Is it all over for Clive Palmer and PUP?
Justice Paul Tottle of the West Australian Supreme Court was well ahead of the pack in questioning the wisdom, if not the propriety, of the extraordinary generosity shown by Clive Palmer’s company Queensland Nickel towards the Palmer United Party.
He did it late last year, at the end of a case in which Palmer’s lawyers, armed with affidavits from Palmer’s managers, had argued that without an immediate injection of $28 million his Yabulu refinery near Townsville would have to close, with the loss of up to 767 jobs.
They wanted the Chinese iron miner Citic – with which another Palmer company, Mineralogy, has been in a vastly complex legal battle for nigh on four years – to provide that money, and more. Palmer was seeking $US48 million in unpaid royalties. Without it, not only Queensland Nickel but several other Palmer enterprises, including Mineralogy itself and Waratah Coal, would suffer “irreparable harm”, his legal team argued.
Justice Tottle was unconvinced that things were as bad as portrayed, and threw out their case.
“I pause to observe,” he said in a judgement handed down on December 7, “that in the 2013-2014 financial year it [Queensland Nickel] was sufficiently profitable to donate over $15 million to the Palmer United Party…”
The implication of his observation was clear: if Queensland Nickel had not so lavishly supported Clive Palmer’s efforts to buy political power, it would not be in such dire straits.
And they are dire indeed, although not quite as disastrous as his people suggested to the court. On Friday last week, the company announced it was making redundant 237 workers at its plant near Townsville. On Monday, it announced it had gone into voluntary administration.
The news got worse. The administrators subsequently confirmed that the company was unable to pay the redundancy entitlements of the sacked workers. It had not made superannuation contributions on behalf of them or the 550-odd others still employed in November, December or January. It owed some $70 million to creditors.
This was, of course, devastating to those employees, says Ben Swan, Queensland secretary of the Australian Workers’ Union, which represents most workers at the nickel plant. But he took slight encouragement from his meeting with administrators on Monday afternoon.
“They said they were hopeful the company could continue trading. We are equally hopeful,” he says.
And yet the overall financial picture remains clouded, to say the least, given the labyrinthine and secretive structure of Palmer’s private corporate empire. It may become a little clearer next Friday, when a meeting of creditors will take place in Townsville.
Swan says the union will seek appointment to the committee of creditors at the meeting. But things don’t look good for the workers and their entitlements. It has now been revealed in the financial press that just days before Queensland Nickel brought in the administrators, two other Palmer entities, China First and Waratah Coal, lodged claims to be designated as secured creditors, which would put them at the head of the queue to be repaid.
The speculation is the government might wind up paying the workers’ entitlements.
And the corporate regulator, the Australian Securities and Investments Commission (ASIC), has confirmed a complicated reshuffle of the directorships of a number of Palmer companies earlier this month.
Most notably among them, Clive Mensink stepped down from his position as director and company secretary of four companies, including those that have laid claim to Queensland Nickel’s assets – China First and Waratah Coal – and Mineralogy, which was party to that West Australian Supreme Court case.
In each case Anna Palmer, Clive Palmer’s wife, replaced him.
But Mensink – who is also Palmer’s nephew – remains secretary and sole director of the nickel company.
It’s all very incestuous and more than a little fishy in the view of some.
Even before Palmer’s moves to reshuffle his company officers and jump the queue of creditors became known, Ben Swan wrote to ASIC seeking an investigation of the affairs of Queensland Nickel.
“A number of matters have been publicly stated and reported regarding the company’s financial and trading position in recent months, including assurances that employee entitlements are ‘safe’ and that recently disclosed political donations are ‘proper’ in the context of the company’s recent operating position. Similar assurances were made to the union, in writing, by Mr Mensink,” Swan’s letter says.
“In the context of all that has recently transpired, the AWU is of the view that there is an open question as to whether the distribution of money in the period before the appointment of the administrator is appropriate.”
Swan also queried whether the recent actions of company officers were “in accordance with legal requirements”.
“In the circumstances, I am requesting that ASIC undertake an investigation into whether there may be any breaches of the corporations law…”
Swan’s letter raised questions about who was actually running the show at Queensland Nickel. Was it Clive Mensink, the sole director and company secretary, or was it Clive Palmer, the sole shareholder, acting as a “shadow director”?
All good questions. ASIC will not confirm whether it is seeking answers.
LNP falling out
To understand this story better, it helps to return to early 2012 and the election of the Newman government in Queensland. Initially, this was an event that made Clive Palmer, long-time, big-time financial supporter of the state’s Liberal National Party, very happy.
The mining boom was past its peak, but Palmer still had high hopes of developing the massive coal deposits of the state’s Galilee Basin.
Things quickly soured, however. Palmer came to the view, rightly or wrongly, that the new government was giving preferred treatment to other would-be developers of the Galilee. Relations got very ugly between him, then premier Campbell Newman and then deputy premier Jeff Seeney. The upshot was that Palmer abandoned the LNP and started his own party.
He put together a ragtag collection of candidates – or “staff”, as they were listed on the party website – and contested every house of representatives seat in the 2013 federal election, as well as the senate.
He himself squeaked into the lower house in the seat of Fairfax, and three of his people were elected to the senate, although two – Glenn Lazarus and Jacqui Lambie – later quit the party in acrimonious circumstances.
The party never had much in the way of membership or policy, but it had the quirky charisma of its leader and the financial resources of his business empire.
Palmer companies tipped tens of millions into PUP’s coffers. In 2013-14, $15 million came from Queensland Nickel alone, as Justice Tottle astringently noted in last December’s judgement.
In fact, Palmer’s struggling nickel refining operation was even more generous than the judge acknowledged. In 2014-15 it gave another $6 million.
More remarkably, Queensland Electoral Commission records show a further $288,516 was donated on December 31, 2015 – that is, just a few weeks after his lawyers had insisted in the Supreme Court the company was about to go belly up and a few weeks before it actually did.
Even if, as Palmer claims, the money was not given on December 31, but over the previous six months and only recorded on that date, it is not a good look. Clearly, the company was already struggling during that period, with nickel prices plunging to a quarter of what they were a few years ago, and still falling.
The returns to the electoral commission were all signed off by Clive Mensink, in his capacity as national director of the Palmer United Party.
No wonder the AWU is asking pointed questions. Here was Mensink, the sole director and company secretary of Queensland Nickel, a company, continuing to approve donations to a political party, PUP, and then receiving them on behalf of that same political party.
The end for PUP
Some might argue, as Palmer has in the past, that his companies are private and that he is entitled to spend their money as he likes.
And that is true, so long as the companies are solvent. But creditors including the AWU are sure to argue that the money should have been theirs.
Time and the corporate lawyers will determine that, but already one conclusion can be drawn with certainty: the Palmer United Party is finished as a political force.
Indeed, it was probably finished even before the revelations of the past couple of weeks.
In the byelection for Joe Hockey’s vacated seat of North Sydney on December 5, it pulled a pathetic 0.5 per cent of the vote. Of course, the silvertail North Sydney was never PUP territory, but Canning, in Western Australia, was. And in the September 19 byelection there, its vote halved to just 3.1 per cent.
The party has never won a state seat. In Queensland and the Northern Territory it has attracted a few defectors from the major parties, who have all promptly defected from it.
Palmer himself won the party’s only federal lower house seat, Queensland’s Fairfax, by just a handful of votes in 2013. Serious political analysts, such as the ABC’s Antony Green, give him Buckley’s chance of retaining it at this year’s election.
Some have speculated he might try to move to the senate but, even there, his chances look remote.
The fact is, as one major party analyst told The Saturday Paper, PUP only ever appealed to those intent on lodging a protest vote. Such people are motivated by dislike of the “grubbiness” of politics, he said, and PUP now looks among the grubbiest of voting options.
Labor Party pollster John Utting thinks the demise of the Palmer United Party will benefit his side of politics. Certainly, on the evidence of current polling numbers, federal Labor needs all the help it can get.
But the bigger question is what the unravelling of Queensland Nickel’s financial affairs will show us about the state of Palmer’s broader business.
His wealth is based on resource industries, specifically coal, iron and nickel. His nickel interests are in big trouble. His plans for a massive Galilee Basin coalmine appear to be going nowhere. The Australian newspaper reported on Thursday that his vehicle for the development, Waratah Coal, has a current cash balance of just over $21,000. And the big one, Mineralogy’s iron ore venture in Western Australia, is locked in seemingly endless legal dispute with its partner, Citic.
It would be unwise to make any pronouncements, except that Palmer is a lot less rich now than he was a few years ago.
And we’ve seen other billionaires fall. Nathan Tinkler comes to mind, as does the late Alan Bond who, coincidentally, once owned the same Yabulu refinery.
Palmer is not going to find much sympathy or help from either side of politics. Or from the hundreds of newly unemployed and impoverished workers in Townsville.
As Palmer is fond of saying, famously, bizarrely, almost melodically: Goodbye, goodbye, twiddle-too.
This article was first published in the print edition of The Saturday Paper on Jan 23, 2016 as "Is it all over for Clive Palmer?". Subscribe here.