allegedly ­secured by Mr Palmer’s own ­assets. The move sidelines voluntary administrators FTI Consulting from the running of the Yabulu ­refinery, but will not stop their forensic investigation into the collapse of former manager Queensland Nickel Pty Ltd, also owned by Mr Palmer.

Mr Palmer, the federal member for Fairfax, said the restructure had saved the refinery from closure and promised to offer all existing employees jobs with the same terms and conditions under a new operating company, Queensland Nickel Sales Pty Ltd.

“I have been working diligently for weeks to find a solution to ­secure the long-term operations of the Yabulu refinery and its workforce in the best interests of the Townsville economy,” he said. “I have been harshly vilified with false allegations in respect of this matter. The Queensland government and the Treasurer, Curtis Pitt, have done nothing to protect the livelihoods of the people of north Queensland.”

The Australian understands administrators FTI Consulting were preparing to announce a staged shutdown of the refinery yesterday amid a cashflow crisis, before being blindsided by Mr Palmer’s plan. The Yabulu refinery is owned by a joint venture controlled by Mr Palmer, but had been run by a subsidiary operating company, Queensland Nickel Pty Ltd. That company employed the workers and held the debt, but did not own the main asset of the refinery. Yesterday, Mr Palmer’s joint venture replaced Queensland Nickel Pty Ltd with Queensland Nickel Sales Pty Ltd, which has existed as part of the refinery’s complex corporate structure in some form since 1972.

Queensland Nickel Pty Ltd owes creditors more than $100m, including tens of millions of dollars for redundancy entitlements for 237 workers sacked in January. That company is now likely to fall into liquidation at a creditors’ meeting next month, and is unlikely to have enough cash to fully repay unsecured trade creditors, including rail company ­Aurizon, which is owed $20m.

If the company goes into liquidation, redundant workers will be able to apply for their entitlements through the federal government’s safety net scheme.

AWU state secretary Ben Swan slammed Mr Palmer’s claims he was rescuing the ­refinery and called for ASIC to investigate whether he had ­engaged in phoenix activity. “I have been warning people about the risk that Mr Palmer would rise like a phoenix out of the ashes, (and now) this is happening,” he said. “Nothing can be taken for granted with this person.”

Mr Swan said he had raised his concerns with the state government, including Premier Annastacia Palaszczuk’s office late last week. He said he would be seeking a guarantee from Mr Palmer that workers’ entitlements, such as long-service leave, would be honoured under new contracts, as well as basic terms and conditions. Mr Swan said Mr Palmer needed all of the 550 workers to sign up with the new company in order to keep the plant running.

“Let’s shoot down this bullshit that he’s somehow guided by generosity in this venture; he’s not, it’s the law,” Mr Swan said.

Not all phoenix activity is ­illegal. ASIC defines illegal phoenix activity as the intentional transfer of assets from an indebted company to a new company to avoid paying creditors, tax or employee entitlements. Under ASIC’s definition, the ­directors leave the debts with the old company, often placing that company into administration or liquidation, leaving no assets to pay creditors. Meanwhile, a new company, often operated by the same directors and in the same ­industry, continues the business under a new structure, ASIC says. The Australian is not suggesting that Mr Palmer has engaged in any illegal activity.

Queensland Nickel Sales’ directors are Clive Mensink, Mr Palmer’s nephew, and James McDonald, Mr Palmer’s chief of staff and marketing director for Mr Palmer’s Blue Star Line, the company that pledged to rebuild the Titanic. Mr Palmer ceased being a director on January 10.