Former minister says he was duped by alleged money laundering gangsters By Alex Crowe and David Estcourt October 26, 2023 https://www.smh.com.au/national/for...ney-laundering-gangsters-20231026-p5efeo.html A former Howard government minister who promoted a money moving business that was allegedly run by Chinese gangsters says he has cut all ties with the company after being deceived into unknowingly spruiking its work. Former immigration minister Gary Hardgrave said he has taken immediate action to terminate all involvement with Changjiang Currency Exchange. A screenshot of former immigration minister Gary Hardgrave in a video promoting the Changjiang Currency Exchange. A sting operation by the Australian Federal Police (AFP) saw the transnational crime syndicate behind the business accused of laundering hundreds of millions of dollars in dirty funds and tainted cryptocurrency. “I was never involved in the day-to-day operations nor at a board level … today I feel shocked and duped,” Hardgrave told Sky News on Thursday. Recruited in 2022, Hardgrave appeared in promotional videos for the company vouching for its reliability, including one describing Changjiang as a firm with security processes that had established “multiple layers of due diligence”. There is no suggestion that Hardgrave is involved in any wrongdoing, is a police suspect or ever suspected Changjiang was involved in money laundering. A high-level Chinese money laundering syndicate has been busted after major Federal Police raids in Melbourne. His comments came as six alleged members of the Long River syndicate faced Melbourne Magistrates’ Court on Thursday, charged over handling large amounts of money that police allege were the proceeds of crime. A seventh alleged member of the crime syndicate, Zhuo Chen, appeared before magistrate Julie Grainger on Wednesday. The AFP arrested the group on Wednesday as part of what they’ve described as the most complex money-laundering investigation in the nation’s history, having executed 20 search warrants across every mainland state while confiscating more than $50 million in property and vehicles. The AFP has alleged Changjiang Currency Exchange facilitated a system for organised criminals to secretly launder more than $229 million over three years. The court heard that one accused woman, Jie Lu, 28, has a child. Magistrate Steven Raleigh granted her permission to have regular phone calls with her mother so she could check in on the child. Married couple Jing Zhu and Ye Qu, both aged 35 and from Kew, appeared for a brief hearing together. The court was told they have two children. Another accused, Ding Wang, a 40-year-old from Glen Iris, waved at a woman seated in court, who waved back. Jin Wang and Fei Duan also appeared. It was the first time any of the accused had been in custody. The court heard from several of their barristers that because it was their first time in prison and due to language barriers, they should be considered vulnerable. The group will return to court in March next year. AFP officers issue a search warrant at a Changjiang shopfront in Sunnybank, Queensland. AFP Assistant Commissioner Stephen Dametto said members of the crime syndicate lived the high life by eating at Australia’s finest restaurants, drinking the most expensive sake and travelling on private jets. “These syndicates move illicit funds regardless of its origin or the harm it does to Australians,” Dametto said.
From top of the world to bottom of the lake: Inside the ‘fraud and bribery’ that sank $1bn company A cache of thousands of leaked internal emails reveals a staggering array of alleged wrongdoing at a one-time sharemarket darling. By Nick McKenzie https://www.smh.com.au/business/com...ry-that-sank-1bn-company-20231207-p5eptk.html DECEMBER 16, 2023 CREDIT: RICHARD GILIBERTO On a spring evening in 2020, a startling email arrived in the inbox of the chief executive of Phoslock Environmental Technologies, an Australian company that had wooed thousands of investors with its pitch to clean up the world’s polluted waterways using a stroke of local scientific ingenuity. While the email’s wording was clunky, the meaning to Phoslock boss Lachlan McKinnon seemed clear. If Phoslock was to maintain its rise from share market darling to blue-chip stock, it needed to pay special “commissions” to Chinese Communist Party officials: those who had been appointed President Xi Jinping’s “river and lake chiefs” and who were responsible for driving his much-vaunted environmental and anti-pollution agenda. “Most government capital projects in China come with commissions,” the Phoslock Chinese manager said in his October 12 email to McKinnon. “This is illegal but it exists naturally … they need cash to pay,” he continued, adopting the tone of a teacher chiding an ignorant child. McKinnon responded in kind: “I want to state clearly, we will not be entering or be part of any illegal deals, commissions or other forms of payoffs. This is not acceptable in any way, and for a publicly listed company in Australia completely unauthorised. It will not be tolerated.” McKinnon and Phoslock’s chief financial officer, Matt Parker, promptly sacked the manager. Days earlier, the duo – who had both been at Phoslock for less than a year – had announced the sudden departure of two board directors, including a wealthy and well-connected Chinese businessman called Zhigang Zhang. The pair also disclosed to the market that an internal investigation had uncovered evidence of fraud including “false accounting” and “misappropriation of funds”. In time, they would also call in Australian authorities, including the federal police. In happier times, Phoslock former chief executive Robert Schuitema (front row, right), former chairman Laurence Freedman (centre) and former deputy chairman Zhigang Zhang (front row left). In happier times, Phoslock former chief executive Robert Schuitema (front row, right), former chairman Laurence Freedman (centre) and former deputy chairman Zhigang Zhang (front row left).CREDITHOSLOCK The Australian Financial Review described the company’s public admissions as a “bombshell” but the full story of Phoslock’s subsequent implosion has never been told. It has stayed hidden, concealing a tale of suspected misconduct and governance failings far more egregious than that described in Phoslock’s ostensibly candid public announcements. A cache of thousands of internal emails leaked to this masthead reveals a staggering array of alleged wrongdoing and repeated red flags that the company’s governance system missed until the arrival of new senior executives in mid-2020. The files show highly suspicious payments were regularly sought and paid, including to win major contracts in China and shake off an investigation into an accidental death. Some overseas staff privately confessed that they had paid bribes to secure work, the leaked files reveal. Many millions of dollars of share options were distributed in highly dubious circumstances, raising separate questions of suspected bribery and unfair treatment of Australian investors, whose ownership was diluted by the transactions. The files show that even while it was extolling its green credentials to the world, Phoslock allegedly made illicit payments to dump dirty water and pay off environmental inspectors. “The scale of alleged corruption involving Phoslock is jaw-dropping,” the head of Transparency International Australia, Clancy Moore, said after reviewing some of the leaked documents. “The company’s fortunes appear at least partly built on suspected corporate misconduct, dodgy payments and poor governance.” If that is so, it raises questions not only for the company’s former board and senior managers, especially given the company has effectively collapsed and is set to be sold for a fraction of its once $1 billion value. The rise and fall of Phoslock also puts a spotlight on Australian authorities. Many years after the suspect transactions occurred, including some in relatively plain sight, and more than two years after Parker and McKinnon reached out to police and regulators, there has been no substantive law enforcement or regulatory action. This masthead is not suggesting any individual is guilty of any crime, a finding that can only be made by a court in the event the federal police, corporate watchdog and Commonwealth prosecutors believe there is enough evidence to pursue a case. But Phoslock appears to have joined a growing list of Australian companies that, despite efforts from dedicated federal agents, face investigations that often stall due to legislative gaps, poor resourcing, competing police priorities, glacial prosecutorial decision-making and other legal roadblocks. The only individuals to so far pay a price in connection to Phoslock’s suspected wrongdoing are its 6000 or so Australian investors. “Australia’s enforcement of alleged foreign bribery involving our companies is simply not working,” says Moore. “After years of federal government inaction, it’s now up to the Albanese government to do far more to combat suspected corporate crime.” Xingyun Lake derives its name from the dance of moonlight upon its expansive surface. For Phoslock, the lake in south-western China glistened for another reason. By mid-2019, the Australian company was a few weeks into a trial at Xingyun involving the use of its special CSIRO-designed clay product. The clay absorbs phosphorous from water, ridding it of algae and pollutants. If it worked in China’s moonlight lake, it was a sign Phoslock’s investors would make significant profits. One of them was Phoslock’s most influential backer, Australian business veteran Laurence Freedman. Freedman’s appointment as the chairman of Phoslock in 2011 was the start of a new chapter in an already storied life of great wealth and visionary business acumen. Freedman was a past master at commercialising innovation, one of a pair of dashing businessmen who “democratised sharemarket investing while riding the 1980s bull market” by giving regular investors the chance to access complex financial products. His already significant personal fortune expanded after he sold his shares in the Ten Network in the mid-2000s, having guided it out of receivership years earlier. Laurence Freedman speaking at the Phoslock AGM in 2021.CREDIT:YOUTUBE By 2019, he was Phoslock’s greatest spruiker, proselytising the company’s mission to resuscitate polluted lakes and waterways all over the globe and citing the clean-up of The Serpentine in London’s Hyde Park before the 2012 Olympics. According to Freedman, a huge pipeline of work for the company across China’s vast network of waterways beckoned. The market lapped up Freedman’s vision, with headlines describing Phoslock “riding a surging wave” as its China business grew. Its stock price tripled in value in the first half of 2019 as its shareholder registry increased from 3000 to more than 6000. By October 2019, it was one of the top 300 publicly listed companies in Australia and was predicted to soon join the ranks of the ASX 200. The company’s success was also evident in the waters of Xingyun Lake. There, it had, according to Phoslock, delivered “outstanding results” while proving to Chinese authorities that the product was “simple to apply, with no adverse effects on fish, plant life or humans”. “We are helping China rejuvenate and fix the country’s water bodies through ethical and sustainable treatment solutions,” Freedman told business reporters in 2019. Freedman may not have known it, but investors weren’t being told everything about Phoslock. Others in the company held dark secrets. This became clear in mid-2020, when the company’s auditors, KPMG, began interviewing staff about a series of unusual transactions in China. Leaked confidential excerpts of transcripts of interviews between KPMG and Phoslock’s senior Chinese staff reveal a series of startling admissions. One of the most concerning involved a manager who admitted the Xingyun Lake project was secured only after a shady side deal involving a middleman and “senior government official”. According to a confidential outline of his interview, the Phoslock employee “refused to reveal the identity of the agent and the senior government official” involved in the illicit transaction, explaining “the use of agents is illegal”. But he disclosed that “it was not possible to win work without entering into such arrangements” and revealed that a kickback of 3000 yuan ($600) was being paid for every tonne of Phoslock clay used at Xingyun Lake. The arrangement totalled an estimated $1.7 million in “commissions”. There is no evidence or suggestion that Freedman knew of this apparent bribery. In fact, the Chinese manager claimed the kickbacks were disguised as a payment for labour hire. Still, there were warning signs for those running and overseeing the Australian business. Emails from as early as 2017 reveal Phoslock’s Chinese managers were brazen about providing benefits to Chinese government officials to buy influence. Australian-based executives, led by managing director Robert Schuitema, were repeatedly copied into correspondence that raised red flags. There is no suggestion or evidence that Schuitema ever personally directed the payment of a bribe. But the leaked emails reveal he should have been firmly on notice that his managers in China were prepared to bend the rules in a country known to host entrenched corruption. For instance, in September 2017, Schuitema was told by a Chinese manager via email that rather than paying employees their overtime wages, Phoslock could avoid its legal obligations by cultivating a relationship with a local government official who “will protect us” when the company crossed “red lines”. “The employee should not force us to follow the labor law, we would be like a tied crab. They will bully the foreign company,” the Phoslock manager told Schuitema when justifying a plan to provide benefits to the official. Schuitema was also told in writing that gift cards would be used to pay just over $1200 to the “director of labor union bureau” and “to the leader of the police station” after 12 sacked employees arrived at a Phoslock site demanding unpaid wages. Leaked emails document a payment of $21,000 – covered up via a backdated invoice – to secure an inflated Chinese government refund on an investment of $100,000. Emails reveal the $21,000 was paid “for relationships” with an “officer [who] can help us to get the money back”. “Obviously they need commission on this task,” stated the email from a Phoslock manager in China. In response to this email, Schuitema replied: “I understand – approved.” The Chinese Phoslock manager later disclosed to KPMG in his confidential interview that “he withdrew cash from his bank account and provided the cash to government officials”. In May 2018, an uninsured truck that was meant to be used only at Phoslock’s Chinese factory left the premises and ploughed into a motorcycle, killing a man and injuring his female passenger. Accounting records reviewed by this masthead suggest a Phoslock subsidiary set aside about $215,000 to manage the fallout from the death. A senior Phoslock employee in China told KPMG some of this money was used as “cash for payment of bribes to police to prevent them from pressing criminal charges”. Phoslock also had a series of dubious dealings with China’s officious Environmental Protection Administration. “The EPA comes to our factory every 2 weeks, every time I will receive a problem list and deadline for the corrective actions,” a Phoslock Chinese manager wrote in an email. “Plan to invite them [to] a dinner … Give EPA some gift/Card/ Cash.” For a company whose business was cleaning up canals and lake, the leaked Phoslock files reveal a willingness to make payments to dump dirty water. In August 2018, a Chinese Phoslock manager described needing several thousand dollars to handle “EPA reporting for waste water discharging issue”. “I need some gift and good meals with all kinds of local government leaders,” the manager’s email stated. Three months later, another request was emailed to Phoslock’s Australian headquarters seeking money to fund “gift cards” for “leader of the local government, leader of police, leader of EPA, leader of central government”. At least one significant suspect payment was made to discharge polluted water. On September 17, Phoslock sent $150,000 to a labour hire company about 2000 kilometres from its factory. The payment was made after a Phoslock senior employee in China emailed Schuitema to request funds for “relationships”. When he was later interviewed by auditors, the same Phoslock manager claimed the labour hire company that received the $150,000 “was designated by government officials” and that “a certain portion of the payment was used to pay off government officials”. Schuitema declined to answer questions or be interviewed by this masthead, although he said in a text message that he had “no knowledge of any unlawful behaviour” or did not know of any alleged “bribery payments” involving Phoslock. But the leaked emails and internal company investigations suggest Schuitema knew that, at the very least, his Chinese staff were paying commissions to win contracts in a manner that should have raised potential bribery risks. In January 2019, a Phoslock employee emailed Schuitema about the “need to pay 3-5 per cent cash/commission to the intermediary, the spokesman of the government leaders” to secure a new contract. Schuitema responded by writing, “the only rule I have is that any commission is only paid when PET [Phoslock] receives full payment from the customer”. Commissions are only permitted under Australian criminal law if they are legitimately due in return for a genuine service. But if benefits are offered or provided, be they in the form of commissions or gifts, to influence a foreign government official to obtain a business advantage, then the benefit may be considered a potential bribe. When Schuitema was informed in another email from a Phoslock manager in China that “bad leaders” in the local branch of the Chinese Communist Party were stalling Phoslock’s expansion plans but that “at least 1M cash” had been set aside to deal with project problems, Schuitema responded: “Fully understand – let’s discuss in Sydney.” In April 2020, Schuitema wrote in an email that “Commission to third parties are clearly very important – if we don’t pay these, projects are unlikely to proceed”. Confidential emails also reveal that Freedman was also sent documents that flagged potentially suspect commissions. In October 2019, he received an email from a Chinese company figure that disclosed how the Xingyun Lake clean up, along with another remediation project, involved “a rebate of RMB3000/ton for the middle man”. In a separate document sent to Freedman, commission payments were listed in a spreadsheet as “refunds”. When contacted by this masthead, Freedman denied any knowledge of wrongdoing but, like Schuitema, declined to answer questions and hung up when pressed about the company’s conduct in China. “I’m not prepared to ... discuss this with you,” he said. The company’s senior Chinese employees were more forthcoming when confronted by auditors. In one interview, a manager told KPMG that “he was aware of payment of bribes to police” paid by Phoslock, and that he suspected illicit payments had been made to secure “certain projects in the pipeline”. Another Chinese employee explained the “arrangements” involving middlemen and commission payments “were illegal” and thus disguised. After interviewing multiple Phoslock employees, KPMG identified two dozen water projects in China potentially infected by suspect commission deals. As the company was expanding, so was its war chest to fund questionable payments. By late 2020, KPMG estimated that key Pholsock projects involved paid or planned suspect commission deals of up to $10 million and advised that further investigations were required to understand the true value of potentially dodgy deals. “These payments may potentially be considered as bribes in breach of various anti-corruption legislation, including in China, Australia, the US Foreign and Corrupt Practices Act and/or the UK Bribery Act,” KPMG’s report warned of the more suspicious commission transactions. Anti-corruption expert Clancy Moore says the leaked documents make it clear that Phoslock’s Australian managers should have known its China arm was engaging in risky conduct. “The reference in company documents to middlemen and commission payments in a corruption-prone jurisdiction such as China should have led to immediate measures to guard against fraud and bribery,” says Moore. “It appears Phoslock did little to guard against these risks until its more recent management team arrived.” It was only after the arrival of managing director McKinnon and chief financial officer Parker at the company in mid-2020 that the practice of paying or offering large commissions was finally banned. Optional governance This was also when the lid was lifted on the dubious distribution of millions of performance share options, an exercise that made millionaires of select figures, even though they had no obvious connection to the Australian company. Performance options are common and typically enable employees to buy shares at an agreed price in the future but only if they help their employer reach revenue or other targets. In business-speak, once this performance bar is reached, the options are said to have vested and can be bought at what the employee hopes is a discount to the open market price. For most of Phoslock’s unwitting Australian investors, the company’s decision to grant 50 million in performance options that could be exercised only if the company hit certain Chinese sales targets may have warranted minimal scrutiny. But KPMG thought otherwise. Its confidential internal audit concluded in late 2020 that huge chunks of these employee options might have been allowed to vest by Phoslock even though “the performance conditions were not actually met”. Even more curious was the identity of some of those who received what would become very valuable shareholdings. (Some option holders became millionaires, with one pocketing a gain in share value of $4.5 million. All up, option holders made at least $22 million profit.) The leaked company files reveal millions of options were given to figures who had never worked for Phoslock. Schuitema insisted via text message to this masthead that the performance targets for the options were met in a “very transparent” fashion. But Schuitema’s leaked emails suggest he was privately concerned about why people not employed by the Australian company were making significant profits. In one email, Schuitema wrote: “The intention of the options is to reward and retain Beijing employees ... [this] is not happening.” There is no suggestion Schuitema knew who the final recipients of the options were, but the leaked internal company files suggest that another influential company figure did. Zhigang Zhang, former Phoslock deputy chairman CREDITHOSLOCK The man who held ultimate sway over who was given the lucrative options was one of Phoslock’s most senior figures – its deputy chairman, Zhigang Zhang. Zhang was not only a Phoslock director but a part owner of a Chinese water and environment company called BHZQ, a firm Phoslock was cultivating as a lucrative customer. BHZQ is no ordinary business. It is ultimately controlled and majority-owned by the Chinese Communist Party. The leaked emails and financial records suggest that the options may have been used to convince figures within BHZQ or the Chinese Communist Party to give contracts to Phoslock. Put simply, the options may have been another form of “commission” payment: an inducement to secure work. The files show Phoslock options ended up with several BHZQ executives, as well as with Zhang’s friends and relatives, including a “son-in-law of an old friend of Mr Zhang”. Another of those who was earmarked for a parcel of options was described as having “wide EPA and local government connections” that Phoslock needed “on our side.” Another person given options was described in an email as “the second generation of a Chinese official” who had “said that he can assist us get projects from the government”. When his own parcel of options vested, Zhang made an estimated profit of at least $6 million. Months later, the share price had plunged more than 80 per cent, from $1.50 to 24¢, as the business was buffeted by the pandemic. It would never recover after Phoslock’s newly appointed executives, McKinnon and Parker, halted trading in the company’s shares and alerted investors to their discovery of serious financial irregularities. In November 2021, the pair revealed to investors they had agreed to share information with the Australian Federal Police. By then, Zhang and Schuitema had resigned from the company and Freedman had retired as chairman. In a joint statement given to this masthead, McKinnon and Parker said ongoing investigations limited their ability to speak publicly but stressed they had uncovered alleged wrongdoing and called in police, keeping investors informed throughout. Phoslock managing director Lachlan McKinnnon.CREDIT:YOUTUBE Transparency International’s Moore says that while it is rare and commendable for a company to dob on itself, the failure of the company’s previous management team to act on red flags is troubling. Also of concern, he says, is the slow pace with which Australian authorities are pursuing the case, albeit due to some obstacles outside the AFP’s control, such as legislative gaps. In a statement, the AFP said it was committed to combating foreign bribery and “strongly supports” proposed reforms to remove the “impediments” it currently faces in progressing inquiries. Moore says the Albanese government needs to do much more to ensure police and prosecutors can more effectively combat alleged corporate crime and suspected foreign bribery, noting that key reforms remain stalled in the Senate. “Given what we know about the track record of prosecutions and investigations in this country, it will take years for Phoslock to face any meaningful accountability,” says Moore. “The saga of Phoslock suggests Australia is choosing to look the other way when regulating the sharemarket. There is little incentive to blow the whistle and little deterrence for wrongdoers.” According to governance expert Dean Paatsch, the ASX and Australia’s corporate watchdog ASIC appear to have missed obvious warning signs that Phoslock was up to no good. “The repeated failure of regulators to properly investigate dubious transactions has meant that shareholders were not protected,” says Paatsch. “Phoslock’s conduct may well become a case study not only of alleged corporate wrongdoing, but of how companies can seemingly get away for years with doing the wrong thing.”
Drugs, guns, corruption: Australia paid suspect companies to run offshore detention By Nick McKenzie,Michael Bachelard and Amelia Ballinger February 11, 2024 — 8.30pm https://www.smh.com.au/politics/fed...o-run-offshore-detention-20240208-p5f3bw.html Companies linked to suspected arms and drug smuggling, busting sanctions on Iran, corruption and bribery won massive government contracts amid systemic failures to adequately vet the businesses being paid to run the nation’s multi-billion dollar asylum seeker offshore processing regime. An inquiry into the Home Affairs department conducted by former ASIO director general and Defence chief Dennis Richardson also blamed senior public servants for the failure to use intelligence that could have prevented taxpayers from paying multiple companies linked to alleged serious crimes through often rushed contracts over a decade up to late 2022........
Qantas will pay a $100m fine and $20m to customers for selling tickets for cancelled flights. (Joel Carrett/AAP PHOTOS) Credit: AAP 'Unacceptable': phantom flights cost Qantas $120m Kaitlyn Offer, Kat Wong and Andrew Brown AAP May 6, 2024 https://www.perthnow.com.au/business/qantas-to-dish-out-120-million-over-ghost-flights-c-14560918 Tens of thousands of Australians who endured cancelled flights will each receive hundreds of dollars in compensation after Qantas admitted to misleading customers for years. The Australian Competition and Consumer Commission had sued the airline in the Federal Court after alleging Qantas engaged in false, misleading or deceptive conduct by continuing to sell the tickets. The competition watchdog announced on Monday the parties had agreed to ask the court to impose a $100 million penalty after Qantas admitted the conduct went on for a year longer than the ACCC alleged. A total of 86,597 customers, who between May 2021 and August 2023 were sold fares Qantas had already decided to cancel, will share about $20 million in compensation. Qantas will pay $225 to domestic customers and $450 to international customers. ACCC chair Gina Cass-Gottlieb said the fine would send a strong message to Australian companies. "This was egregious and unacceptable conduct by Qantas," Ms Cass-Gottlieb told reporters. "Many customers will have made holiday, business and travel plans after booking on a phantom flight that had been cancelled." The early settlement was preferable to spending years going through court, Ms Cass-Gottlieb said. The commission alleged Qantas advertised tickets for more than 8000 cancelled flights between May 2021 and July 2022. It also alleged that for more than 10,000 flights scheduled to depart between May and July 2022, Qantas did not promptly notify customers the flights were cancelled. Qantas admits the behaviour went on until August 26, 2023, affecting flights scheduled to depart between May 2022 and May 2024. The ACCC announced it was suing Qantas on August 31. Qantas has agreed not to repeat the conduct and make the payments to affected customers as soon as possible. It has undertaken to notify customers of cancelled flights as soon as practicable and no more then 48 hours from deciding to cancel a flight and stop selling tickets for such journeys within 24 hours. The undertaking applies to subsidiary Jetstar too. "When flying resumed after the COVID shutdown, we recognise Qantas let down customers and fell short of our own standards," Qantas CEO Vanessa Hudson said. "The return to travelling was already stressful for many and we did not deliver enough support for customers and did not have the technology and systems in place to support our people." Payments will be available through an online portal facilitated by Deloitte and will be independently audited. Qantas will notify impacted customers via email from June. Former consumer watchdog chair Allan Fels said the large fine had sent a signal to not only the airline but other companies as well. "That's a message not only for Qantas but for other businesses, that there's going to be big fines for consumer protection issues," he told Sky News. "(I have not seen a breach of consumer law) on such a scale and also backed by such denial by legalism about the nature of our contract with the airline, but I've never seen a fine of this magnitude in Australia." Prof Fels said the intervention by the consumer watchdog had legitimised the concerns of countless passengers about their treatment by the Flying Kangaroo. Opposition transport spokeswoman Bridget McKenzie and Liberal senator Dean Smith welcomed the fine and called on the government to do more to address anti-competitive behaviour by Australian airlines. "Everyday Australian travellers receive a win today as Qantas has waived a white flag," they said in a joint statement. "Australians deserve a more affordable, reliable and safe airline industry where their flight arrives on time and their bags show up with them."
Opinion Sorry, not sorry: Qantas perfects the art of the non-apology Joe Aston Columnist May 8, 2024 https://www.smh.com.au/business/com...e-art-of-the-non-apology-20240507-p5fqgb.html Qantas’ new CEO Vanessa Hudson is desperate to appear different to her predecessor Alan Joyce. Funny, ’cos they sure as hell apologise the same way. “Sorry, not sorry.” That’s the reflex response from the airline’s Mascot headquarters, irrespective of who’s boss. Vanessa Hudson says she wants to be judged by her actions, not her words.Credit: Joe Armao When Qantas settled the Australian Consumer and Competition Commission’s ghost flights case against it on Monday, agreeing to pay $120 million in penalties and compensation, Hudson reduced the airline’s wrongdoing to mere “delays in communications”. Thus, “the penalties and compensation that have been outlined today is for delays in communications”. Delays that went on systematically for 15 months and which Qantas magically happened to profit from! Let’s be real here. Qantas has admitted to misleading consumers and made an undertaking not to repeat the misconduct. It has admitted the misconduct was not limited to the winter of 2022, as originally alleged, but continued until August 2023. But this is the Qantas way – it is so entrenched. “We’re sorry but alongside our apology, here is our self-serving minimisation of what really happened.” It is absolutely no different to Qantas saying: “We’re sorry for sacking 1700 people illegally, but we had sound commercial reasons.” Qantas will repay customers $20 million for selling tickets to flights it planned to cancel. Qantas’ settlement was even characterised as “a win” for Hudson in some quarters. How is it ever a victory to pay $120 million for wrongdoing? It’s not even about the number, it’s about the shame associated with it. It’s being the kid caught with the face full of cake mix when you swore black and blue you never touched it. Qantas also said the $120 million will be recognised in its financial accounts as an item outside underlying profit. That means it will have zero impact on the profit measure that determines half of Hudson’s bonus. Half her luck. “We absolutely have maintained and continue that we did not take fees for no service,” she insisted. Hudson is strictly correct that the ACCC dropped its claim, as part of the settlement, that Qantas wrongly accepted payment from the affected customers. But what is always omitted from analyses of the ghost flights misadventure is that the ACCC’s action evolved from its original investigation into Qantas’ COVID flight credits, which single-handedly made Qantas the most complained-about company in Australia. When Qantas cancelled flights during the pandemic, which it regularly did, tickets were transferred into COVID flight credits. Redeeming those credits was, for so many customers, outrageously difficult. It is near impossible to resist the conclusion that it was difficult by design. Qantas customers were in 2020 owed $2 billion in COVID credits, but by August last year, with all remaining credits set to expire on December 31, 2023, Qantas was assuring the public that the balance was down to $370 million. Then a Senate committee forced Qantas to admit that, actually, the balance was $570 million! ACCC chair Gina Cass-Gottlieb. The ACCC’s action evolved out of its original investigation into Qantas’ COVID flight credits.Credit: Edwina Pickles That’s why, days before that Senate hearing, unveiling a record $2.5 billion profit for 2023, Vanessa Hudson said, “This is not as good as it gets for Qantas,” presumably because she was counting on $500 million of expired COVID credits dropping straight into her profit for 2024. That was undeniably an attempt at fees for no service. Sadly for Hudson, when the ACCC launched its bombshell action over the ghost flights, it also forced Qantas to remove the expiry dates from all COVID credits. But this is all in the past, right? Wrong. When you attempt to use a flight credit, Qantas transfers you into a special booking engine which displays airfares that are often significantly higher than the airfares offered on the exact same flights in the regular qantas.com booking engine. This is the system whether you were attempting to use a COVID flight credit in the past or a regular Qantas flight credit today (regular flight credits replaced COVID flight credits for any cancelled bookings after October 2021 and unlike COVID credits, they expire after 12 months). In recent months, Qantas added a legal disclaimer to this process. “If you use a payment method other than Flight Credit on qantas.com,” it says, “lower fares may be available.” Customers are forced to click “I understand” if they wish to proceed and redeem their credit. There is no “I don’t understand” button. You can either indicate your understanding that you are being ripped off or you can forfeit all of your money. Those are your binary options. Qantas then hits you with a $99 booking fee, which they deduct from your credit, even though your re-booking has been 100 per cent self-administered! What’s more, “You can only use your Flight Credit to book fares that are equal to or higher than the value of your Flight Credit.” Therefore, if you have a $500 credit and the airfare you want to book is $199, you simply lose $301 (or technically $202 once you factor in the self-booking fee). Qantas adds that $301 to its gargantuan profits as “breakage” revenue. Ghost flights were just one in a suite of behaviours that were emblematic of Qantas’ poor culture.Credit: Peter Rae Qantas could issue you with a new $301 credit. That would be the ethical thing to do, but being ethical is expensive, so they don’t. At the very minimum, Qantas has banked multiple tens of millions of dollars this way and by the definition of any ordinary, reasonable citizen, it is deceptive conduct. It is legal theft at scale and it is still happening. So many Australians have had, and continue to have, infuriating experiences with these credits. It is occurring right under the noses of our politicians and regulators whose apathy on the matter is profoundly depressing. Ghost flights were just one in a suite of behaviours that were emblematic of Qantas’ poor culture. To suggest that settling this one matter means Qantas is now a trustworthy company is to be wilfully blind to extremely recent history. If Vanessa Hudson changed Qantas’ unbelievably aggressive revenue management practices, I would agree with her pretension to be “restoring confidence in the national carrier”. Until then, it looks to me like just another chapter in Qantas’ storied history of image management.
The Sydney Morning Herald Opinion Page 97 of the budget kept me awake at night, and is a stain on Morrison’s legacy Shane Wright Senior economics correspondent May 20, 2024 https://www.smh.com.au/politics/fed...ain-on-morrison-s-legacy-20240520-p5jexd.html There are tens of thousands of pages to the federal budget. But a single paragraph on page 97, which could easily have been missed, demands to be read and understood by all Australians. It shows a decision by the Albanese government to fix a situation left by their predecessors that is beyond comprehension, and a stain on the Morrison government’s legacy. Throughout his time as prime minister, Scott Morrison said Australia should do more to support veterans. Credit: Alex Ellinghausen The paragraph reveals an extra $6.5 billion going to defence veterans over the next five years, which the government says is “largely due to more claims being processed because of increased staffing levels”, and which “results in increased payments to veterans”. I’ve covered every budget since Peter Costello handed down his “back in black” budget of 1998. Normally, I sleep well after them. But that one sentence kept me awake for days, thinking about the veterans left without proper support, about my own relatives and friends who served their country and how we got to a position where a government has to spend so much money to rectify a problem not of its own making. This $6.5 billion funding allocation is an indictment against the Morrison government, the backstory to it enough to make your blood boil. In 2018, Scott Morrison said he understood “first-hand the battles so many veterans face when they leave the defence forces”, and argued that as a nation, more could always be done to recognise the men and women who had served in uniform. Unfortunately, that didn’t extend to processing veterans’ entitlement claims. By April 2023, the average processing time for a veteran’s claim was 435 days, while 36,271 claims – almost half of those lodged – hadn’t even been looked at (known as “unallocated” cases). This was a known and growing issue for the Coalition. In March 2022, ahead of Josh Frydenberg’s final budget, then veterans affairs minister Andrew Gee threatened to resign unless extra money was put aside to clear the backlog, which at the time was around 60,000 unallocated cases. That was 60,000 veterans, partners or widows of people who had served in the Australian forces waiting for someone to start looking at their claim for financial support. Within the veterans’ community, the term “delay, deny, die” is used to describe the system. It means if a government delays the start of processing a claim, and then denies the initial claim, the veteran is likely to have died before they are finally paid what they are owed. It’s hard to know what’s worse – that veterans have coined a term for this situation or that many believe it is a deliberate choice by government. Gee’s 2022 threat seemingly touched a nerve, and he was promised an additional 90 departmental employees to deal with the backlog. The 90 extra staff barely touched the sides. The incoming Labor government, including new Veterans Affairs Minister Matt Keogh, quickly realised the disaster left by the previous bunch and confidentially talked to veterans affairs ministers going all way the way back to the Rudd government to understand what he had been handed. In the October 2022 budget, handed down just five months after Labor took over from the Coalition, Treasurer Jim Chalmers allocated funding for a further 500 employees, and last week, funding for an extra 141 staff was allocated to make sure claims are processed, and so that our veterans can start getting their entitlements. This goes to the heart of the problem left by the Morrison government. To save costs across a number of sectors, including Veterans Affairs, it used labour hire companies and short-term employment contracts in favour of permanent employees. But one of the biggest problems with this model is that staff barely stay long enough to remember their logon details before their contract is up. In Veterans Affairs, it takes up to six months to train the specialist staff responsible for overseeing claims. And so, the previous government’s use of labour hire ended up being a disaster for the department and veterans. Unsurprisingly, the department has become more efficient since switching back to public service employees. The backlog of number of unallocated cases has reduced to just 2569 and the processing wait time, while still far too long, has dropped by 62 days. What’s truly outrageous is not just that these claims took so long to be processed, but that this $6.5 billion would have left the government’s coffers long ago and already be in the pockets of our veterans had the system not been in such a poor condition. Yet even in light of this, Opposition Leader Peter Dutton complained last week that the number of public servants has swelled under the Albanese government, declaring the Coalition sees defence spending as “much more of a priority than office staff in Canberra”. What Dutton seemingly failed to appreciate, though, is that hundreds of those staff in Canberra are the ones looking after the veterans who were left unsupported by his former boss. There are 20,000 veterans out of the wars in Iraq and Afghanistan alone. This isn’t an issue that’s going away, and the claims coming forward show more veterans are now suffering multiple problems, ranging from post-traumatic stress to physical injuries. Keogh, Chalmers and Finance Minister Katy Gallagher are still a way from fixing all the problems within Veterans Affairs. But clearing this backlog is a major step in the right direction. They’ve done it without fanfare. And they’ve made a conscious decision not to overtly politicise a situation which was an absolute mess and ripe for point scoring and public criticism.
The Indigenous population of Australia is the most imprisoned population on the face of the earth. You would think that Australians would fix their own problems before criticizing the U.S. and Israel -- but sadly a few yammer on endlessly while refusing to address the injustices in their own country. Where is Peter Garrett when we need him? The art project aiming to keep Australia’s Indigenous people out of jail Aboriginal people make up a third of all people in Australian prisons, but The Torch is working to change that. https://www.aljazeera.com/news/2024...keep-australias-indigenous-people-out-of-jail Melbourne, Australia – More Indigenous people are behind bars in Australia than ever before, making them the world’s most imprisoned people. Despite making up 3.8 percent of the national population, Indigenous Australians make up 33 percent of the prison population and are 17 times more likely to be jailed than non-Indigenous people. In Australia’s southeastern state of Victoria, a group of artists is working to break the cycle. The Torch is a community-led organisation that works with Indigenous inmates to teach artistic skills and reconnect prisoners with their cultural heritage. Inmates also generate income selling their work in galleries and to private collectors nationwide, with the money being saved in a trust, ready for their release. The results have been startling – inmates engaged with the programme have a return-to-prison (recidivism) rate of 17 percent for First Nations prisoners compared with the national average of more than 70 percent, according to The Torch. “Before I went to prison, I was in domestic violence and I was on the verge of being homeless,” Stacey Edwards, a former inmate, told Al Jazeera. “My Torch fund helped me put a deposit on a house and now I’ve got a routine and a structure. I’m OK with who I am and my place in the world.” What experts call the “hyper-incarceration” of Indigenous people in Australia is a legacy of colonisation and its racism, as well as successive governments’ focus on law and order. In particular, the trauma of the Stolen Generations – the forced removal of Indigenous children from their families – continues to reverberate. In the state of Victoria, where the Torch programme operates, about half of all Indigenous people have been directly affected by the assimilation policies, which only ended in the 1970’s. (More at above url)
Analysis The Senate's report into ASIC is as scathing as it is overdue for a regulator that's been failing for decades By chief business correspondent Ian Verrender Fri 5 Jul 2024 Bernie Madoff was given a 150-year jail sentence for white-collar crimes on a massive scale.(AP Photo: David Karp) Bernie Madoff died in a North Carolina medical centre attached to Butner, a US federal prison known for housing inmates with chronic health conditions, just three years ago. Once a titan of Wall Street, the 82-year-old was just 12 years into a 150-year sentence for running the world's biggest Ponzi scheme, worth a reputed $US65 billion. Previously considered untouchable, the former chair of the Nasdaq Stock Exchange was unceremoniously led from his office in handcuffs on December 11, 2008 and paraded before the public in what US politicians refer to as the "perp walk" by FBI and US Securities and Exchange Commission officers. By June the following year, Madoff was behind bars. If he ever had misgivings about his downfall, perhaps his greatest regret should have been that he didn't base himself in Australia. The pool of money may well be a mere pond compared to the US. But the chance of detection or prosecution was far lower, overseen by a regulator with a reputation for cosying up to big business and shying away from prosecution. This week, a parliamentary inquiry recommended a radical overhaul of our corporate regulator, the Australian Securities and Investments Commission (ASIC), in yet another call to bring it into line with its global peers. The first recommendation was a demand for the federal government to recognise the organisation's inadequacies. A deep dive into the chequered history of ASIC as 20-month Senate Inquiry ends A regulator missing in action ASIC's failures have been well documented over the past 25 years, most recently by former High Court justice Kenneth Hayne in his royal commission into banking misconduct. Each day for months, lurid tales of theft and deceit were broadcast to the world as the leaders of some of our biggest financial institutions were forced to confess their sins. Kenneth Hayne found much of the misconduct committed by financial institutions had already come to the attention of the corporate regulator.(AAP: David Geraghty) But it wasn't as though ASIC had been caught unaware. Take AMP as a case study. In 2006, the life insurer became embroiled in what then was hailed as the scandal of the decade. It was caught overcharging thousands of customers, switching them into expensive and poorly-performing products designed to enrich planners and the organisation, at the expense of clients. Despite what would usually be referred to as theft outside the financial world, no-one faced charges and the organisation was never even subjected to a civil damages case. Instead, it was forced to sign "enforceable undertakings" where it merely promised to never repeat its misdeeds. If the highly publicised action had any effect, it was to send a message to financiers that the wealth management industry could operate with impunity. In the period leading up to the Hayne royal commission, our biggest banks were found to have rigged the foreign exchange market and engaged in illegal activity with their wealth management divisions. Each time, they were subjected to "enforceable undertakings". But, as the royal commission showed, the undertakings, for whatever reason, were rarely enforced. Instead, ASIC chose to chase mainly the tiny fish; individuals and small companies ill-equipped to take on the might of a government-backed authority. Why was ASIC so reluctant to prosecute? In the early 2000s, then ASIC head David Knott decided the organisation would spread its legal wings, and engage in civil court actions in addition to criminal cases. The rationale was that civil cases involved a lower burden of proof, making the organisation more effective. ASIC had a monumental loss in its case related to the collapse of OneTel.(ABC TV) Shortly afterwards, Onetel, backed by James Packer and Lachlan Murdoch, collapsed. In what became Australia's longest running civil case, ASIC's deeply flawed investigation went down in a screaming heap. Then followed a failed case against Citigroup over insider trading and a botched attempt to run a case against Andrew Forrest over alleged misleading of investors. For an organisation so heavily populated by corporate lawyers and accountants, its failures were stunning. But perhaps that was part of the problem. High profile lawyers from the corporate world often were recruited into the regulator on a secondment basis, occasionally to advise on highly sensitive policy matters, leading to accusations that ASIC was captured by the big end of town. While its law enforcement actions tailed off, its revenue raising activities took precedence. Last year, according to ASIC's annual report, the organisation raised close to $2 billion in fees from its database and corporate registration activities. But ASIC has an operating budget of about a quarter of that, with the difference going to the federal government's budget bottom line. It's clear where the priorities lie. Justice not being seen Even in high-profile cases, when it was forced to proceed to court, its approach was found wanting by those presiding over proceedings. Consider the case against the former heads of Storm Financial, Emmanuel and Julie Cassamatis. Between them, acting largely in unison with our biggest banks, the pair destroyed $880 million of wealth for mostly low to middle-income and vulnerable families. The founders of Storm Financial, Emmanuel Cassimatis (pictured) and his wife Julie, were banned from running companies for seven years.(AAP: Dave Hunt - file photo) But they escaped criminal prosecution. Instead, ASIC called for fines of just $70,000 and a seven-year ban from running a company. In March 2018, when handing down his decision, Justice John Dowsett took it upon himself to comment on what he believed was the lax penalty. "I am inclined to think that the penalty sought by ASIC is on the low side, having regard to the cases to which I have been referred," he told the pair. It wasn't an isolated incident. Several years earlier, alleged comedian and former Telstra director Steve Vizard struck a deal with ASIC over his use of confidential Telstra information. He admitted the charges, but only after ASIC agreed that punishment would be limited to civil penalties. Even those were considered inadequate. Justice Ray Finkelstein took it upon himself to double the penalties recommended by the regulator. Undelivered promise ASIC began life in the 1990s with a great deal of fanfare. Armed with a new set of national corporations laws, its task was to deliver Australia into the modern global financial system. But it never lived up to its promise. The organisation it replaced, the National Companies and Securities Commission – staffed by a mere handful of executives – was much more effective. Under-resourced and with minimal budget, it had taken on the likes of Alan Bond, John Elliott and other giants of the Australian corporate scene to enforce the law and instil investor confidence in the regulatory framework. It was replaced by an organisation populated by industry insiders that, over the decades since, has concentrated on backroom dealings away from the legal system, which may have saved it money but done little for delivering justice. Its failures have forced investors to take justice into their own hands with civil court class actions, thereby outsourcing its regulatory activities. The federal government this week batted away calls for ASIC's break-up and reform. But for how long?
Starmer: "We have too many prisoners." Australia squints suspiciously and closes its ports. We have too many prisoners, says new PM Starmer https://www.bbc.com/news/articles/c16jpkzz9g3o