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Corporate vandals hit building ind'y
Date: 16 December 2009
THE Hightrade affair has been nothing if not a lesson in how the building and construction industry is susceptible to some of the worst corporate practices in Australia, Andrew Ferguson, CFMEU NSW Construction Union Secretary wrote for The Newcastle Herald.
The fact that Australian workers and businesses are out of pocket by millions of dollars is a catastrophe in itself.
But the real tragedy is that the trail of destruction wrought by Hightrade and its related entities should not have come as a surprise to law makers and regulatory bodies.
The Construction Forestry Mining Energy Union has been warning various governments about shoddy practices in the building industry for a long time.
For instance, in 2001, under the banner of tackling unlawful activity in the industry, the Howard government launched the Building and Construction Industry Royal Commission.
While the commission predictably was more interested in airing unsubstantiated complaints about union organisers, the CFMEU made a submission outlining practices that now reads like a checklist of the allegations levelled at Hightrade and its associated entities.
First and foremost, the union drew the commission's attention to phoenixing - the practice named after a mythological bird that would re-emerge after burning to death.
Put simply, phoenixing is when a company that has supposedly gone bust continues to operate in another form.
There are many different methods of doing this, but the object is the same-to avoid obligations to creditors and to keep the money coming in.
Sometimes the company will go into liquidation and a new company will be started with a similar name.
Other times a management company will be set up that will own the assets and equipment required to run a business.
The management company will then rent the equipment out to a related company at exorbitant rates.
The related company goes bust after running up huge debts and the management company escapes unscathed.
One practice Hightrade has been accused of is to allow companies to be wound up, avoiding tax obligations and creditor debts.
New companies related to Hightrade then resume business.
This happened in 2006, when Hightrade Construction changed its name to Reica Construction less than two weeks before going into administration. Other related Hightrade entities then resumed construction on Hightrade sites.
At least 10 Hightrade affiliates have been liquidated or wound up in the Hunter in the past three years.
The CFMEU submission to the royal commission lamented the lack of regulatory oversight on these kinds of practices.
The Australian Securities and Investments Commission then, as now, seemed to lack either the resources or the will to take on companies that used phoenixing arrangements.
Other issues the CFMEU submission referred to were the appalling safety record of the industry and the use of illegal immigrant workers.
You only have to look at the recent history of the Sky Central project at Charlestown to understand that eight years down the track, nothing has changed.
When CFMEU organisers visited the project recently, they were confronted with serious threats to worker and public safety.
There is no way any worker in the 21st century should be exposed to these kinds of hazards.
An immigration raid last month netted seven illegal workers on Sky Central.
This came about a week after raids on another Hightraderelated site in southern Sydney found 15 illegal workers. Raids on Hightrade related sites found illegal workers in 2000 and 2005.
It is obvious that laws are not tough enough on companies that use illegal workers or the practice would have stopped.
It is an outrage that successive governments have chosen not to listen to the concerns of unions about the building and construction industry.
For dozens of families in the Hunter Valley, those problems cannot be ignored.
The Government must move to address the issues that have been brought to light by the Hightrade affair.
It must put in place stricter regulations on phoenixing and ensure those regulations are adequately enforced.
It must allow unions to do their work and make sure building sites are safe for workers and the public.
It must impose heavy fines on companies that use illegal workers.
Andrew Ferguson is NSW Secretary of the Construction Forestry Mining Energy Union (CFMEU).
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