Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 13 August 2003
Page: 18374

Mr FITZGIBBON (12:45 PM) —It will come as no surprise to those listening to this debate that the Workplace Relations Amendment (Compliance with Court and Tribunal Orders) Bill 2003 represents another attack on those who devote their lives to the protection of working-class people in this country, who are the weaker party in the employer-employee relationship and who rely on collective action and the support of trade unions and trade unionists to tilt the unlevel playing field back to somewhere close to level. The bill does two things: firstly, it provides a mechanism for the minister to seek penalties for failure to comply with orders of the Australian Industrial Relations Commission or the Federal Court; and, secondly, it provides for disqualification by default of officers and employees of registered organisations—in other words, trade unions.

What an unsurprising disgrace this bill is, and what typical hypocrisy it represents on the part of the Howard government. Under the Howard government, Australian society is being torn apart. We are becoming a nation divided by a Prime Minister who will stop at nothing to create a society in which only the privileged prosper. At a time when corporate fraud and white-collar crime are reaching new heights, the Howard government's obsession with the trade union movement and its unabashed preference for the big end of town shine like a beacon. We saw that in the ethanol debacle which has been running in the parliament this week. We saw it in the government's weak Dawson report—a review of the Trade Practices Act—and we have potentially seen it this week in the early retirement of the chairman of the Australian Securities and Investments Commission.

The fact is that the Howard government is tough on misery and soft on the big end of town; it is tough on misery and soft on corporate crooks. That is the hypocrisy of this bill: it attacks the trade union movement but leaves the big end of town alone. It took the collapse of HIH for the full extent of that company's indiscretions to surface. Where was the Howard government prior to that collapse? We know where it was: it was focused entirely on its ideological obsession with the trade union movement and was, of course, happy to ignore what was happening at the big end of town. I will cite another example. Despite my urging, the government refuses to act on Macquarie Bank's role in the collapse of the Nardell coalmine in my electorate, which has cost the region more than 100 direct jobs, left 180 unsecured creditors more than $10 million out of pocket and imposed misery upon dozens of small and medium sized businesses in my electorate. In many cases these businesses were run by hardworking, blue-collar tradesmen and engineers who now have the banks knocking on their doors—not just after their businesses but after their family homes.

The Howard government likes to feign support for small business. But what about the 10 or so businesses in Rutherford's industrial estate who face ruin as a result of Macquarie Bank's corporate bastardry and fraud? What about Peter Braun of Coal Management Operations and Processing whom Nardell—and, therefore, I contend, Macquarie Bank—hired to construct the mine's surface infrastructure? He is owed $1.3 million for work done between January 2003 and the end of February 2003. Gerry Feeney, of Bulga Civil Constructions—a battling concreter—is owed $98,000. Vince Martin, of Eastern Mining, who did the underground infrastructure at Nardell Coal, is owed $1.2 million. The list goes on and on. It is a list of the victims of corporate crimes which should be punished by jail.

Let us not just talk about trade union leaders; let us talk about corporate crooks. They are thugs in suits—like Macquarie Bank's David Clarke and Allan Moss, and those who do their bidding—who are prepared to burn anyone who stands in the path of their corporate greed. Macquarie Bank's corporate symbol is the holey dollar. Those at Macquarie Bank consider the dollar to be very holy indeed and will stop at nothing to grab hold of one or two more of them. Macquarie Bank were here in Parliament House last night—as they are on an annual basis—shouting a beer, a glass of wine, a glass of champagne and a prawn or two for this country's political elite, including the Treasurer. There they were, Treasurer Costello and Allan Moss—the CEO of Macquarie Bank—patting one another on the back and, in front of all and sundry, telling one another what wonderful things they were doing in their respective roles as Treasurer and CEO of a big bank. Wouldn't my unsecured creditors love an opportunity to come to Canberra and meet with 200 or so politicians, shout those politicians a beer and see whether they can get some sympathy from the legislators of this country? Wouldn't that be a wonderful thing for my unsecured creditors?

It just goes to show the modus operandi of Macquarie Bank: employ a few people from all sides of politics, shout a beer once a year, maybe offer a few trips, and make sure that you have friends on all sides of politics so that you can get away with whatever you like in this country. That even extends to actions which I say are in breach of the Corporations Law and the ASIC Act and, in this case, potentially in breach of the New South Wales Crimes Act for taking money under false pretences.

Allan Moss, the CEO, told the gathering last night, `We do take seriously our responsibilities to the communities we are serving.' Let me tell you about the community in my electorate. Let me tell briefly the tale of the Nardell Coal Corporation. I refer those who are interested in a more detailed version to today's Notice Paper, where I have some 32 questions on notice to the Treasurer. In brief, the story begins around 2001, when a few pointy heads in the Macquarie Bank decided they would get into coalmining. It was obvious from the beginning that these pointy heads knew a fair bit about investment banking and managing risk but not too much about coal mining. But they thought they could make a killing out of this yet to be exploited and valuable resource of coal in my electorate.

So they organised some finance from two key sources. The first source was Bond Street Investments, which is 100 per cent controlled by Macquarie Bank and—surprise, surprise!—chaired by Macquarie Bank's chairman, Mr David Clarke. The second source was Macquarie Investment Trust III, which is one of those Macquarie Bank clubs for high-wealth individuals. Bond Street forked out about $10 million and MIT III some $22 million, at the bargain basement interest rate of 23 per cent. Nardell could have got the money cheaper on Bankcard! Bond Street's loan was fully secured by both fixed and floating charge over the assets of Nardell, both the mine and the holding company. The make-up of the new board was also interesting. There were four directors, two of which were nominated by Macquarie Bank. The chairman, Mr Campbell Anderson, was also from Macquarie Bank. So Nardell Holdings was an entity wholly controlled by Macquarie Bank.

In July 2002 the board was directed by Macquarie Bank to do a pretty prudent thing. Given this was to be an exporting mine, it was directed to take out insurance against a potentially rising Australian dollar. It did so around July 2002. It also did a less than prudent thing around that time. The board entered into a domestic contract with Macquarie Generation—and I should say that there is no relationship between Macquarie Bank and Macquarie Generation—to supply coal to its power stations. We now know that the deal was entered into too cheaply. Therefore, for some time it continued to be a significant burden on Macquarie's books. Despite this, it is still a bit of mystery how a coalmine opened with such fanfare and presented as having such a bright future could, after only a couple of years of operation, collapse so quickly, costing all of those jobs and leaving all of those unsecured creditors in its wake.

We do know a few things. We know they had some geological challenges at Nardell. But we also know that there was celebration amongst the contractors that the strategy that had been embraced to overcome those geological problems had been successful. We know there was a rapidly appreciating Australian dollar, but we also now know that, on the direction of Macquarie Bank, Nardell had insured against that rising Australian dollar. So they were fully insured on that basis. We know that coal prices fell on the international market. But, if we track those prices back, we see that it was not a significant issue between July and December 2002. We do know with every certainty that, from 20 December 2002, the Nardell currency hedge had disappeared. The mine was mainly engaged on the export market and it was struggling, yet, for some reason, someone decided to take away from the mine the very thing that was keeping it afloat: its insurance against a rising Australian dollar.

There can be only two explanations as to why this may have occurred. The first is that Macquarie and Nardell, either separately or together, decided that, because the hedge was a rolling options hedge, it was out of the money so it was allowed to lapse, even though the dollar was appreciating rapidly at that point. Why would you let it lapse? It was money in the bank. I have made reference to the value of that hedge in earlier speeches in this place. To let it go was extraordinary. The second is that Nardell had no money to pay the next premium. We know that with some certainty, and I accept that. So Macquarie decided to take the hedge and put it into its own books. What a wonderful prize that hedge was at that stage! The first instalment was I think $500,000 and the second was $3.7 million. At that stage I think the value of the hedge was approaching some $10 million.

Of course, Macquarie denies that it did this, but I am very suspicious—or, at least, I am sceptical and cynical—about its response to these questions. In a taped conversation between former and present Macquarie employees—and it was a well-publicised tape; I think many will have seen it in the Australianaround September last year—the senior director of Macquarie Bank admitted that Macquarie likes to run two sets of books: one set for the auditors, ASIC and those who regulate our Corporations Law and another set for the back room. We know with absolute certainty that, from December 2002, the Nardell operation was no longer insured and was therefore an absolute basket case. We also know that the Nardell board continued to run up debts to unsecured creditors after 20 December 2002. It dropped the insurance against an appreciating Australian dollar but continued to run up debts.

The administrator appointed by Macquarie has himself acknowledged that, at some point at least, Nardell was trading while insolvent. But whatever the figures say, we all know that without that currency insurance Nardell was a basket case. What was Nardell doing ramping up debts between 20 December 2002 and the end of February 2003 when its board knew its business was effectively insolvent? These are comparisons between the government's approach to the trade union movement and its approach to the big end of town.

But there is a more important point to be made: in correspondence I have had with Macquarie's Mr David Clarke he assures me that the decision not to renew the currency insurance was entirely a decision for the Nardell board. Well guess what? I do not believe that to be the case and, in fact, I have the evidence that it is not the case. In front of me I have an email on Macquarie's email account address from Mr David Wrench of Macquarie Direct Investments. It is dated 19 December—a very important date. In the email Mr Wrench informs the Nardell board that Macquarie Direct Investments has approved the extension of its existing loan to Nardell holdings. The important thing is that Mr David Wrench put a very important condition on the extension of that loan, which was that from that point on all material capital expenditure proposals and operating expenditure commitments were to be authorised by Macquarie Direct Investments.

From that point Macquarie Investments—Macquarie Bank—was wholly controlling Nardell. You cannot say that the decision on 20 December not to take the hedge was a decision for the Nardell board when Nardell had just entered a contractual arrangement with Macquarie not to make any expenditure decisions, including whether or not to take out the next instalment on the hedge, without going to Macquarie for approval. Here we have, contrary to Corporations Law and contrary to the ASIC Act, Macquarie not acting at arm's length from Nardell Holdings from 19 December but directly controlling Nardell and all it did. Therefore, who is responsible for the $10 million or so in debts to unsecured creditors? Not Nardell Holdings, which can hide behind the cloud of Corporations Law but, of course, Macquarie Bank, backed by $44 billion of net assets and having last week declared record profits.

I appeal to the Macquarie Bank to do the right thing. The amount of money it needs to find to pay out unsecured creditors is roughly equivalent to the remuneration of Allan Moss for one single year. Wouldn't it be a wonderful thing for Macquarie's PR to just do the right thing and pay up and admit it was wrong? I will be taking this a bit further if it does not. It has made an offer to the unsecured creditors first of 17c and then, when there was a public outcry, it went to 35c. When that was also rejected they decided they would embark on a divide and conquer strategy. They decided they would give all unsecured creditors who were owed between zero and $5,000 one hundred cents in the dollar, all those owed between $5,000 and, I think, $10,000 fifty cents in the dollar, and the others can go and get stuffed—they can cop their 35 cents. What did that mean? It meant they had a majority of unsecured creditors voting to take the offer. It was only about $1.6 million in value and there must be something near $10 million in debt to creditors in value terms sitting over here opposed to the deal. It was a divide and conquer technique to see whether they could get the majority of unsecured creditors to accept what I think is an unfair proposal—certainly it is unfair in the eyes of those who are owed more than $10,000.

This is a disgrace. In my questions today I again appealed to the Treasurer to act under section 14 of the ASIC Act. He has the power, where there is an allegation of fraud and it is in the public interest, to direct ASIC to investigate Macquarie Bank and its relationships with Nardell Holdings. This is not just about Nardell; this is part of a pattern by Macquarie Bank, who will steamroll anyone to make a quid. We have seen them now entering the sphere of local government, where they think people are a little gullible and there is an easy take. We have seen that in the Oasis development in Liverpool. We have seen the case between Bell and Berg and Macquarie Bank in the Industrial Relations Commission—an unfair dismissals dispute where Macquarie stole the intellectual property of Mike Bell and his partner. We have seen the case of Brian Locke, which is again a case of theft of intellectual property. This is an organisation with a bad culture of corruption and bullying, and it is about time the Treasurer moved to pull Macquarie into line and used his powers under the ASIC Act to help unsecured creditors and get some justice for all those in the Hunter Valley and, indeed, for all those around this country who have been burned by Macquarie Bank and who are now regularly ringing me to share their story.