A company once owned by former Minister for Tourism John Brown to which the Keating piggery companies once owed up to $4 million has been dissolved.
There are no answers as to whether the piggery companies still owe any money to Mr Brown.
Mr Brown is head of the privately funded Tourism Task Force, one of whose aims is to lobby the Federal Government in the interests of the tourism industry. It has claimed much success in generating more tourism business to Australia.
The Prime Minister, Paul Keating, and his family are the half owners of the piggery companies through his family company Pleuron which half owns Euphron which in turn owns Brown and Hatton Group Pty Ltd (BH Group).
The now dissolved company once owned by Mr Brown was Brown and Hatton Pty Ltd (Brown P/L).
Various annual returns, corrected annual returns and audited returns of BH Group have recorded the amount owed to Brown P/L in various ways. It has been slowly reducing. BH Group audited accounts lodged on December 22 and signed on December 17 last year show an amount of $2,760,622 as “”subordinated loans”.
The accounts state: “”The subordinated loans recorded in the company’s balance sheet under shareholders’ equity has been determined by reference to the amount due to the previous owners of the business undertakings associated with BH Group. As a subordinated loan such amount will be reduced commensurately subject to the future profitability of the company and the availability of cash resources”.
That was December 17, 1991. However, the previous owners, Brown P/L, was dissolved as a company, according to the public ASC record on December 8. A dissolution of a company occurs when the shareholders voluntarily agree that they no longer want to pursue business as a company.
So to whom does BH Group owe the money? If the company was dissolved, the debt must have been assigned to someone. If the audited accounts are correct it must owe it to someone.
I telephoned Mr Brown asking whether I could talk to him about it. He said: “”You won’t be talking to me about it. Your whole performance about this issue has been appalling. Please don’t ring again.”
I put questions to Mr Keating’s office yesterday asking whether the debt had been expunged and, if not, to whom was it now owed. And if the company owed any money to Mr Brown did Mr Keating see any difficulty with that, given Mr Brown’s position on the Tourism Task Force.
Mr Keating’s senior media adviser, Greg Turnbull, replied referring to an article I wrote in December suggesting that if the Opposition did not have the courage to raise the piggery issue in the House it could not be in a position to raise the issue in the campaign and “”should leave it alone in the Senate”.
Mr Turnbull said, “”The Opposition did not take your advice. Instead they have continued to make untrue and defamatory allegations against Mr Keating. They did not take your advice, but we think you should.”
Mr Turnbull attached a copy of a press statement issued by Mr Keating last week which contained an apology published by üThe Age@ over a column by Peter Ryan. Mr Keating’s statement said: “”The column masqueraded as a series of questions concerning my investment in the Brown and Hatton Group of companies. In fact, it was a collation of claims and allegations made by the Liberal Party’s Senator Baume.”
Comment:
Mr Keating has good reason for concluding that Peter Ryan’s column is a list of unsupported allegations masquerading as innocent questions. It seems Mr Ryan did not put his questions to Mr Keating’s office for response before publication.
The questions posed here about Mr Brown have been.
Mr Keating and his family invested $430,100 for their half share in Euphron Pty Ltd which in turn owns BH Group. That is a lot of money. The fate of that money is dependent upon the fortunes of BH Group. The fortunes of BH Group are affected by the speed with which the loan to Brown P/L (or its successor in title to that loan) is paid off. Mr Keating is not a director of any of the companies, but has a half shareholding which is enough power to exercise significant control over the company if he chose to exercise it.
Is such a link, if it still exists, between the Prime Minister and a leading lobbyist for one of Australia’s major industries wise?
To get an answer to that I put the following questions to the Prime Minister’s office yesterday:
In view of the dissolution of Brown and Hatton Pty Ltd:
1. Has the debt been expunged?
2. If not, to whom is it now owed?
3. Does any of the piggery companies in which the Prime Minister has a share owe anything to John Brown or to companies in which he or his family have an interest?
4. If so, does the Prime Minister see the potential for a conflict of interest given that John Brown is head of the Tourism Task Force, a lobby group seeking greater government help for the tourism industry?
In effect, I got no answer yesterday and none from Mr Brown.
Though in answer to questions put to Mr Keating’s office last year, Mr Keating said he had made all appropriate declarations about potential conflicts of interest.
Allegations made in Parliament by the Opposition that Mr Keating somehow used his position to influence the Foreign Investment Review Board, the Australian Quarantine Inspection Service or used the One Nation statement for private gain have come seriously unstuck. They are unfounded.
None the less the political wisdom of the Prime Minister getting involved in this piggery can be questioned on other grounds. Its accounts have been in a mess, and still are. Questions I put to the Prime Minister’s office last year asking about the value of Mr Keating’s investment remain unanswered. Audited accounts put the piggery group in serious financial difficulty yet the accounts of Euphron on their face still show the Keating share at $4.2 million.
Further, after auditing, the auditors of several of the companies in the group state: “”The continuity of normal business activities is dependent upon the continued support of the company’s ultimate shareholders together with the support of the bankers of the group of which the company is a member.”
That means, in light of the asset-liability position of the group as shown in the accounts, if the bank withdraws support the companies and the Keating family’s original $430,100 investment are all but worthless.
That is a significant auditor’s qualification, not a standard-form phrase used whenever a company owes money to a bank.
The bankers are the Commonwealth Bank, which is 51 per cent owned by the Commonwealth of Australia.
Is it wise for the Prime Minister to leave himself in the position where his substantial investment relies on the continued support of the bank in these companies when he in turn heads the Government that controls the bank?
The fact, according to the public record, that Brown P/L was dissolved at the time of the audited accounts of BH Group were lodged is another example of sloppy accounting within the group over the years. A subordinated loan indicates that the company has the power to determine if and when the loan is repaid and the creditor company has no power to call it in. If the creditor company is dissolved, in the case of a very large loan, good accounting practice would state who the new creditor is who accepts the terms that the debtor will pay if when it can.
The Opposition tried to make by the Opposition about the reduction of tax liability by off-setting profits and losses between the companies within the group. But this is an entirely legal, proper and standard accounting procedure. A trading arms profit should be offset against a wholesaling loss to come up with an overall figure. However, the group’s accounts reveal inconsistencies.
The directors of one subsidiary say the subsidiary can pay its debts as they fall due, including presumably a debt of more than $1 million to a related company in the group. Yet the same people, signing as directors of that other subsidiary, have written off the $1 million as unrecoverable. There is another examples of this in the group’s accounts. Either the subsidiary can pay the money and the other subsidiary can recover it, or the first subsidiary cannot pay the money as it falls due and the second subsidiary cannot recover it. It is inconsistent for one subsidiary can pay the debt and for the other to say the same money is unrecoverable.
Mr Keating is not a director and is not responsible for the accounts. However, as he controls half the share-holding he is in a position to demand better practices by directors or seek to remove them. And the accounting deficiencies of these companies have been public knowledge for some time.
Is it wise for the Prime Minister and his family to remain half shareholders of a group of companies whose accounts are in this state?
These are not questions masquerading as allegations. They are serious comment upon publicly available facts.