Oh Zali, how could you?
Whether or not one of the few genuinely likeable and centrist MPs survives the donation scandal will be known in a couple of months, but Zali Steggall’s brand has clearly been damaged by the John Kinghorn non-disclosure fiasco.
Although it’s almost certain the debacle was more cock-up than conspiracy, the failure to disclose a significant $100,000 donation from a coal industry figure will make her life far more difficult.
The donation has gained attention because of Kinghorn’s directorships of Cascade Coal and Felix Resources, but that is far from the only controversial businesses he has been involved with. The donation also seemed out of character; he previously committed $500,000 to right-wing think tank the Centre of Independent Studies, which once published the writings of Steggall’s political victim, Tony Abbott.
But focusing on Kinghorn’s coal interests is very much burying the lede in what has been a spectacular and somewhat colourful corporate career.
Global financial crisis
Kinghorn was a bit player in the frantic financialisation that occurred in the 1990s and 2000s in Sydney, which ultimately led to the collapses of the likes of Babcock & Brown and Allco during the global financial crisis.
An investment banker who once ran Delfin in 1979, Kinghorn convinced an up-and-coming tax partner at blue chip law firm Stephen Jacques named David Coe to join his nascent Allco Finance Group. Coe would eventually take over Allco from Kinghorn before dying, disgraced, as the Allco empire collapsed in 2008, wiping out billions in shareholder and bank funds. But until then the two were fixtures on the BRW Rich List, partnering on ventures like owning the Australian master Krispy Kreme franchise.
After mostly selling out of Allco in 1991, Kinghorn — who had been a wholesale lender — started a consumer brand called Rams Home Loans.
By 2007 Rams had grown its loan book to $13 billion, and Kinghorn undertook what would be one of Australia’s most disastrous IPOs, listing the business on the ASX and pocketing an incredible $650 million (Kinghorn retained a minority 20% stake).
Although Rams’ prospectus forecast strong growth of 34% in 2008, it failed to predict the tightening global liquidity — and within weeks several Bear Sterns hedge funds would collapse. Just three weeks after Kinghorn had reaped hundreds of millions, Rams shares would fall 60% in a single day after the business was unable to sell $6 billion worth of commercial paper in international markets.
A month later shares fell to 57 cents, before the brand name and other assets were acquired by Westpac for $140 million. The float was so bad The New York Times would call it “the worst public initial offering of the decade”.
The story continues …
But that wasn’t the end of the story.
The following year, the Rams board — which included Coe — authorised a transaction which allowed the early repayment to Kinghorn of a $28.5 million loan (at the time, Rams had a cash balance of only $35 million). This generosity came shortly after Kinghorn invested $95 million into one of Coe’s failing entities to stave off margin calls. Kinghorn would also curiously purchase a $5 million luxury yacht for Coe.
Another close associate of Kinghorn and Coe was Greg Jones. Jones was a partner of Kinghorn in his e-Lect IT business and reaped tens of millions of dollars when Rams floated. As Kate McClymont later reported in The Sydney Morning Herald, Jones would lose it and declare bankruptcy in a “whirlwind of excess: palatial homes, extravagant lunches and private planes hired to fly the flamboyant Mr Jones and his pals from one luxurious European location to another”.
But Jones would also form a link to the Obeid/Macdonald corruption scandal which would come to haunt Kinghorn. In 2009 Jones was caught boasting “that he was on to another ‘sure thing’ — a coalmining deal involving his mate Macdonald”.
As always, Kinghorn wasn’t too far away. He was a shareholder and director in the now infamous private company Cascade Coal, which entered into a deal with the Obeid family in 2009 in which Cascade would give the Obeids a 25% interest in the coal explorer in exchange for information which would allow it to win a coal exploration licence in Bylong Valley.
The licence would prove to be very lucrative indeed; Cascade Coal later agreed to be sold to a business called White Energy for $500 million, of which Kinghorn also happened to be a director. (Kinghorn would have reaped about $60 million from the sale.) Kinghorn later had an ICAC corruption finding against him overturned by the NSW Supreme Court.
The broader Obeid investigation was described by Geoffrey Watson SC as “the most important investigation ever undertaken [by the Independent Commission Against Corruption and was] corruption on a scale probably unexceeded since the days of the Rum Corps”.
… and continues
But Kinghorn’s story didn’t end there. The millionaire was seemingly incapable of avoiding controversy.
In 2017 the then 76-year-old was charged by the Australian Federal Police with fraud after allegedly avoiding $30 million in taxes relating to his ownership of Rams through the use of Jersey-based companies. Kinghorn pleaded not guilty in 2018, claiming that it was improper for the Australian Tax Office to pass transcripts to the AFP. A couple of months ago, the NSW Court of Criminal Appeal found that evidence of Kinghorn’s 2005 ATO interview would be admissible as part of his fraud trial, which is still going.
As Colleen Ryan noted in the AFR in 2015: “Kinghorn wins out — most of the time. But he often leaves a lot of damage in his wake.”
Perhaps Steggall should have done a little more diligence on her controversial donor, who presided over one of Australia’s worst IPOs and is facing fraud charges.
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On one side we have a single incident which may or may not have been intentional. On the other, rorters with decades of unethical behaviour.
I’m prepared to give Stegall the benefit of the doubt this time.
She got Abbott out of Parliament for us. We owe her.
In media and in her Twitter statement Zali S claims the $ was donated from 8 members of a large family, that family connected to Kinghorn business. Was Kinghorn himself one of the eight?. Maybe the 8 had misgivings about the coal business etc and wanted to counter balance. Families can have deep political splits.
I’m reminded of James Murdoch “estranged” from that family, donating to Black Lives Matter etc and supportive of strong climate action.
Definite benefit of doubt matter I think.
And were the family travelling under different family names to confuse matters?
It was so unexpected that such a good person should be conned in this way. Most of the current government wouldn’t have raised a comment, because they’re already renowned for rorting and dishonesty.
Would it be overthinking it to suggest a Macchiavellian plot by Kinghorn to discredit Zali Steggall?
I was wondering about that myself. I don’t know the details of how who knew what, but the motive for discrediting Steggall is there, given the conflict between Kinghorn and Steggall’s climate views.
Indeed, if it was conscience money it should’ve been far more generous.
If it was conscience money they might have given away far more, but only some of it to Steggall, and they might still be doing so. It would be quite odd for them to decide their conscience was best appeased by nothing other than handing one wad of money to one parliamentary candidate, once.
Have to say that didn’t occur to me but I did wonder about a bloke who had had coal investments now supporting an MP who was opposed to fossil fuels. It would be like Murdoch or the Gambling Industry supporting Andrew Wilkie.
Yep – a set up.
A plot? Absobloodylutely. And the timing – deliberate. One Crikey headline today talked about the backgrounding of women by the pm’s office and I thought it was going to expose the backgrounding of Zali Steggal. Come on whistle blowers – let’s have at them!
One suspects what is known as ‘the libertarian trap’ with this:
‘The donation also seemed out of character; he previously committed $500,000 to right-wing think tank the Centre of Independent Studies, which once published the writings of Steggall’s political victim, Tony Abbott.‘
CIS is in Koch’s (global) Atlas Network of which both Jane Mayer (‘Dark Money’) and Nancy MacLean (‘Democracy in Chains’) had researched and published on in the US, to be followed up by (obviously coincidental….) attacks on their credibility and reputations; another tactic also used against critics of their pet issues is co-opting and bringing them inside….
Steggall remains one of the better senators and her involvement with Kinghorn looks more foolish than sinister. As the artile says, due diligence would have been wise. She might have remembered the words of the Trojan priest when he saw the wooden horse left outside his city:
Timeo Danaos et dona ferentes
Bit of a lacuna but Laocoön might have been heeded had he more accurately warned, even if in Virgil’s Latin, ‘Munera portantes cave Danai‘.
Sorry – MP not senator.
As the old saying goes:
“If you (and it doesn’t matter who you are) lie down with dogs, you get up with fleas!”
Please don’t malign dogs
Another old saying: ‘If you sup with the devil you need a long spoon.’
Even a multi millionaire is not going to spend $100k to nobble an independant in a formerly safe lineral seat, if all he has to do is with hold the money. Unless he has lost it mentally.
You think it wouldn’t be worth a measly 100k for politicians or media unnamed to nobble an independent who actually unseated THEIR sitting Prime Minister? Not saying they did or anything, but it sure ain’t outside the realms of possibility. And we suspected they were going to be paying all out dirty. Think of whose voluminous and well padded with money pockets they sit in. Does it have some similarity to Henry VIII who said something along the lines of “who’ll rid me of this pesky priest?” Why doesn’t someone ask them? I’m sure we’ll be able to trust their answer!
Wrong Henry. The one with the priest problem was not one of the Tudors, but a Plantagenet some 350 years earlier.
There’s a fair chance Kinghorn is so wealthy he regards $100k as small change and if so perhaps he would spend that much just for some malicious fun. But the donation was made in March 2019. The election was two months later and the AEC rules mean nothing abouit it was made public until much later.
So if Kinghorn is on Abbott’s side his cunning plan involved helping Steggall to beat Abbott. How does that work? And it’s not at all clear he arranged for the eight donations to be made as one, which is the only reason it was eventually exposed.