How good is a 200% return? That’s what Cayman Islands-based company Eastern Australia Irrigation (EAI) made from Australian water and cotton farms.
Farmer and former Liberal Party senator Bill Heffernan warned against taxpayer money being used to purchase overflow land (OFL) water licences that involve floodwaters, or water that is “in the clouds”. He variously described these deals as a fairy tale, a con job and cooking the books.
Unfortunately, Bill’s trifecta of warnings has gone unheeded by his political party. In August 2017, $80 million was given to Eastern Australia Agriculture (EAA) for the acquisition of two OFL water licences at properties at Clyde and Kia Ora.
This taxpayer-funded purchase delivered a windfall gain of at least $52 million for the benefit of EAI, the parent company of EAA, in the Cayman Islands. The ultimate beneficiaries of this bonanza are unknown investors.
Former agriculture minister Barnaby Joyce had ministerial responsibility for the $80 million purchase through the Department of Agriculture and Water Resources (DAWR). Barnaby’s colleague, Energy Minister Angus Taylor, is managerial alumni of both EAA and EAI. The various relationships of Angus Taylor with EAI and EAA on the public record are as follows:
- Founder of EAI from 2007.
- Director of EAI from 2007 until financial year (FY) 2013.
- Director of EAA from June 26, 2008, until November 25, 2009.
- Secretary of EAA from June 26, 2008, until December 18, 2009.
- Part of key management personnel of EAA from 2007 until FY 2013.
- Consultant to EAA FY 2009.
Last Friday, large law firm Ashurst produced a media release on behalf of its client EAI in the Financial Review. Neither Taylor nor any member of his family had any financial interest in EAI or any associated company, Ashurst says. When it comes to law firms issuing statements on behalf of clients though, it is usually more useful to focus on what they leave out rather than what they put in.
Set out below are some of the important omissions, which pose serious questions for Ashurst’s client, Joyce and Taylor. In summary:
- Did EAA spend $7.2 million on advisers when purchasing Clyde and Kia Ora in 2008 and how much of that was received by Angus Taylor?
- Did EAA successfully negotiate with DWAR to be compensated for $16 million for infrastructure which had cost it a fraction of that amount?
- Did investors in EAI make returns of 200 per cent from financing the purchase of EAA in 2008 and selling out of the company in 2018?
- Did EAA pay any income tax in Australia on the windfall gain made on the water licences sold for $80 million?
- Did EAA avoid income tax in Australia by overstating the original cost of the water licences sold for $80 million?
Were financial benefits flowing before water licences were sold?
The Ashurst Friday statement also said: “We are further instructed that he [Angus Taylor] has not received any benefit of any kind for the sale of any water or land owned by EAI or any associated company and we are not aware of any matter which would cause us to doubt the accuracy of these instructions.”
Perhaps Ashurst is not aware of the quantum of consultants’ fees received by Angus Taylor from EAI, EAA and associates. A lot of government money ($80 million) has been received by EAA for the sale of water. Before the water was sold, a lot of money seems to have been paid by EAA to advisers of which Angus Taylor was one.
It is important to note that Taylor was a director of EAA in 2009 and of its parent, EAI, until some time in 2013 before he entered parliament. There is no allegation in this story that Angus Taylor has done anything wrong.
The Ashurst media release in the Fin reports a source saying: “Ashurst was responsible for setting up the corporate entities to own the farms while Mr Taylor found the farms, valued them and wrote a plan to make them profitable.” So how much exactly did Angus Taylor receive for his consulting work on the purchase of the two farms?
The EAA accounts for FY2008 show that the two farming properties (including water licences) involved an outlay of $7.2 million on direct costs related to the acquisitions. These costs would normally include stamp duty, accountant fees, lawyer fees and consultant fees, which related directly to the acquisitions.
Apparently, Queensland stamp duty does not apply to business property used to carry on a primary production business. In that case, EAA has paid around $7.2 million to advisers in connection with the acquisitions of the Clyde and Kia Ora properties in FY2008. The question is, was Angus Taylor an adviser at this time?
Read the rest of this piece over on Michael West’s blog
This still leaves a lot of unanswered questions, particularly as to who were the directors, officers and shareholders of the two companies between 2013 and 2019. Who were paid advisory or consultancy fees in the same period and how much. Why is Mr Taylor issuing legal threats against people who even raise questions about this?
If you look up “misleading” in the dictionary, there is a photo of Angus Taylor (a group photo with the LNP cabinet).
In fact even the The Guardian Australia has been silenced and is not allowing any mention of Taylor and the Cayman Island account into which the $80 million was placed. I twice posted information quoting with attribution from The Saturday Paper and have been given the boot.
Brilliant. The amount of money heading Angus’s way, even if a small cut of the consultancy fee is more than substantial. The fact that he set the companies up, does anyone seriously believe that his returns haven’t been many more times this? No wonder he’s disappeared from the campaign trail after his initial legal threats failed to fire.
Great to see West’s work in Crikey. He’s done some good reporting of the Northern Beaches Hospital boondoggle in NSW. The names, track records and relationships of those on the board of the original operator enough to make your hair stand on end. Follow the money as always.
I’m sure most if not all of Crikey’s subscribers would like to see Michael West’s work here on a regular basis, I’d be glad to know some of my Crikey costs were headed his way !
Absobloodylutely – hell, I’d pay a premium to ensure West wrote here regularly.
If decent dictionairies still exist, look up ‘investigative journalist’ and there should be a pic of Michael West.
(If not, it should be discarded as useless.)
Couldn’t agree more. West leaves most at Crikey and elsewhere in the shade. Maybe get someone connected with NITV on to this too. Their show last night on the Darling was by far the most informative on the subject ive seen. It’s hard to see the Nat vote holding up in the face of hundreds of kms of dry Darling riverbed and all the locals being pretty clued up about why.
Michael West used to work for Fairfax but was shown the door. Since then he has done serious investigative journalism and Fairfax has gone to the dogs.
Michael Pascoe used to work for Fairfax but was shown the door. Now he writes intelligent and thoughtful analysis for The New Daily and Fairfax has gone to the dogs.
Michelle Grattan used to work at Fairfax. Now she writes for The Conversation and Fairfax has gone to the dogs.
Katharine Murphy used to work at Fairfax. Now she writes thoughtful analysis for The Guardian and Fairfax has gone to the dogs.
Tim Colebatch used to work at Fairfax. Now he writes incisive analytical pieces for The Conversation and Fairfax has gone to the dogs.
And you can bet the board and executives at Fairfax are sitting around wondering why no-one trusts the media and circulation is falling.
Fairfax now owned by Nine Publishing. Peter Costello is Board Chairman.
Add Peter Martin gone too.
But then Fairfax is also gone – to 9
Are any of the former Fairfax luminaries perhaps coming to Crikey?