A shake-up of one of Canberra’s largest building and land-development companies will be sought at a shareholders’ meeting tonight.
The company, Consolidated Builders Ltd, is made up of about 100 medium- and small-builder shareholders, nearly all of Croatian background.
The company’s aims were to enable smaller builders to get access to Canberra’s land-development market which since privatisation has had erratic releases and domination by several large companies. The original intention of the company was to provide mainly for first-home buyers in Canberra.
In March a general meeting of shareholders appointed a four-member committee, including a solicitor, to look at the conduct of the company’s business. In a report, the committee said it found several areas of concern and has recommended publication of a more detailed formula for distributing land among the builder shareholders. The committee also recommended that no shareholder (including immediate family and related companies) own more than 9 per cent of the company.
The committee also raised questions about the purchase of shares in the company by three of the four directors; the purchase of land in Queensland; and about some of the contracts with the company.
The committee said three directors John Sostarko, John Ikic and Anton Abramovic had gone to Queensland late last year and had negotiated and purchased for the company a townhouse development project [estimated to be valued at $2.2 million]. The report also noted that they had bought a residential townhouse development project for themselves [for an estimated $3 million] about seven kilometres from the company’s site.
The report said, “”The committee believes that the circumstances of the purchase are unsatisfactory and the competition between the directors’ own interests and the interest of the company are of concern.”
The committee also expressed concern about an attempt by the three directors to suspend the fourth director, John Juric. The committee said Mr Juric had been elected by shareholders for a further term on November 11, last year. On November 15, at a directors’ meeting at the company’s offices in the old GIO building in Northbourne Avenue the other three attempted to suspend him and prohibit him from attending board meetings. After threat of legal action by Mr Juric, the three directors called a shareholders’ meeting to consider a motion, supported by the three directors, to remove Mr Juric. It was unsuccessful.
The committee claimed the board had not run shareholders’ meetings properly, citing short notice, change of venues and the failure to provide fair debate. The committee noted the actions of the board occurred when Mr Juric had been unable to attend.
Shareholders had not been told about decisions for the company to become a residential builder in Queensland and to withdraw from a joint venture with Canberra Land, which the committee said had been beneficial to the company.
The committee recommended that the company have five directors; that the board should publicly adopt a formal and strict set of guidelines for notifying conflicts of interest; and that shares in the company that come up for sale should be advertised to all shareholders.
Messages were left with Mr Sostarko, Mr Ikik and Mr Abramovic asking for their comments on the committee’s report. Mr Ikic, who is treasurer of the company, said the directors were to meet yesterday and would issue a statement, but none came by the end of business yesterday.
Since the Federal Government privatised land development in 1988 by selling raw land in tracts there has been some vigorous debate since self-government about whether the ACT Government should revert to developing itself and sell at one-block-at-a-time public auctions.
The three largest main players now are: Alex Brinkmeyer’s Land And National Development (LAND) Ltd, Bob Winnel’s MBA Land Pty Ltd and John Ainscough’s Land Co Pty Ltd. Consolidated Builders comes a close fourth.
Some have argued the three largest companies have tied builders and real-estate agents in vertical monopolies, but the companies said the competition between them has kept prices down and they are more efficient than the public sector and that they will sell single blocks to small builders or individuals.
The ACT Government’s official policy was to revert to developing itself and single-block auctions. However, in practice it has encouraged more joint ventures between itself and private developers.