Sharon Grierson (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

Corporate crime is always unacceptable, but the global financial crisis has certainly shone a brighter spotlight on the losses sustained by average Australian customers and investors when greed replaces integrity. At the local level, the pursuit of development and construction company Hightrade regarding its operations in the Newcastle and Hunter region by both Joanne McCarthy of the Newcastle Herald and Andrew Ferguson of the CFMEU has my full support. The actions of Hightrade have led to considerable loss—by contractors and suppliers, by investors and by workers involved with Hightrade and its associated companies. With a case brought by the Australian Taxation Office currently in the Federal Court, it seems that the loss may also extend to the wider public purse.

For the record, I first raised Hightrade with the Australian Securities and Investments Commission through the parliamentary process in 2006. However, under the Howard government, ASIC was seriously underresourced and had limited legislative power to pursue companies like Hightrade or other companies operating under the phoenix model. During the 2007 election campaign, I received a phone call from Mr Ed Mazzoni, representing Hightrade, requesting a meeting with me. I told him that I had concerns about Hightrade’s local operations but that a meeting would not be possible until after the election. Mr Mazzoni responded that he was aware that an election campaign was underway and that Hightrade could be ‘very useful’ to me. I told Mr Mazzoni that the only way Hightrade could be ‘useful’ to me was to do the right thing by the people of Newcastle, repeated that I would not meet with him until after the election and terminated the conversation. That is the only contact I have ever had with Hightrade.

At the federal level there is a bigger picture to consider as well. As chair of the federal parliament’s Joint Committee of Public Accounts and Audit, and as deputy chair in the last parliament, I and the committee have consistently pursued with the Commissioner of Taxation, at our biannual public hearings, the behaviour of phoenix companies, including the activities of Hightrade and other development and construction companies operating in Newcastle suspected to be under the phoenix model. The failure of companies to contribute the superannuation guarantee contribution of employees has been a particular focus of the committee, with greater resourcing and activity undertaken around this area by the ATO as a consequence.

Under the Rudd government, Hightrade has also come under particular scrutiny. The relevant federal minister, Chris Bowen, the Minister for Financial Services, Superannuation and Corporate Law, who recently visited Newcastle, is aware of the Hightrade matter and is currently considering legislative reform around the issue of phoenix companies. Hightrade building sites have been raided by immigration authorities at least six times.

The Australian Taxation Office’s Serious Non-Compliance Division is currently pursuing Hightrade in the Federal Court for GST fraud, describing these matters as ‘the most important investigations being undertaken by the SNC operations’. With amounts approaching $100 million suspected to be in question and 38 of the 125 companies in the Hightrade group suspected of being involved, the ATO’s pursuit of Hightrade for GST fraud and taxation noncompliance is critical.

At last Friday’s public hearing between the JCPAA and the Commissioner of Taxation, Michael D’Ascenzo, the taxation commissioner agreed with me that 10 prosecutions of company executives for phoenix type behaviour since 2000 was not satisfactory and that this area of corporate behaviour was deserving of further attention from the ATO. The ATO’s case against Hightrade, if proven, may provide an important precedent for further pursuit of phoenix companies.

I am a member too of the federal parliament’s Joint Committee on Corporations and Financial Services. Our committee’s inquiries into the collapse of agribusinesses, as well as our ongoing inquiry into Storm Financial and Opes Prime, have very much held financial companies, advisers, lenders and the big banks to account. Last night the Commonwealth Bank of Australia and Macquarie Bank presented to the JCCFS in a public hearing to explain their role as lenders to clients investing in these failed investment companies. The role of financial planners and advisers has also come under scrutiny during this inquiry.

One important and positive consequence of the global financial crisis for average Australian investors has been the increased funding by the Rudd government to regulators such as ASIC and the more strategic data sharing and matching by government regulators, departments and agencies to pursue illegal corporate behaviour. The Rudd government is serious about combating corporate crime and protecting Australians and the public purse from predatory or illegal behaviour.