Clive Palmer spending looks fraudulent: ex-judge

An ex-judge gives his verdict on Clive Palmer spending, saying the conduct looks “dishonest, fraudulent”.

Clive Palmer speaking at a doorstop at Parliament House in Canberra. pic by Kym Smith

A confidential inquiry into spending by Clive Palmer, his confidants and his companies of about $23 million in Chinese funds has found some of the conduct had the appearance of being “dishonest” and “fraudulent”.

In a scathing judgment from a closed-door arbitration tribunal — in which Mr Palmer’s company Mineralogy was pitted against China’s state-owned ­investment group Citic Pacific — retired Supreme Court judge Richard Chesterman slammed “utter misrepresentation” over the funds. Mr Chesterman QC said it appeared that Mineralogy and a key Palmer executive “exploited the (Chinese funds) ruthlessly and cynically”, adding that cash was taken “without any regard” for the terms of deeds, which ­required the money to be spent on a remote iron ore port.

After months of evidence and investigation in the quasi-judicial tribunal in Brisbane last year, Mr Chesterman’s 58-page judgment said Mineralogy “had not shown any entitlement to any payment from the (Chinese funds) in ­respect of any of the years 2011, 2012 and 2013”.

The judgment explored the many withdrawals of the Chinese funds, including the biggest with two cheques — one for $10m and one for $2.167m — written by Mr Palmer to bankroll his Palmer United Party and pay its advertising agency, Media Circus, leading up to the 2013 federal election.

Mr Chesterman found: “The explan­ation for the two ­withdrawals is beset with so many curiosities as to make it incapable of acceptance.

“In particular, it cannot be accepted that the two payments totalling $12,167,065 were taken from the fund for any purpose made legitimate by clause 5 of the deeds. The purported explanation must be ­rejected.”

The judgment, produced in ­November and leaked to The Weekend Australian by a “former adviser” this week, draws on sworn statements, bank and cheque ­account details, and oral evidence given during the Brisbane hearings, which were conducted under the Commercial Arbitrations Act.

The Chinese side has asked police in Queensland and Western Australia to investigate the spending of the funds, which Mr Palmer repaid last year. He has repeatedly insisted that he did nothing wrong. He declined to answer questions sent to his media adviser, Andrew Crook, yesterday.

Mr Chesterman, one of Queensland’s most senior judges until he retired from the court three years ago, concluded there had been attempts to “delay and frustrate” his three-person arbitration panel. He found that the Chinese funds were wrongfully spent, and that Mineralogy subsequently manufactured illogical excuses. He found that evidence from one of Mr Palmer’s key managers was full of “numerous errors, discrepancies and downright falsifications”.

In a separate public judgment in early May, Supreme Court judge David Jackson decided he would not need to make a finding about whether there was fraud and dishonesty in how the Chinese funds were spent. Justice Jackson’s finding in the civil case that there was not a formal legal “trust” by which Mineralogy had held the Chinese funds led to Mr Palmer saying he had been cleared and that the case was a fabrication.

Mr Chesterman’s scrutiny and judgment, however, were not limited to a narrow point over trust law. He cited a series of hearings in September in the arbitration case in which four witnesses were questioned under oath and a “substantial number of documentary exhibits” tendered. Executives of the company claimed the funds were properly spent.

Mr Chesterman’s judgment found the executives had been forced to admit that many items claimed were unjustifiable and that some appeared fraudulent on their face.”

He said that a company controlled by Mr Palmer, Cosmo Developments, opened its bank account with National Australia Bank on August 1, 2013. A week later, on August 8, Mr Palmer signed the cheque drawing $10m of Chinese money, and depositing it to Cosmo’s account.

“On the same day, 8 August 2013, $6m was withdrawn and paid to the Palmer United Party of which Mr Palmer was and is the leader,” Mr Chesterman found.

“The cheque was signed by Mr Palmer. On 16 August 2013 another cheque was drawn on the Cosmo account paying Media Circus $799,763.40. On 22 August 2013 a further cheque was drawn in favour of Media Circus in the sum of $1,247,644.

“In all, $4,214,672 was paid from the administrative fund to Media Circus, to fund the advertising of the Palmer United Party in the September 2013 federal election. $6m was paid ­directly to the PUP. Lesser but still substantial sums were paid from the Cosmo account to (Mineralogy) or related companies.”

Mr Chesterman cited “the significance of these payments, the manner in which they were made circuitously through Cosmo, their misdescription in the books of (Mr Palmer’s company), and the ­attempts to keep the information from the arbitrators”.

He described explanations given by Mr Palmer’s side for not providing butts of the two large cheques he wrote as “fatuous”.

Mr Chesterman found that a “port management services agreement” for services relating to one of Mr Palmer’s companies, which was backdated apparently to just­ify the payments, “appears ludicrous”. He found there was “substantial reason to doubt” its authenticity, and that requests to produce the original document, described as a “sham” by Citic, were unsuccessful.

Mr Chesterman said “it did not take long for cracks to appear” in the testimony of a key Mineralofy witness, who conceded that the company did not operate the port facilities for the three years in question, and did not establish any facilities.

Mr Chesterman said the ­answers posed a “considerable difficulty” for Mineralogy as it had taken money without legitimate purpose.

“It is difficult to understand how (he) could have honestly believed the deeds permitted (Mineralogy) to spend the moneys in the administrative fund as it thought fit …” Mr Chesterman said in the judgment.

At one point during questioning about the expenditure, the witness said: “I am appalled at myself for putting something which is not legitimate in this — this is crazy. Yes, I am truly embarrassed. I have no answer to this.”

Mr Chesterman said: “Some of (the expenditures) appear to be dishonest and (the witness) accepted that they bore the likeness of fraud.

“The administrative fund was quite blatantly misused by (Mineralogy). Given the number and ­nature of the ‘mistakes’ and ‘oversights’ to which (he) confessed, it is difficult to see how the payments could, in truth, be regarded as the product of mistake.”

More than $6m in costs for staff of Mr Palmer’s companies were claimed despite no evidence “to show that they did anything that might justify part of their wages being charged against the fund”.

Mr Palmer did not go into the witness box.

A Citic spokesman said last night: “The arbitral award is confidential and we do not support its publication.”