This is Part three in my series about the Paddington Bowling Club. Part one provided an overview of the story about how a valuable publicly owned club site ended up in the hands of Christian Sanchez's CSKS Holdings. Part two focused on an inquiry into the Club and its dealings with the Crown Lands department and members of the Sanchez family, who have a controversial history as developers and hoteliers.
Now the Minister for Trade and Investment Andrew Stoner has agreed to review the dealings between NSW Crown Lands and the Paddington Bowling Club which resulted in Crown land being transferred to a company controlled by the Sanchez family.
The review was welcomed by residents' group Friends of Quarry Street who are campaigning to stop development of the site at the edge of Trumper Park, Paddington.
The site was leased to CSKS Holdings, now owned by Christian Sanchez at the end of 2011. The transfer happened quietly and was unexpected given the findings of the 2008 inquiry ordered by the NSW Liquor and Gaming Authority into allegations of corruption in the club affairs had been completed.
The Inquiry was ordered after Woollahra Council discovered that ex-Labor Minister Tony Kelly had secretly agreed to sell the Crown land on which the club is situated. While the local community waited in vain to hear what actions would be taken after the Inquiry, opponents of the sale breathed a sigh of relief hoping that one result of the Inquiry would be that the sale of the land to the Sanchez development company was off the agenda. Little did they know that a plan for a new long term lease and an eventual transfer of the land to a Sanchez family company was already being hatched behind closed government doors.
Now the NSW Minister for Trade and Investment Andrew Stoner has agreed to review Crown Land's dealings with the Paddington Bowling Club site.
This is a step forward for the Friends of Quarry Street who are campaigning to save the site as open space. Earlier in the year, a spokesperson for the Minister declined to answer my detailed questions on the basis that it would take too long to review the file. He also did not respond to a report and request for a judicial inquiry by the Friends of Quarry Street or to a recent letter from Local MP Alex Greenwich calling for an investigation into the matter. Minister Stoner is also yet to respond to parliamentary questions from Greenwich and Greens MLC David Shoebridge.
The review was the immediate result of a meeting three weeks ago between two of Stoner's staff and Woollahra Councillors Katherine O'Regan and Andrew Petrie. Petrie as a previous Mayor, has been raising questions about the developer's conduct and the Club's affairs for 8 years.
The good news was delivered to the Council just as Greens Councillor Matthew Robertson was moving a motion for the Council to hold its own investigation into the affair. Robertson told the Council that there were questions about the validity of the lease with CSKS Holdings that should be dealt with before the company's development application for the site is considered. Robertson argued that it would be a dereliction of duty for the Council not to pursue the matter as part of its representation of ratepayers, including the Friends of Quarry Street.
Robertson's motion was defeated after O'Regan told the Council that Stoner's staff had said that although they had previously been informed by Crown land staff that there were no probity issues, they would review the matter. The Councillors told the meeting they outlined concerns to Stoner's staff and gave them more information. They also referred them to Parts One and Two in this series.
Petrie told the Council that the meeting was the first positive one with a Minister's office that he had experienced in the entire history of the matter and that he had a "positive undertaking, a promise" that Stoner would look into the deal. He said Stoner's staff understood the community's concerns and were now "totally focused on this matter."
Since the meeting, Woollahra Council Mayor Toni Zeltzer has written to the Minister about "widespread alarm by the Woollahra Community" about the lease arrangements with the NSW government. She asked the Minister to provide an explanation of the lease transfers and the nature of the liaison with Council.
So far the nature of Stoner's review is unclear. Crown Lands staff have been asked to prepare a brief on the matter. Some of the staff involved in this are the same ones who were involved in the original dealings which suggests that the review is not at this stage an independent one. Department staff do not seem to have been made aware of the Minister's review.
Friends of Quarry Street co-convenors Lesley Scott and Melinda Hayton met with Crown Lands staff this week. The group drew the attention of Department staff to a number of potential breaches of the CSKS lease and also explained concerns about the land dealings. Much of this information was provided to the Minister's office earlier in a Friends of Quarry Street report and request for an inquiry to which the group received no response.
The need for transparency and independence of the review is a critical matter. In a speech in the Senate on March 25, Greens Senator Lee Rhiannon welcomed the need for the review but emphasised that it must be a "thorough review involving independent people who were not part of the original decisions". She noted that Local MP Alex Greenwich, Greens Councillor Matthew Robertson and the Friends of Quarry Street have all been calling for an independent Inquiry.
Rhiannon summarised the issue behind the Paddington Bowling Club land deal issue:
Many issues of concern arise out of this matter. Some of these are: lack of consultation by Crown Lands with local stakeholders, including Woollahra council; secret negotiations to initially sell and, more recently, lease land to CSKS Holdings, a company whose past and present directors have a long history of controversial and failed land deals and developments; an apparent failure of due diligence by Crown Lands, which is supposed to protect the public interest; a failure of corporate regulation; the handling of the club's receivership by well-known liquidator Andrew Wily; and, most recently, the use by the developers of a defamation threat to suppress public exposure of these matters.
She went into more detail about each of these matters in the speech, including how solicitor Tony Brooks, who witnessed the lease transfer document from Paddington Bowling Club to CSKS Holdings, issued a defamation threat against this reporter on behalf of his client Christian Sanchez. He demanded that I remove the story from the internet, apologise and pay Sanchez's costs. I sent him a letter rejecting his claims and have not even received an acknowledgement. This is not the first time that defamation has been used to silence free speech in this matter. Defamation threats were also made against Councillor Petrie who was eventually advised by lawyers to apologise to the Directors of Paddington Bowling Club in 2009.
As Senator Rhiannon told the Senate:
It strikes me that, at a time when people are arguing in the name of free speech and the government are repealing 18C of the racial vilification act after a group of Indigenous Australians were found to have been vilified by Herald Sun columnist Andrew Bolt, we might do well to turn our attention to how small community groups and publications are denied their right to free speech on a regular basis by more powerful vested interests threatening use of the defamation laws.
Paddington Bowling Club AGM - better late than never
The Minister for Liquor Gaming and Racing George Souris, who sits under Stoner's mega Trade and Investment portfolio has also requested a brief on the operations of the Paddington Bowling Club.
Today was a special day in the life of the Paddington Bowling Club. It held its first annual general meeting for three years.
According to the Registered Clubs Act, the Club is supposed to operate under the Corporations Act which for clubs of this kind means directors must file annual financial accounts. But the Paddington Club doesn't operate that way. Meetings have been often missed.
Today's meeting was scheduled last week but it was postponed because not enough members turned up. This time, the meeting was to go ahead quorum or not Owen Rogerson, Senior Compliance officer from the NSW Office of Liquor Gaming and Racing is expected to attend as an observer.
It will be interesting to find out how much the few members who do attend are told about their club. There's certainly a lot to report. Will they be told that the OLG recently received a dossier of more than 70 noise complaints, adding to the long history of complaints about the club, some of which were upheld.
Will they be told that previously the club had a perpetual lease which it rented at discounted community rates from the state government. Now the club is a sub tenant paying market rates to developer Christian Sanchez's CSKS Holdings. ( See Part One) The club also no longer has the income from two tennis courts. The club's situation is also less secure because CSKS Holdings mortgaged the lease to the Commonwealth Bank on the very same day it signed the lease with the NSW government. As Senator Rhiannon told Parliament, Christian Sanchez was at the time in financial difficulties over other failed developments. ( More of this in Part Four).
Today's Club meeting is the first since it came out of its decade long receivership. During this period, well known receiver Andrew Wily was in control of the club. He was responsible for a Company deed designed to facilitate the Sanchez family taking control of the land. Only after the land was transferred to Christian Sanchez did Wily take the Club out of receivership. He is now involved in winding up some of the Sanchez family businesses including Benchmark Hotels.
Today's meeting was also the last for long term Club President Kirk who apart from being Club president works on Christian Sanchez's developments, including as a planner on CSKS's current child care development plan.
From 2004 until the land was finally transferred to Christian Sanchez at the end of 2011, Kirk and Wily were key players in negotiations with ex-Minister Tony Kelly, Registrar General Warwick Watkins and others about taking over more Crown land and transferring it to the Sanchez company.
When I first checked the Club's Australian Securities and Investment Commission records, I noticed that financial reports were missing. So a month ago, I interviewed both the Club secretary Robert Ashton and President Brian Kirk. Ashton explained that to find out why meetings hadn't been held, I would need to talk to Kirk. Kirk was defensive about the delayed meetings telling me, "I suppose we have been a bit tardy we're finalising those now... I don't see that as a major difficulty." Asked why he wasn't concerned, he said, " I didn't say I wasn't concerned. That's why we're correcting it, making sure we get on top of it". It's hard to know if the Club would have had a meeting at all if ASIC hadn't queried them about the missing reports earlier in the year.
Unfortunately the meeting won't be open to the media so I won't hear the President's report or receive the 2011,12,13 accounts until they are filed with ASIC.
I have however read the 2009 and 2010 accounts. They show that despite an expensive Inquiry that highlighted a number of problems, little changed at the club. Hundreds of thousands of dollars continued to be spent on management fees, lawyers, receivers' fees and other unnamed business activities. Without these expenses, the Club may well have managed to make a profit.
However, the crucial factor that kept the Club in receivership was a $1.2 million loan for which the Inquiry found no credible evidence. (See Part 2).
The Inquiry found that the validity of the loan was never investigated by Wily who admitted in evidence before the Inquiry that this could be considered 'negligent'. After the Inquiry Wily continued to leave this task undone which meant that Club's Auditor Michael Bulgin was unable to form an opinion about the Club's financial affairs. Bulgin completed his reports for 2009 and 2010 in mid 2011. In these reports, Bulgin noted that no annual general meetings were held because of "complex and drawn out negotiations between the Directors concerning the Deed of Company Arrangement and the State government." It is hard to see how this could possibly be an excuse for not holding meetings, which would have provided the perfect opportunity to tell the members what was going on.
Those 2009 and 2010 reports were filed with ASIC on August 17, 2011. Bulgin resigned the same day. I have been unable to contact Bulgin.
Over the years, Club members raised many complaints about the club but eventually most became frustrated and dropped away. A club that had boasted more than 10,000 members cannot now get a quorum at meetings. Some older Directors and members have reported that they were actively prevented from going into the Club.
OLGR did refer the report to Crown lawyers who decided not to prosecute any matter. At least one Licensing compliance officer is recorded as being disappointed with that outcome. The Inquiry report should have been enough to prevent further poor management at the Club and to stop the game that kept a club in administration on the basis of a 'phony' loan. But in fact the opposite happened.
Although the Inquiry report had found that high salaries paid to Michael Sanchez's daughter Vanessa and her husband ex Club secretary Marcus Levy helped keep the club insolvent, Levy continued to be paid very high consultancy fees while he moved in the hotel trade. His replacement as Secretary, Robert Ashton told me that Marcus Levy remained involved in the club until the land deal was done and the company came out of administration in early 2012.
Negotiations between Wily, Kirk and Minister Kelly and Crown land officers including the Registrar General Warwick Watkins continued after 2008. With the sale plan off the agenda, they hatched a new plan. The Council and Local MP Clover Moore kept trying to protect the community's interest in the land. But to get the rest of this story, you'll need to read Part 4.
It will take a serious independent inquiry with powers of subpoena to get to the bottom of this matter. Kelly and Watkins have already been found to be corrupt by ICAC in another matter and Kelly is involved in two more ICAC inquiries. Residents and some Councillors believe another one is needed but in the meantime, they're hoping Stoner's review might throw some fresh light on the land dealings.
Update: Friday April 4. - No quorum but the meeting goes on
For the second week in a row, Paddington Bowling Club failed to get a quorum for an Annual General meeting, its first since 2011. So the meeting went head with approximately eight members present.
Outgoing President Brian Kirk did most of the talking at the meeting, his last in this role. Kirk, who is also the planning advisor on Christian Sanchez's development on the PBC site, was critical of Local MP Alex Greenwich who has been writing letters to Minister Andrew Stoner asking for an investigation into the Club and the land deal.
Now that it has been allowed to come out of administration, the Club is planning renovations. This won't be good news for elderly residents of Goodwin Village who live immediately above the site. There have been scores of complaints about evening noise from the club - bucks parties can be particularly hard to handle especially when men are still drunk in the street until early hours of the morning.
As readers of this series know, I am keen to read the Club's financial accounts 2011, 2012 and 2013. These should have been filed with ASIC long ago. But according to my source, the long awaited accounts from 2011 onwards weren't tabled at the meeting as the auditor has not approved them yet. So it's 2014 and the Club is still finalising its 2011 accounts? Could this be true? So to find out I rang Alan Teale, the in coming President who should know the situation well because he has been on the Club Board for years. Teale is an ex real estate agent who lectures in property at the University of Technology Sydney where he is doing a doctorate in planning. I spoke to Teale but he wouldn't confirm the information about the accounts. In fact, he was not pleased to hear from me at all. He told me that my stories have been a cause of disappointment. As a consequence, a letter of complaint has been written about me to UTS ( of which I am a honorary Professorial Fellow). I asked him to tell me what was inaccurate but he declined to do that. in fact, as he told me, he doesn't bother to read my stories.
However, he also said that the whole matter was turning out well for the Club as it has shown most local people support the Club. He declined to answer any questions and said that the Club's solicitors are meeting with a Queens Counsel ( the old name for Senior Counsel or senior barristers) and I would be hearing more from them soon. He said the Club is also acting on its concerns that local MP Alex Greenwich has been publishing defamatory statements.
I asked Teale to forward me the name of the Club's solicitor which he did. I may try to find out more about the Club's affairs through its lawyers. In the meantime, I have sent some questions to the Office of Liquor Gaming and Racing.
This all goes to reinforce Lee Rhiannon's point about freedom of speech. Unless you feel confident in the face of defamation threats, conversations like the one I had with Allan Teale can be unnerving. Not surprisingly, small publications and community groups often back down, while others are deterred from speaking publicly.
As a journalist, my first obligation is to the truth. So if you see anything inaccurate in my articles, please let me know so that I can correct it.
For a further update, go to Part 4 in this series.
Note: I use the MEAA code of ethics. This includes respecting the confidentiality of sources when requested.
A current problem with our mainstream media is that many stories that should be pursued in the public interest are neglected due to lack of resources. So If you are a journalist and would like to follow this story, I'm happy to share my research with you.