Clive Palmer may have committed criminal acts while a director, or shadow director of Queensland Nickel during its collapse, an administrator report has alleged.
Palmer, who has not been a listed director of Queensland Nickel since February 2015, is alleged to have continued as a ‘de facto’ or shadow director, while the business was run by his nephew Clive Mensink, up until its collapse in January 2016.
The allegations are made in a report released on Tuesday by FTI Consulting, appointed as administrator to the Townsville refinery business after it fell victim to the nickel slump.
In its report, FTI considers Palmer to be just as responsible for Queensland Nickel’s actions up to January 18, 2016, as Mensink.
“Our observations indicate Mr Palmer, a former director of the company, appears to have acted as a shadow/de facto director of QN at all material times from February 2012 up to the date of our appointment on 18 January 2016,” FTI wrote.
“Both Mr Mensink and Mr Palmer, in our view, appear to have been reckless, in exercising their duties and powers as directors of QN.”
The collapse of Queensland Nickel, operator of the Yabulu nickel refinery, has left hundreds of workers facing redundancy, and several outstanding creditors, including Queensland-based rail operator Aurizon, facing millions of dollars in potential losses.
Palmer, a former mining magnate who is now an MP and leader of the Palmer United Party, has denied the alleged wrongdoing, saying he acted at all times within the rules.
But FTI Consulting has highlighted more than $200 million in questionable loans, provided by Queensland Nickel during Palmer’s actual, or de facto, directorship, to his other businesses, or those of his associates.
FTI Consulting deemed these to be “uncommercial transactions”, which took place under Palmer’s directorship, or de facto directorship.
Despite officially not being a QN director, “Mr Palmer is a current signatory on three (3) bank accounts in QN’s name,” FTI found, “where he has capacity to authorise transactions on these accounts solely and independent to other authorised signatories”.
“Our analysis of the related party loans shows that from February 2011 approximately $224.3 million of QN’s funds were transferred to director-related parties, or paid by QN on behalf of the director-related parties,” the administrator wrote.
Loans include $122.2 million made out to Palmer’s mining business Mineralogy, $58.9 million to his leisure resort at Coolum, and $28.1 million to Palmer Aviation.
In total, FTI Consulting found $224.4 million in payments made by Queensland Nickel that it deemed to be “uncommercial”, of which $201.5 million is still owed.
Recorded as part of the Mineralogy loan figure, FTI alleges that in November 2012 Palmer made $43 million in payments to his personal bank account (US$15 million), a French Polynesian account linked by several sources to his wife, Anna (US$15 million), the bank account of his father-in-law Alexander Sokolov (US$8 million), and several others.
FTI also alleges questionable transfers by Queensland Nickel include the acquisition of 60 vintage cars and a Cessna aircraft.
The administrator believes Palmer and Meninsk may have breached five sections of the Corporations Act, a charge which holds the possibility of a maximum five-year jail sentence.
“We have considered the evidence available and are of the view Sections 180, 181, 182, 183 of the Act may have been breached,” the administrator wrote.
“Further, there are indicaitons the directors may be in breach of their common law and fiduciary duties and may have also committed offences under Section 184 of the Act…”
Section 184 of the Corporations Act pertains to alleged criminal behaviour through intentional dishonesty by a director, reckless misuse of their powers, or the use of inside information to directly or indirectly gain a personal advantage, or cause detriment to the business.
FTI alleges the directors “directed and/or authorised QN to enter into transactions with related parties which do not appear to have been in the best interests of QN or for a proper purpose”.
The administrator also believes the pair “failed to exercise discretion,” and did not properly seek to avoid conflicts of interest.
“Their actions appear to have caused significant detriment to QN, having potentially appropriated assets ordinarily available to QN, and extinguishing any and all available alternatives and opportunities to QN in any short and long term business strategy.”
FTI’s report recommended Queensland Nickel’s creditors liquidate the business.