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Parliamentary Joint Committee on Corporations and Financial Services
Impairment of customer loans

POWER, Mr Colin, Powers Hotel Holdings


CHAIR: The committee welcomes Mr Colin Power. We have received your submission as submission 12. Would you like to make a short opening statement before we proceed to questions?

Mr Power : First of all, I would like to thank the hard work of Guy Goldrick, Peter McNamee, Romesh Wijeyeratne, Senator John Williams, Mr Philip Ruddock and the many more who have tirelessly worked so hard, as I have, to bring this monster, hopefully, to its knees, and its participants for the corrupt, illegal, immeasurable, unforgiving, murdering thievery they have committed in this wonderful country of ours by taking many hardworking Australians' dreams from them by the stroke of a pen, by loopholing the system for their own betterment to achieve the biggest profit a bank has ever made in the second longest period of depression, known as the global financial crisis, in our country's history since the British arrived in 1788. The first was the Great Depression in 1929, in which it was well known that the banks then never doubled their profits in such a bad financial time.

We would also like it to be known that this bank committed murder for the number of clients who have committed suicide. They took their own lives for what this relentless and greedy bank, known as the Commonwealth Bank of Australia, has done to them. I will number in order the procedures they executed against me to leave me living in a garage for 12 months, with $32 left to my name and on the dole when I had an asset value in excess of $14 million in 2009. I lost my marriage, my children to another man for a while—who was a violent alcoholic—my family home, my beach-side unit and many other components. My wife and I had worked for 55 years of our lives to enable our children to benefit from their studies at the private school where we had them enrolled and from universities for their own choice to launch into professional careers.

I want people to take note that the receiver Michael McCann colluded with the bankers Duanne Lee and Peter Reagan, who in turn colluded with the broker, and all colluded with the valuer Bruce Arthur McFarlane to purchase one of my properties for the sum of $1.7 million when he valued it for $4 million two years earlier. The most annoying part is that the receivers are to report to me as caretakers of my business. I asked them for prospectuses over and over and over for the sale of my properties. I have quite a wealthy sister and a brother behind me, who are all self-made, and no-one gave a cent. The answer from McCann and Lee was, 'Go away. We're not going to sell to you.' This is a blatant breaking of section 420A of the law: a valuer cannot purchase a property he values. ASIC and the Brisbane fraud squad would do nothing about it after receiving advice from the Sydney fraud squad that was sent through from Senator Ruddock's office. We had to go to Broadbeach Police Station in Queensland and report this theft. But nothing was done.

I will now list in numerical form extracts from my submission for you to refer to. No. 1: my beginning was a self-starter in business in 1984 when nobody gave me a cent; my father wanted me to stay clear of the Commonwealth Bank's barbaric practices. No. 2: how the Commonwealth Bank bought out the Colonial State Bank as they were too competitive, so I sold to move away from them. No. 3: I then moved to Bankwest as the loan structures were safe with 25-year loan structures that gave me the opportunity to buy back bills every 90 days at whatever interest rates were offered. If they went up, I went up with them; if they went down, I could go down with them. My wife and I had 55 years of experience in the hotel industry, with a AAA credit rating after buying and selling 10 hotels successfully—actually, I will say eight hotels because they took the last two from us. We were very floatable and successful in a 24-year period. No. 5: there was the pressure the Commonwealth Bank put on us by putting us on notice to start selling assets just six months after they purchased Bankwest. When I heard of their takeover of Bankwest, my words to my wife were, 'This is the beginning of the end of us.' Two times I ran from them and I got away from them. They are barbaric. They were impossible to deal with.

No. 6: how we took the Rubyvale Hotel to auction, how we sold our house and unit to free up our accounts for the betterment of $60,000 per annum to show that we were responsible towards this bank in making every effort to get through this tough time called the GFC, even though our turnovers were only down by 15 per cent. No. 7: the visit from Duanne Lee and Sean Dollar. These all refer to my submissions. No. 8: how Sean Dollar and Damien Stewart, my development officers, told me, 'Just make sure your interest is paid prior to the next month's rolling-over.' That was good news because we were doing it tough. We were slipping behind the actual dates, but the fact was that we were meeting it next time, like they said. They said, 'Col, even if we get it on the 30th or it rolls over to the 31st, we're happy with that.' This was under Bankwest. This was not the Commonwealth Bank.

No. 9: then Duanne Lee told us that they employed Grant Thornton to do a report on us. I refused, telling them they had the most accurate figures from my accountant that were issued to the ATO. This was the beginning of the manufacturing of the folly against me. No. 10: I had to spend eight hours with two juniors to explain how to gather information for Grant Thornton because they had no idea how pub accountancy worked. I have the Grant Thornton report here. I went through it. There is close to $120,000 in net that they missed on the valuation. No. 11: interest rates had dropped to three per cent on 30 September 2009. I rang Duanne Lee and told him I wanted to lock in at that rate. He said, 'No way. You have defaulted.' I said, 'How have I defaulted—by missing those couple of months where Damien Stewart and Sean Dollar allowed me or gave me permission verbally to pay my interest before the other month rolled over?'

I wanted to lock in that rate. He said, 'No way. You have defaulted. They had me locked in at 9½ per cent, making me pay $300,000 per annum, more than what my loan agreements adhered to. I could roll over every 90 days. When the interest rates went down I could go down with them; if they went up, I had to go with them.

No. 12: in March 2010, Duanne Lee rang me to say, 'Don't worry, we're going to lend you $98,000.' I said, 'What are you talking about? I'm in enough debt. I don't need any more debt.' I said, 'I'm interested, but I will take the documents to my lawyer.' Duanne Lee's response was in total anger: 'If you take those documents to the lawyer, that is the end of you.' No. 13: then I wrote to Duanne Lee explaining that we have our two biggest trading months when the Rubyvale pub and cabins swells to double their turnover because of Gemfest. For Rubyvale, we got Best Queensland Tavern in 2003 and 2004. Gemfest was in August. The Imperial Hotel swells to 2½ times its turnover in September because of Speed on Tweed, and then in November all our poker machines will be paid out and our bank accounts will be $50,000 a quarter healthier, and we will commence knocking over our principals on the loans.

Things were tough. We were getting our interest paid in the couple of days before the end of the month. I would pay them within a fortnight. I paid them 15 grand. There was 30 grand due. I paid 15 grand on the 30th, on the 28th, before the 31st. I told them, 'We've got Gemfest coming where the pub swells from 45 grand a week up to $80,000 a week for a month.' Then the Imperial went from 55 grand a week to $125,000 a week through Speed on Tweed, through accommodation, through liquor, through poker machines. We had all our poker machines and I told them at least two good months were coming. With the amount of money that was coming in, we were going to be very floatable. Then our leasing finished in November. Our accounts would have been $260,000 better off per annum, but they chose to put the receivers in before August, before the Gemfest, and they chose before September, because those two big months were coming and those receivers could take that money.

No. 14: Michael McCann, the receiver, arrived in Murwillumbah with papers to seize the Imperial, and half an hour later they had another guy turn up at Rubyvale to do the same. After five hours, my lawyer argued with Grant Thornton's lawyer, who did not have a court order so I evicted him. He screamed at me, 'You're an idiot. You have no idea what is happening.' My reply was, 'No, I don't, but I'm about to find out.' He said, 'We'll be back the next day with a court order.' It took them three weeks to get a court order. I could not afford a lawyer because my lawyer said, 'Col, it's no good going. You're wasting time. If this bank wants your properties, they want them for a reason. No way in the world are you going to be able to fight them. They will just run you around and around in circles,' which was great advice. I had not spent a cent. Three months later, I picked up the Financial Review, where I read Guy Goldrick's nine questions. Those nine questions were exactly the same as what they did to me and as they did to hundreds of others—1,100 I believe.

No. 15: I received a court order on Friday, 13 August 2010 and my lawyer's advice to me was not to defend it because of the reasons I have told you. No. 16: It was the final straw. It ended my marriage. They have taken my living from me when I held $360,000 in stock, we had $50,000 in our safes, we had local accounts running within 60 days, our brewers were being paid on time every 10 days, we had $110,000 cash in the bank after that Monday's banking, when we only owed that bank $48,000 in interest. I ducked and weaved for three years before they could find me bankrupt. I had eight different addresses so they could not find me to bankrupt me. They ended up bankrupting me through an email—a frigging email. No. 17. Remember this: I never went broke. I was far from it. My bank went broke. Bankwest went broke. That was the problem here.

No.18: Bruce McFarlane, Bankwest valuer, the valuer for LandMark White, purchased my Rubyvale hotel for $1.7 million from the receiver, Michael McCann, doing $45,000 per week in March 2011. I purchased the same property for $2.1 million, doing $31,000 a week in 2003. Those figures are important. I paid $2.1 million for $31,000 a week in 2003.

Senator WILLIAMS: Was it freehold?

Mr Power : Freehold. Both of those properties were freehold. So I paid $31,000 for that pub, developed that pub, and we got that pub up and running into the best Queensland tavern for $2.1 million. This valuer buys it doing $45,000 for $1.7 million. The day the receiver turned up, they turned up with the manager. I said to John, my manager, 'Get him out; they've got no court order,' so John evicted him. He said, 'You know this pub is only worth $1.7 million.' John said, 'This pub is worth $4 million; we've got valuations on it.' This manager said to my manager, 'Mate, this pub is worth $1.7 million and that's what it will sell for.'

Senator WILLIAMS: Who bought it?

Mr Power : Bruce McFarlane. Bruce McFarlane bought that pub for $1.7 million. They already had it set up before they even went in there.

Mr RUDDOCK: Do you know of other buyers?

Mr Power : No other buyers. Sean Dollar went from Bankwest; he got out. When the Commonwealth Bank took over Bankwest they took it over in three days. How long does it take to sell a house?

Mr RUDDOCK: I am asking, in relation to your hotel, were you aware—you said Mr McFarlane paid $1.7 million—there were other buyers?

Mr Power : We had no idea there were other buyers, because they would not release to me any information. I went to McCann, I went to brokers and I went to Sean Dollar. Sean Dollar was Ray White's head man here in Queensland. Sean rang me and said, 'Guess what, Col.' I said, 'What?' He said, 'Your hotel got sold.' I said, 'You are kidding me. How much did it sell for?' He said, 'For $1.7 million.' I said' 'You are kidding me. Who to?' He said, 'Listen to this: Bruce McFarlane.'

Senator WILLIAMS: Who was the valuer at the time.

Mr Power : Who was Bankwest's valuer. He had valued my hotel in 2007 for $4 million. He downturned it, by the bank's order, to $3.3 million, when we were still doing exactly the same turnover. Admittedly, for sure, the cash flow is not around through a global financial crisis. We found that out because we took that pub to auction, to try and get them off our backs, because we had three kids going to private schools. We had The Imperial just 20 kilometres away from home. We had a beautiful home in Tallebudgera Valley. I was 55 years of age. Everything was ready and set to go.

Senator WILLIAMS: When you put the Rubyvale hotel to auction, what happened? Did you have a bid at the auction?

Mr Power : Yes, we did.

Senator WILLIAMS: How much was the bid?

Mr Power : It was $3.5 million but it fell over.

Senator WILLIAMS: Why?

Mr Power : I do not know. I can give you the real estate agent's address now, if you want to ask him that. Whether it was a dummy bid set up—because when they came back I said I would take the $3.5 million. I said, 'Get the bloke down the front for $3.5 million.' What I think could have happened is it was a dummy bidder. I can give you the broker's name.

Senator O'NEILL: Was there only one bidder on that occasion, Mr Power?

Mr Power : No, there were two bidders.

Senator O'NEILL: What was the other bid?

Mr Power : He bid to about $3.45 million.

CHAIR: What was the date of that auction?

Mr Power : March 2009.

CHAIR: Does that finish your opening statement or is there more you would like to add to that?

Mr Power : In conclusion, as leaders of our community and country, you people must jail these individuals responsible for such an inconceivable criminal act they have committed, especially Ian Narev and David Cohen who have already purged themselves in the 2012 Senate inquiry, denying that any clawback provisions were used to purchase Bankwest. That destroyed so many good hardworking families.

To see that this never happens again, this bank must be forced to compensate—right to this present day—to where our businesses would have been today. They need to compensate for the damage they caused my ex-wife, the psychological breakdown she suffered; my children, for the opportunities you have taken from them—forced to leave their private school and the hours of psychiatry they have attended, with my daughter's breakdowns and my son's anger from being expelled from school because of the deep emotional issues they have suffered from the breakdown and the loss of their parents' 25-year marriage and family unit.

The losses I have incurred were not being able to find work back in the pub industry because I was overqualified and the loss because of the embarrassment of being a bankrupt and losing our AAA credit rating—from penthouse to shithouse. There is the damage for my daughter. She wanted to fulfil her professional modelling career in New York, where she had offers. There was my second daughter's ambition to attend Bond University to study psychology. And there was the torment that my daughters and son received from their school peers, that their father had failed by going broke.

There was the loss of the family home on two acres in Tallebudgera Valley. It took us 25 years to be able to get that house. I built a heated swimming pool, a Rebound tennis court and a clubhouse that gave them every opportunity to address the sporting world if they had that ability. There was the loss of our two BMW motor cars that we worked so hard to achieve. They were purchased when we had a tax problem in 2005—luxuries were only ever afforded by making tax avoidance, of course. It is like everybody does: you buy your lease cars for tax avoidance. Do you guys lease cars?

Senator O'NEILL: No.

CHAIR: Mr Power, thank you—

Mr Power : We worked so hard to achieve that. There was the loss of our staff superannuation and holidays. They promised our staff when they took the hotels over that they would give them their super and their holiday pay. They gave them nothing; they sacked the lot of them over a period of probably three or four weeks. They robbed the information out of them.

There was the loss of cash and stock on premises, brewery and liquor suppliers and creditors. The stinking receiver did not pay anyone with his final costs to the bank, supposedly for caretaking two country hotels earning $1.1 million per annum. His costs were over $3 million in seven months. How can that be justified? How can a receiver justify taking over care of two country hotels netting $1.1 million for $3 million? You tell me that!

This is the law. This is a loophole in the law. The banks were given a free rein in 1998 when they deregulated the banks. They are out of control. You blokes have to take control of them and tell them to pull their heads in, seriously.

CHAIR: Mr Power, thank you for your evidence. Senator O'Neill?

Senator O'NEILL: Thank you very much, Mr Power.

Mr Power : I have not finished yet. Sorry.

Senator O'NEILL: I noticed that you were quick out of the blocks, too, Mr Power.

Mr Power : You bet I am! I have waited five years for this.

Senator O'NEILL: Well, finish it off and I will have a question for you.

Mr Power : Thank you. What do I do now? I drive B-doubles to Adelaide, Sydney and Melbourne and back to Brisbane to try to help my kids get to uni to study to get professional careers. My wife has gone back to study and has only just been employed after being out of work for several years. The money these mongrel bankers owe us in damages will never be able to repay the damage and pain they have inflicted on my children over the past seven years, since the Commonwealth Bank purchased Bankwest in October 2008. These banking criminals should get seven years without parole for their total greed. And they still will not feel the emotional pain that my family and I have suffered over the past seven years.

I thank you for the opportunity that you have given me here today to address you all. Please do something about what has happened.

Senator O'NEILL: Thank you very much, Mr Power. I am sure that your family are very proud of you for being here today and putting that on the record, and that you are not just speaking for yourself but for other people who have had a similar journey. Can I just take you through a couple of factual questions? Then I want to go to your response to The Australian Financial Review article that you talked about in your evidence this morning.

You spoke today, and in your submission, about two occasions where you had financial difficulty with the Commonwealth Bank, and the first one was after the bank acquired Colonial First State—

Mr Power : Yes.

Senator O'NEILL: and the second one was after it acquired Bankwest.

Mr Power : Yes.

Senator O'NEILL: Let's do Colonial first. Can you recall what your aggregate debt-to-equity ratio was at that time?

Mr Power : We borrowed those loans through Colonial at 30 to 70 per cent, but no housing was involved. We had 30 per cent equity and they put up 70 per cent.

Senator O'NEILL: Okay.

Mr Power : By the time I worked those hotels with Colonial State, who were terrific to work with, we had a portfolio then of—jeez; I worked with Bankwest in 2007—probably an overall value of around $5 million net; that included the hotels we bought. We bought five hotels. We had a series of investors with us. We bought leases. We took leases with no premiums. We took freeholds.

An example was the little Terminus Hotel at Marulan; I think we paid $750,000 for that, with a partner. We had that for four years and we sold it for $2.97 million. We took another one, which was the Criterion Hotel at Weston; we bought that for $2 million and sold it for $3 million. We would look for hotels with no poker machines when they first came out. My dad was in the ex-services clubs so he said, 'Poker machines—boy!' So that is why I went as hard as I could. The kids were only babies.

The last hotel I worked was in 1998. After that, when they bought out Colonial First State, they were just on my back about ridiculous things—just things I did not have time for. I was too busy going forward; I was too busy generating a company here for my kids.

Senator O'NEILL: So, when you say 'ridiculous things', what do you refer to there? And did it happen at other times or was it only when the bank was purchasing Colonial State?

Mr Power : They were just annoying, frustrating things, like: 'How much stock have you bought this month?' Every month we did a stocktake. Every month we did our own gross profits. We had our own computer system that we invented that allowed us, as soon as a pot or a middy of beer was sold, to come back to the profit and loss.

Senator O'NEILL: Mr Power, can I just ask you a couple of questions based on some evidence we heard yesterday from a different bank, the NAB, where they talked about having special business customer relations managers that understand the different fields. Did you have a special banking relationship with somebody to look after your businesses, and talk to you about your businesses, who was an expert in pubs?

Mr Power : I had a bloke who was with Colonial State in Wagga; that is going back a fair while ago. He went with the Commonwealth Bank. He was excellent with lending the money but, once you got the money, it was who else you were dealing with. That is why I got away from it. You need people who understand business. You do not want public servants—the public servant attitude still falls through that bank.

Senator O'NEILL: So one of the things that we have been hearing is that banks set up this relationship because they agree, in principle, that you need specialists in the area. But you are saying that the specialists might be with you at some period and then all of a sudden you are transferred to somebody who is just doing paperwork and checking off—

Mr Power : Well, if you did not do as you were told they would take you to another area, and that was a stricter area. And because I am probably pretty strong-headed, I said, 'I haven't got time for this rubbish! Mate, I am too busy trying to look after my employees and too busy to go ahead with it. Look at the equity you have. Look at the values you have for the hotel. If our cash flow is running on time, why are you—' It was the most annoying, frustrating things.

Look at the Commonwealth Bank in the financial crisis. That is ridiculous. Yes, go to the bank for advice! You betcha! What did they steal—$100 million from pensioners and God knows what?

Senator O'NEILL: Can I just ask you a few more detailed questions about the ratio of your interest payments to your earnings before interest and tax for each period? Have you got any documentation around that that you might be able to give us?

Mr Power : Interest payments to earnings? Documentation—

Senator O'NEILL: If you want to take it on notice, Mr Power, you can, because it is a pretty specific question. I would really just like to get an idea if the banks are going to say that you were a big risk. You have heard Mr Ruddock say this morning that the GFC was swirling around. Everybody was saying, 'Well, the bank's got to look after its shareholders; you were risky business,' and that is why they had to sell you up.

Mr Power : I was not a risky business when I had 50 per cent with my residential plus my hotels. Bankwest did not have any control over my residential. I had a home in Tallebudgera that I had bought for $463,000; it was valued at $2 million in 2007. I had a unit that was valued at $1 million. I never allowed them near the residential, because I never trusted them.

Senator O'NEILL: Right. And you were still functioning without access? With that separation of your residential from your business, you were making your interest payments on time?

Mr Power : Bankwest interest payments?

Senator O'NEILL: Yes.

Mr Power : Didn't I explain to you earlier, dear?

Senator O'NEILL: Yes, I just want to get it on the record, Mr Power.

Mr Power : I explained to you earlier—

Senator O'NEILL: You said that you were making payments, if they needed to be, on the 29th or the 30th—

Mr Power : About March 2010 we started to slip a bit.

Senator O'NEILL: That is what the bank will come back to us with, Mr Power. They will pick a moment. When did you find it difficult to meet your interest payments? When did that happen?

Mr Power : Around February-March—after the school holidays. Murwillumbah relies on the Gold Coast a lot. The Gold Coast was down. Rubyvale swells during the school holidays because it is very touristy for the Gemfields. Rubyvale held its turnover pretty strongly. The Imperial slipped by 30 per cent. It had taken a $55,000 turnover back to $35,000 a week. Therefore, we had to adjust everything. We had to cut the staff. My wife and I were working a lot of hours. There kids—there are only two here for the moment, and my girlfriend Nic and her daughter—were working in the restaurant and doing dishes. [Inaudible] would wash up when we could get him in there.

Senator O'NEILL: So you just cut back to make sure that you were able to try to manage that?

Mr Power : Absolutely.

Senator O'NEILL: What happened in terms of your interactions with the bank at that point in time?

Mr Power : Sean Dollar and Damien Stewart said, 'Don't worry about it, Col.'

Senator O'NEILL: Who were they?

Mr Power : My development officers. They are the guys that you deal with. Sean Dollar was excellent. Damien Stewart was the bloke who sold me the money.

Senator O'NEILL: And these are the guys from the Commonwealth Bank or Bankwest?

Mr Power : They worked with Bankwest. They said, 'It's all okay, as long as you pay your interest and your principal.' That was the understanding. That was cool. With Duanne Lee, I conversed with him all the time. It was just like a switch—you just switch it on and off. And then they turned into the frigging monster that they are.

Senator O'NEILL: So the switch you are talking about, Mr Power, if I understand you correctly, was when CBA took over Bankwest?

Mr Power : No, well after that. It was well after that—until they settled in. I just have some information here I found this morning. It won't take me two seconds—

Senator O'NEILL: If you want, you can provide that evidence to us after so that you do not have to look now. I want to ask you another couple of questions while I have a chance to hear from you. We would be happy to get that documentation from you later.

Mr Power : Yes.

Senator O'NEILL: Can I ask you now about the property revaluations that were involved in both of these cases?

Mr Power : Yes.

Senator O'NEILL: You talked about a number of valuations that you have had in additional to the ones that the bank had. Did you seek them yourself? Did you pay for them?

Mr Power : Yes.

Senator O'NEILL: Why did you do that and who did you pay?

Mr Power : The bank just take it out of your account. I do not agree in paying for them. It should be a 50 per cent split if you both benefit from it. They just take it out of your account and say, 'No. You pay for the valuation.'

Senator O'NEILL: And you also paid for an independent—

Mr Power : I paid for another valuation about the time when they took the pubs from me, and I never received a copy of the valuation. I rang the bank and I said, 'You're charging me for a valuation.' They charged me $8,000 for a valuation. I said, 'Where's my valuation and who valued it?' They would not release the details.

Senator O'NEILL: The bank then went on to make decisions that relied on those valuations. Is that correct?

Mr Power : The bank went on to make decisions to rely on the valuations. They did not care what the pubs were worth. They were after the dollar value on the loans. That is what they were chasing. If I was only in debt for $2 million, I would still be working my pubs today. That is what you need to understand. You are probably all aware of that. They needed the loan values—with decent properties, also, to be able to sell. Our hotels were ready and were very available to sell. One was one of the best Queensland taverns; we were developing the other one in Murwillumbah to bring it back to its old charm. They gave us $1 million to renovate. We had to go further—our turnover was down. We went to buy a 37-foot cruiser to run cruises from the lake right around through Cooma and back up the river. We had a 73-unit complex. We had just done all of the floor. We did all of the TAB. We doubled the TAB turnover. It is an alright promotion, but it slipped back to $35,000 around February. We are waiting for it to return. I read something this morning where in April we went up to around $90,000 between the two pubs, so we were both getting our $45,000 a week out of them. Again, back in that period, we were sweating because when that global financial crisis hit it was tough. But we still stuck with all of our employees. We kept our super up for all of our employees; we kept them employed. The worst thing I could have done was tell this Duanne Lee that the good months were coming. They utilised that. That receiver said, 'Let's get it now.'

Senator O'NEILL: You have had two experiences that are different. You were actually able to get yourself out of the financial difficulty that arose around the time of the Commonwealth state bank purchase.

Mr Power : That was no difficulty. That was pressure. I had a choice. I could have stayed with them if I had wanted to stay with them, but I could not be bothered with their, as my father said, barbaric—you know.

Senator O'NEILL: So what was different—

Mr Power : I had good, profitable businesses. I ended up selling five hotels just to get rid of them.

Mrs SUDMALIS: We have been told on numerous occasions that when banks bring in an investigative accountant they actually have a panel of experts that relate to a specific industry and they only get those people to come in because they are familiar with the idiosyncrasies of a particular industry. From your submission, it would appear that that was not the case.

Mr Power : I sat down with an 18-year-old and a 22-year-old, maybe a 25-year-old—students. They had no idea. They had no idea about pub arithmetic. They had no idea about gross profits. They had no idea how to derive net profits to know what turnover you should have.

Mrs SUDMALIS: Did you put in a formal letter of complaint to the bank at that time, or an email or some other substantive document?

Mr Power : Probably a lot of screaming phone calls.

Mrs SUDMALIS: That is unfortunate.

Mr Power : But, you know, to get down to write a letter to them and say, 'Your kids are idiots'—

Mrs SUDMALIS: Did anybody overhear your phone call or was there anybody else there at the time these valuers were doing their work?

Mr Power : Was there anyone there at the time?

Mrs SUDMALIS: Was there anybody else there, besides these two individuals and yourself?

Mr Power : Are you talking about when I was stuck in this little office with these two kids?


Senator WILLIAMS: Are you talking about the receivers?

Mrs SUDMALIS: No, they started some investigative accountants.

Mr Power : No, this is about Grant Thornton, when they gave us this report. This so-called frigging report that I basically wrote, because the information that I had to feed to these two kids—they had no idea.

Mrs SUDMALIS: The reason I ask is that, if there is another party who was witness to this, it would be worthwhile to get a letter or a statement from them looking at the inexperience of the valuers involved.

Mr Power : You can ask for the names of the two and they should comply. I have a pretty good memory, being a publican, I can tell you. That is good enough identification as far as I am concerned.

Mrs SUDMALIS: No, it is not ID-ing them; it is the fact that they were not experienced. There needs to be a third party to say that as well.

Senator O'NEILL: Did your accountant know and did your accountant see any of the work that was done?

Mr Power : Yes, absolutely.

Senator O'NEILL: Your accountant might be the third person who could verify what you just said.

Senator WILLIAMS: Mr Power, Rubyvale Hotel was valued at $3.3 million in June 2009. Is that correct?

Mr Power : Yes.

Senator WILLIAMS: Who did that evaluation?

Mr Power : McFarlane.

Senator WILLIAMS: What company did he work for?

Mr Power : LandMark White.

Senator WILLIAMS: You are sure of that?

Mr Power : I am so sure that I will give you a copy of the valuation.

Senator WILLIAMS: No, we have run out of time. You are sure that McFarlane did the valuation at $3.3 million in June 2009?

Mr Power : Absolutely, sir.

Senator WILLIAMS: Did you get a copy of that valuation?

Mr Power : Yes.

Senator WILLIAMS: Could you leave a copy with the committee?

Mr Power : I will leave the full valuations for both the hotels with you. Both those hotels were valued in 2007.

Senator WILLIAMS: I might have a look through them. What was the weekly turnover of the pub in June 2009?

Mr Power : It was $45,000 for Ruby Vale.

Senator WILLIAMS: No, in June 2009. What was the weekly turnover back in 2009 when that valuation of $3.3 million was put on. Do you know offhand?

Mr Power : Yes, $45,000 a week.

Senator WILLIAMS: It was $45,000 a week in 2009?

Mr Power : Yes.

Senator WILLIAMS: Was another valuation done after June 2009?

Mr Power : Yes, they did a valuation of both my hotels but would not give me the values. That was around 2010, before they put the receivers in.

Senator WILLIAMS: This was McFarlane who did the valuation?

Mr Power : I do not know, because the bank would not tell me. They charged me $8,000 to get a valuation done, and they would not give me the valuation. The receivers went in on 26 July.

Senator WILLIAMS: What year?

Mr Power : 26 July 2010. That is when I kicked the receiver out, and they came back on black Friday.

Senator WILLIAMS: Did McFarlane buy this hotel?

Mr Power : Yes.

Senator WILLIAMS: Him and his wife Wendy, I think from memory. Is that correct?

Mr Power : Yes.

Senator WILLIAMS: So he valued it at $3.3 million in June 2009, doing $45,000 a week, and he bought it in 2011 for $1.7 million, doing $45,000 a week. Is that correct?

Mr Power : Yes.

Senator WILLIAMS: You have tabled a copy of his valuation in 2009.

Mr Power : Yes. I have valuations from 2007 and 2009.

Senator WILLIAMS: Who did the valuation in 2007?

Mr Power : McFarlane.

Senator WILLIAMS: He did it in 2007 and 2009?

Mr Power : Yes.

Senator WILLIAMS: What did he value it at in 2007?

Mr Power : Four million.

Senator WILLIAMS: Four million, and then down to $3.3 million in 2009.

Mr Power : Yes.

Senator WILLIAMS: And he bought it for $1.7 million in 2011.

Mr Power : Off the receiver.

Senator WILLIAMS: The receiver was McGrathNicol?

Mr Power : No, Grant Thornton.

Senator WILLIAMS: Grant Thornton was the receiver?

Mr Power : Michael McCann and Graham Killer.

Senator WILLIAMS: Did they put it to auction?

Mr Power : No.

Senator WILLIAMS: Did they call for tenders?

Mr Power : No.

Senator WILLIAMS: Section 420A of the Corporations Act basically says receivers, liquidators and finance companies that are selling people up must get the maximum value they can. I am very concerned about the guts of this section 420A, because I think it is a toothless tiger. So I just want you to tell the committee: to the best of your knowledge—and you must tell the truth, of course—what efforts did Grant Thornton make to get the maximum price for that Rubyvale hotel?

Mr Power : I was the buyer, for a start. I said, 'I'll buy my hotels back from you,' and they said, literally, 'We're not selling to you.' That was from the bank. I rang the bank and I said, 'I will buy those hotels back from you, and I have good family backing.' They said, 'Absolutely not; we're not selling to you.' I said: 'You need to give me figures. It is law that you are the caretaker of these properties. You need to give me figures.' 'I don't have to give you anything.' I searched those papers—The Courier-Mail and The Sydney Morning Herald—for all the pubs coming up for sale. I have been buying and selling hotels for 24 years.

Senator WILLIAMS: Was this Rubyvale hotel advertised?

Mr Power : I could not find it advertised anywhere. I know who sold the hotel.

Senator WILLIAMS: Chair, it might be of interest if we write to the bank and ask them for a copy of those valuations that you were obviously billed for, Mr Power, and you could not see.

Mr Power : Yes, for sure.

Senator WILLIAMS: I think this is a very interesting part of this inquiry. The valuer, you claim, valued the hotel at $3.3 million in 2009 and then bought it for $1.7 million in 2011 off the receiver.

Mr Power : Yes. I have all the information here on his purchase.

Senator O'NEILL: Who was the valuer when the pub actually got sold? You do not know who that was?

Mr Power : McFarlane. McFarlane valued the hotel in 2007 at $4 million. He revalued it in 2009—under bank instructions, not under my instructions—at $3.3 million. They were setting the case for properties. Of course, we all know property values come down through such an event.

Senator O'NEILL: And in 2010, when it was sold—

Mr Power : In 2010 it was valued again, because—

Senator O'NEILL: By whom?

Mr Power : I do not know.

Senator WILLIAMS: We will find that out.

Mr Power : The bank valued it, and I got charged $6,000 or $8,000 for that valuation. I said, 'What's this for?' He said, 'It's a valuation.' 'Give me a copy of the valuation.' They said no, because I was a prominent purchaser.

CHAIR: Mr Power, thank you for your submission and for having the courage to come today and to articulate the experience that you have had. You have been asked to provide a number of things on notice. Could you provide those by 27 November? If for whatever reason you struggle to do that, please let us know and we can negotiate a different date, but we may well come back with some questions or clarification for you. For those valuations that you wish to hand up—

Mr Power : Will someone just email me what you want to know.

CHAIR: Yes, we can do that. That would be great. Thank you very much.