Clive Palmer sent $10m of CITIC cash to $1 company

THE com­pany controlled by Clive Palmer that received $10m in Chinese funds is a $1 entity once involved in minerals exploration.

THE com­pany controlled by Clive Palmer that received $10 million in Chinese funds is a $1 entity once involved in minerals exploration northwest of Adel­aide, far from the West Australian port for which the cash was allocated.

Cosmo Developments Pty Ltd, the recipient of cheque number 2046 for $10m of Chinese funds allegedly wrongfully siphoned last August, had no interest or role at the port of Cape Preston, according to documents seen by The Australian yesterday.

But the $1 company was a vehic­le for Mr Palmer’s now defunct Cosmo Project, which he claimed “conducted some explor­ation” in South Australia several years ago.

The project and its iron ore exploration licences have no apparent connection to the near-$10 billion iron ore mining project established by the Chinese on Mr Palmer’s tenements in Western Australia’s Pilbara region.

In financial documents released to Hong Kong investors during Mr Palmer’s unsuccessfulbid to achieve a multi-billion-dollar float of his resources interests in 2010, he said: “We are developing the Cosmo Project, which is in a very early stage of exploration for iron ore.

“Cosmo, our wholly owned subsidiary, has conducted some exploration on the areas covered by the exploration licences underlying the Ooldea Deposit, but insufficient exploration has been conducted to define … a compliant mineral resource.

“We acquired Cosmo on 17 March, 2009, for a total consideration of $1 … We currently have no commercial operations and no operating history upon which an evaluation of our ­future success or failure can be made.”

The document, a prospectus for the failed public float of his Resource House, disclosed that the exploration licence granted to Cosmo Developments would expire in September 2012. Cosmo was permitted to drill 73 holes in the area, about 230km northwest of Ceduna, at an estim­ated cost of $8m.

Mr Palmer and staff are under mounting pressure in legal proceedings to explain how Chinese funds, drained from a National Australia Bank account called Port Palmer Operations, were spent on “port management services’’ when his companies have not been operating the port of Cape Preston.

Mr Palmer was served with a subpoena in Canberra on Monday at the Hyatt Hotel. A source who saw it said the federal parliamentarian tried to hand it back, saying he would not accept it.

Mr Palmer was the sole signat­ory on the NAB cheque account, according to sources close to his company, but he repeatedly told journalists on Monday he could “not recall’’ signing two cheques totalling $12.167m last year.

The Chinese government-owned Citic Pacific suspects its funds, which were held in the NAB account and subject to strict controls, were wrongfully used by Mr Palmer to bankroll the Palmer United Party.

The matter is likely to be referred to police.

Confidential quasi-judicial arbitration proceedings in Brisbane, parts of which have spilled into the Supreme Court, have established that cheque number 2073 for $2.167m went to Media Circus Network Pty Ltd, just a few days before the September 7 election. Media Circus Network was responsible for booking many of PUP’s election ads.

Several legal orders, issued by retired Queensland Supreme Court judge Richard Chesterman QC, require the handover of many documents by Mr Palmer, its sole director, and Mr Palmer’s nephew Clive Mensink, other officers of his company Mineralogy, the bank and others as part of an investigation tracing where and how the Chinese funds were spent.

Mr Palmer resigned from Cosmo Developments in May, soon after the allegations in legal proceedings were revealed by The Australian. However, he did not disclose this when he updated his parliamentary register to declare that he had quit as a dir­ector of several other large companies in his group.

Mr Palmer has said the money deposited into the ­account was “no strings ­attached”, insisting: “It was my money. The money was paid (by the Chinese) to our companies.”

Citic claims there were strict rules around the money’s use and Mr Palmer had signed a deed that said the funds could be used only by Mineralogy “for the day-to-day expenses of operating, maintaining and repairing” the port.

Mr Palmer has repeatedly and strenuously denied any wrongdoing, and has accused The Australian of “invention”.