What did Sinodinos, Packer and O’Farrell chat about at Rockpools? Greens’ Kaye hits a nerve

SINCE I POSTED THIS STORY TODAY, NSW PREMIER BARRY O’FARRELL HAS RESIGNED. THE CASINO QUESTIONS ARE MORE RELEVANT THAN EVER. IT’S TIME FOR POLITICIANS TO START ANSWERING OUR QUESTIONS.

For a party that was swept to power on a platform of anti corruption and transparency, the NSW Liberal Party is looking very  grubby today. If the people of NSW decide it’s business as usual, one could hardly blame them.

This post brings readers up to date with an earlier story about an interesting lunch at Rockpool’s between then NSW Party Treasurer Arthur Sinodinos and James Packer about two months before Packer launched his carefully prepared successful campaign for his controversial Barangaroo Crown casino in February 2012. NSW Premier Barry O’Farrell and his then chief of staff Chris Eccles were reported to have bumped into the two men at the restaurant. The question is: what did they talk about? Did this relate to the casino or any other NSW business deal? Were donations or other favours mentioned?

When Senator Arthus Sinodinos stood aside as Federal Assistant Treasurer after he became embroiled in the current NSW Independent Commission against Corruption (ICAC) investigation into Australian Water Holdings ( AWH), a memory of the lunch niggled at me. It that had been briefly mentioned by the Daily Telegraph back in 2012.  This and other opportunities for conversations about the deal became even more relevant after information about political donations from Crown Entertainment and Ros Packer to the NSW Liberal Party later emerged. ( see my earlier story).

I was worried by how Premier O’Farrell avoided any detailed scrutiny of the government’s immediate support for the project and his own dealings with Packer. He sidestepped questions by saying in February 2012 that whenever he met Packer, they discussed the casino. I wrote about this in New Matilda in 2012 when O’Farrell refused to answer our questions. The casino that many opposed was made to seem like a fait accompli from the time it was announced.

Greens MLC John Kaye has since taken up this issue in the Legislative Council.  I will return to his questions soon but firstly, here is some current context.

Yesterday, O’Farrell gave evidence at the NSW Independent Commission against Corruption in the final session of its investigation into infrastructure company Australian Water Holdings (AWH), its attempts to secure NSW government contracts and links to notorious corrupt ex Labor government Minister Eddie Obeid. O’Farrell’s appearance at the Inquiry was not originally planned but evidence that emerged last week left ICAC with no choice.

Evidence was given that then chief executive of Obeid-linked infrastructure company Australian Water Holdings, Nick Di Girolamo, sent Mr O’Farrell the $2978 bottle of Penfolds Grange in mid April 2011. The wine gift and other entertainment expenses associated with the Premier were recorded in company records. Around the time of the alleged arrival gift arrived at his home, O’Farrell made a short phone call to Di Girolamo, who told the Commission that this was his thank you call. O’Farrell denies ever receiving the gift and did not record it on his pecuniary interest register as is required. He denies making the thank you call.  Di Girolamo has now returned to the witness box.

Ex Finance minister Greg Pearce gave evidence last week that in May 2011 he had been called up like a naughty “schoolboy” to O’Farrell’s office where Di Girolamo was meeting with O’Farrell. Pearce was surprised at how close a the meeting between the Premier and Di Girolamo appeared to be.  A text message from O’Farrell to Di Girolamo in August 2011 has been tendered saying that the Premier is “appalled” at the treatment of AWH and “we are on to it”. The two men sent texted each other on other occasions.

At best, the picture that emerges of NSW a familiar one of favours, meetings, cosy talks in pursuit of government decisions that favour business mates.

O’Farrell’s approach up until now has been to fend off questions and stand indignantly on the high moral ground. As Andrew Clennel wrote in the Daily Telegraph today when O’Farrell’s meeting with Di Girolamo was revealed , O’Farrell announced:

“There is no problem having meetings with people, the problem is the actions that are taken after those meetings,” O’Farrell railed. “This state has scandal starvation. There is no story here and no splash here because the work has not been done.” Whatever his hopes that the scandal would go away, there is certainly a story now.

O’Farrell’s retort to uncomfortable questions is a classic tactic. Political opponents and journalists who think there is more to probe would not take them too seriously.

This brings me back to the lunch I reported in this blog several weeks ago.

I drew attention to a Senator Arthur Sinodinos lunch with Jamie Packer at Rockpool restaurant in December 2011, not long before Packer was going to launch his long planned campaign for his Sydney Crown casino.

Greens  MLC John Kaye who has consistently campaigned against the casino deal followed up the issue in the NSW Legislative Council.  The question struck a nerve and the answer opened up more questions.

 JOHN KAYE: My question without notice is addressed to the Minister for Police and Emergency Services, representing the Premier.In December 2011, did the Premier and Mr Chris Eccles, while eating at the Rockpool restaurant, happen upon Mr James Packer, who was eating at the same venue with then Liberal Party Treasurer and Senator Arthur Sinodinos? If so, what matters were discussed and at any stage during the conversation were either of the following topics discussed: first, campaign donations and, secondly, Mr Packer’s proposal for a gambling facility or second casino?

The question caused a mild uproar.

After order had been restored, Gallagher’s  (representing O’Farrell) first approach was to attack the questioner. “What an absolutely stupid question. I am sorry, I should have said that it is a good question from a stupid member.” Kaye then objected that Gallagher should answer not debate the question.

Gallagher:

I will not give that question any more attention, and I do not believe it actually deserves any. I do not know where the member who asked the question gets his information from.

Liberal MP Catherine Cusack then came to Gallagher’s defence suggesting that he should ask Kaye a question. Gallagher responded:

No-one is interested in what Dr John Kaye does—or where he eats, who he eats with or who he knows. He stands in this place and makes such an allegation as though it is gospel, and we are supposed to accept it. I do not know and he does not know.

Kaye: I asked you a question.

Gallacher : And I am answering it.

Kaye:So are you saying that he did not meet with him?

Gallagher :I do not know.

Kaye:Is that what you are saying? Are you denying that he met with him?

Gallagher: I rest my case on the last interjection. It is pretty clear that the member does not want an answer, because he does not seek one. He simply wants to make an allegation and put it on the record.

Kaye: I ask a supplementary question. Will the Minister elucidate his answer by explaining whether Mr Eccles and the Premier, while eating at the Rockpool restaurant in December 2011, happened upon Mr Parker and Senator Arthur Sinodinos?

 

The supplementary question was ruled out of order.

About 30 minutes later, Gallagher changed his tune.

Gallagher:

Earlier in question time I was asked a question by the Hon. John Kaye regarding the Premier’s dining arrangements. I refer the member to a letter in the Daily Telegraph Letters to the Editor column on 27 October 2012 entitled “Clearing the air”, which stated:

 

The Daily Telegraph reports correctly that my Director General and I ran into James Packer at a restaurant in December last year. As your journalist was told when he raised the encounter, James Packer did not mention anything to do with his current Barangaroo proposal.

That short letter was written by Barry O’Farrell, Premier of New South Wales. I had not known of O’Farrell’s reply when I made my earlier post. As I said, O’Farrell declined to answer any of our questions in 2012.

I asked Kaye how he responded to the reply. He answered: “Minister Gallacher’s responses open up more questions than they answer.

“The Minister neatly avoided the issue of any discussions of campaign donations and left the public hanging on what actually was discussed.

“Given the timing of the meeting and Mr Packer’s obsession with his casino proposal, it is quite extraordinary that the Baranagroo project was not discussed. It’s my guess that it would have been one of the only conversations Packer had with anyone in that entire year where he didn’t raise the casino issue. The level of abuse in the Minister’s first response is convincing evidence that we were getting very close to the bone.His second response and its failure to even mention campaign donations suggests that more questions should be asked,” Kaye said.

Back in February 2012, O’Farrell said that ”just about every time I see Mr Packer he expresses interest in running a casino in Sydney and offers other suggestions on boosting tourism.” So if this was an unusual occasion in which the casino was not discussed, what was discussed – donations? I wonder why Gallagher failed to respond to the part of the question about donations.

Another indirect connection with Packer has come up at this inquiry.  Eddie Obeid’s son Eddie Obeid Jnr who worked at Australian Water Holdings also arranged a breakfast meeting between Senator Sinodinos and Karl Bitar. Bitar like Sinodinos was a party apparatchik who resigned as ALP national secretary in March 2011, joininh a long line of Labor leaders men who went to work for the Packer Family. Sinodinos, Bitar and Obeid met in the Four Seasons Hotel on July 12, 2011. “It was a general discussion. Arthur and Karl always wanted to make acquaintance. It was a general sort of catch-up,” Obeid told the Inquiry said. I wonder what matters were canvassed in the “general sort of catch-up?”

Deal making in NSW crosses political party boundaries. Business mates use entertainment, donations, jobs and lobbying to tap into both major parties. Packer has amassed an impressive display of political contacts across both parties. ( See New Matilda’s 2012 report of Team Packer. This is partly why it’s not at all surprising that O’Farrell rather than offering a bright clean future for NSW ended up being the fourth NSW Premier to appear before ICAC. The Inquiry continues today.

I’d still like to know about the topics of conversation at that December 2011 lunch. It would also help transparency if NSW politicians could treat parliamentary and journalists’ questions with less arrogance.

Top bureaucrat to review Crown land decision – and some very surprising answers

Part 4

This is the fourth part of my Paddington Bowling Club series. Soon I’ll complete my investigation into the Club (PBC) and the controversial land deal but in the meantime, there has been some good news.

As I reported in Part Three, following a meeting between Ministerial staff and two Councillors Andrew Petrie and Katherine O’Regan in March, Woollahra Council was told that NSW Deputy Premier and Minister for Trade and Investment Andrew Stoner would review the transfer of a Crown lease from PBC to developer CSKS Holdings.

This was welcome news for local residents’ group  Friends of Quarry Street who have campaigned for several months for an inquiry into the NSW government’s handling of the lease and to save the land for open space. But the nature of the review was not clear. The group had earlier asked for a judicial inquiry or a NSW Independent Commission against Corruption (ICAC) inquiry into the land dealings.

On Thursday, Stoner provided more clarity by issuing a statement referring to representations he received from the community and Woollahra Council “raising serious allegations of misconduct.” The statement continued:

“We take these allegations seriously and have listened to the community’s calls for a  review into this matter. I have therefore asked the Secretary of NSW Trade & Investment Mark Paterson AO  to conduct a review into the matter. This investigation will be independent from the Division of Crown Lands,”

So although this will just be an internal review, it seems that Stoner wants a thorough investigation that will look beyond formalities of the lease. Terms of reference are still being developed. It is not yet clear whether the review will accept submissions or publish its report. ( Since I first published this article, it has become clear that submissions will be accepted.)

Local MP Alex Greenwich who has been supporting local residents and Friends of Quarry Street in their campaign welcomed Stoner’s decision on Friday:

” The government has an obligation to protect Crown land as a community asset.Community members have been raising concerns over a number of years. I’ve asked for these allegations to be properly investigated – this is important for the club and the community. The concerns raised must be properly investigated and the Government must ensure that this lease is above board.”

Greenwich has also written to the Minister for Tourism, Major Events, Hospitality and Racing George Souris requesting an investigation into the PBC, which held a perpetual Crown lease on the club’s site until it was transferred into a 50 year commercial lease in 2010. The new lease was transferred to Christian Sanchez company CSKS Holdings in December 2011. (Greenwich’s representations  can be found on his website.)

The review of the land deal will involve an investigation of the actions of ex Labor Minister for Lands Tony Kelly and the ex Register General of Lands, Warwick Watkins both of whom were found to be corrupt by an ICAC Inquiry into the sale of ‘Currawong’ on Sydney’s Pittwater.Kelly gave evidence at an another ICAC inquiry this week when he was questioned about his role in altering a cabinet minute in a way that favoured Australian Water Holdings’ push for a major NSW public-private partnership.

The events involving the transfer of the PBC lease go back to 2009 when NSW Labor Ministers and Watkins appeared to support those lobbying for the transfer. Ex Mayor Andrew Petrie who consistently opposed the deal told me earlier this year, he was surprised by a meeting in which Warwick Watkins was “aggressive towards us … It particularly stuck in my mind. He had made up his mind and that is the way it was going to be.” I attempted to reach Watkins to interview him without success. The transfer finally happened in December 30, 2011, nine months after the Liberal government had come to power.

Stoner has now decided that Crown law officers will not be involved in the review and instead it will be conducted by the head of his department Mark Patterson. In the light of some of the answers he has been advised to provide to parliamentary questions, this is just as well.

Some surprising answers

Both MP Alex Greenwich and Greens David Shoebridge have received answers to their parliamentary questions about the transfer this week.

In response to Greenwich, Stoner states that he had held no meetings with representatives of CSKS Holdings; that some of those who dealt with Crown Lands were both ”representatives of both CSKS Holdings Pty Ltd and Paddington Bowling Club” but that “no conflicts of interest” were identified; that four meetings were held between the Paddington Bowling Club representatives and Crown Lands officers on the Paddington Bowling Club site. ( Crown’s law officers’ advice that they saw no conflicts of interest although at least one individual was representing both parties is surprising and will be explored in my next story.)

As I have previously reported, an inquiry was conducted in 2006 to investigate Minister Kelly’s earlier decision to sell the publicly owned PBC site to CSKS Holdings. Back then, CSKS Holdings was called the Paddington Bowling and Sporting Club Pty Ltd and before that it was called Woollahra Gardens Pty Ltd.  During the Inquiry, a Crown Land officer, developer Michael Sanchez and President of PBC and CSKS Planner Brian Kirk gave evidence about the negotiations that led to that sale decision. Confidential Evidence was given about ongoing negotiations between the developer and Crown Lands during the time of the Inquiry. Nevertheless, in response to this question:

Was the Government aware of the Registered Clubs Act section 41X “Inquiry in Relation To Paddington Bowling Club Limited” carried out by Commissioner Brian Guest when the decision to transfer the Paddington Bowling Club lease was made?

Stoner responded:

I am advised that Crown Lands was not aware of the Inquiry at the time that the decision to transfer the lease was made.

 

So weren’t these earlier events noted in the file? Did the Crown land officers dealing with the lease transfer read the file? Why not? (There had been prominent reports of the Inquiry in the Fairfax and suburban press in 2007.)

Answers to questions by Greens MLC David Shoebridge were also posted on the parliamentary website this week.

In answer to:

Were Crown Lands officers aware that CSKS Holdings P⁄L was the same company as Woollahra Gardens P⁄L which was the subject of the 2007 Inquiry in Relation To Paddington Bowling Club Limited conducted by Commissioner Brian Guest pursuant to section 41X of the Registered Clubs Act 1976?

 

Stoner answered “No”.

Those who have read my earlier reports and Greens Senator Lee Rhiannon’s recent speech will know, most of the companies in which Michael and Christian Sanchez were involved were in severe financial distress at the time of the lease transfer. Some of these are now being wound up. Shoebridge had also asked:

At the time the lease was transferred to CSKS Holdings P⁄L was due diligence undertaken to confirm they were financially stable? If so, what inquiries were undertaken?

 

The answer:

A search of the Australian Securities and Investments Commission register was undertaken. This search did not reveal any adverse findings in relation to the company. An incoming lessee must abide by all of the lease conditions or be at risk of forfeiture in the event of non-compliance.

 

In dealing with transfers of land under Section 34A of the NSW Crown Lands Act, the Minister must act in the public interest. For this he or she depends on Crown law advice. So is a basic company search the only check that Crown land officers do when they are advising the Minister on the potential alienation of our publicly owned lands? Given the amount of land that is currently potentially being sold or transferred by the NSW government, this is worrying. Companies searches do not reveal “adverse findings’ about companies. If on the other hand, Crown law officers had done a credit search, they would certainly had cause to pause.

But let’s assume that a single basic ASIC company search was done. To do the search, you visit the ASIC register and identify the company. As soon as you do the search, this is what comes up on the screen.

Basic free search of CSKS shows former names

Source : ASIC Website : Basic free search of CSKS shows former names

So if the Crown law officers had done the search, how could they not know that CSKS Holdings had used the two earlier company names? However you do the search, you can’t miss it. Did they do even the company search or not? Whatever the answer, the absence of due diligence is worrying.

If they had just gone a couple of steps further and done a director’s search for less than $100, they would have found that another company with which Christian Sanchez had been closely involved Crows Nest Retail Pty Ltd  had recently gone into receivership owing Bankwest a large amount of money. The whole exercise would take less than 15 minutes.

Having failed to carry out any serious due diligence, the Crown law division chose to advice Stoner that CSKS Holdings was the sort of company that could be described as a “private equity financier”.

In the light of these answers, it’s just as well that the officers who handled the transfer won’t be inquiring into the transfer of the lease.

Stoner also pointed out in his parliamentary answers that: “An incoming lessee must abide by all of the lease conditions or be at risk of forfeiture in the event of non-compliance.”

Friends of Quarry Street have already sent a detailed submission to the Crown Lands department arguing that several conditions of the lease have been broken. The company will have a chance to respond to their complaints.

Meanwhile the Office of Liquor Gaming and Racing are continuing to investigate complaints against the PBC which now sublets the site from CSKS Holdings. The Club has been the subject of many complaints and, as I reported in Part 3, has not filed accounts with ASIC for three years.

Note: If you see any inaccuracies in my article, please let me know. If you have any more information, I would be glad to receive it at wendybacon1@gmail.com or by direct message to my twitter Wendy_Bacon. I apply the MEAA code of ethics and respect all confidences.

 

 

 

 

 

 

How did valuable public land end up in developer’s hands? Minister Stoner reviews the deal

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.

Part three includes recent news about a review of the dealings between NSW Crown Lands and the Paddington Bowling Club by the NSW Minister for Trade and Investment Andrew Stoner. 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. In this part, I also discuss how Paddington Bowling Club was mismanaged in a way that disadvantaged its members and advantaged the developers.

In Part five, I will backtrack and pick up the story from the end of Part two. By 2008, a 34 day 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 was already being hatched behind closed government doors.

PART THREE

Minister Stoner to review developer CSKS Holdings lease

The NSW Minister for Trade and Investment Andrew Stoner has agreed to review Crown Land’s dealings with the Paddington Bowling Club site.

Wentworth Courier 12/3/2014

Wentworth Courier 12/3/2014

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.

Developer Christian Sanchez wants to replace open tennis courts with large childcare centre

Developer Christian Sanchez wants to replace open tennis courts with large childcare centre

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.

 

 

 

 

 

Paddo Bowls Inquiry 2008 – First media report 2014

In Part One of this series, I gave readers an overview of my investigation into how the NSW government handed over Crown land to developer CSKS Holdings and updated readers on questions asked by Sydney MP Alex Greenwich and Greens David Shoebridge in NSW Parliament last week.

In this story (Part 2), I explain the findings of a 2008 Office of Liquor Gaming and Racing ( OLGR) Inquiry into the Paddington Bowling Club (PBC). The report was published in 2008 but although readers may find it a little hard to believe, this seems to be the first account of its findings. ( If you find another one, let me know so that I can link to it.)

Part 3 will update readers on attempts by Friends of Quarry Street to prevent development of open space on the Paddington Bowling Club site and overturn the deal which gave CSKS Holdings a 50 year lease on the land.  It will also explain how the Paddington Bowling Club was mismanaged in a way to the advantage of the developers.

Part 4 will continue the investigation of events from 2008 until the present time.

Part 2

CSKS wants Woollahra Council to approve a development of a large for-profit child care centre on Paddington Bowling Club (PBC) land it leases from the government on the edge of Trumper Park, a small bushland in inner Sydney. The Centre would replace two tennis courts.

CSKS director Chris Sanchez whose interests have previously been in club catering, hotels and retail development has entered the field of child care by setting up a tiny company Picket Fence ELC Pty Ltd that would run the Centre. Sanchez told me that although he has no experience in child care, he would hire a very experienced director to run the Centre.

Friends of Quarry Street and other residents have lodged scores of objections to the development application, particularly around parking and pedestrian use of narrow Quarry Street which runs alongside the site. But Friends of Quarry Street, other residents and some Councillors say there are also broader issues at stake that affect the entire community.

Tonight Greens Woollahra Councillor Matthew Robertson will move a motion that Council officers should prepare a report on the current state of the CSKS Holdings lease, the rationale for why the NSW Liberal government allowed it to be transferred to the Sanchez company and whether or not the NSW government consulted with the Council.

While some may argue a narrow view that Council should only deal with the development application, Councillor Robertson will draw fellow Councillors attention to the Local Government Act that states that the role of Councillors should be to “protect the interests of residents and ratepayers” and “provide leadership to the community”.

How CSKS got control of valuable Crown land.

Much of the story about how CSKS got control of this land is found in the records of a NSW Office of Liquor Gaming and Racing Inquiry set up in 2007 after Woollahra Council blew the whistle on a decision by NSW Lands to sell the site to the Sanchez controlled company. The SMH and Wentworth Courier published several reports on the Inquiry but the report itself seems to have been missed.

The Inquiry was set up by the then Director of NSW Liquor and Gaming Albert Gardner to investigate the administration of the PBC and whether there had been any improper or corrupt dealings in relation to it. The Inquiry followed a four month police investigation into the club that recommended further investigation.

Barrister Brian Guest conducted the Inquiry that included more than 30 days of hearing. His Inquiry could only make factual findings, leaving it to law enforcement and regulatory agencies to decide what action should be taken on the basis of Guest’s findings.

The Inquiry transcripts trace the story back to the 1990s when the small Paddington Bowling Club ( PBC),like many similar ones, struggled to compete with bigger registered club venues. PBC was just holding its head above water with a bank balance of $200,000.

From St Trinians to Barefoot Bowls – the PBC directors lose control

Bruce Malouf, an ex-Wallaby rugby union player who was involved in the LJ Hooker real estate agency in nearby wealthy Sydney suburb of Double Bay, came up with a bright idea that he sold to the PBC: a new restaurant for the club called St Trinians with waitresses dressed as naughty schoolgirls. The PBC directors agreed on the basis that there would be no financial risk to the club. The restaurant was launched by TV host Kerri Anne Kennerley who described it as the “ new hot and happening pub.” but it failed after a couple of months.

As the Inquiry was told, Bruce Malouf’s renovation costs blew out from $35,000 to $624,000. Much of the money had been supplied by B52 a small superannuation company in name of Malouf’s mother Mavis. Without seeking Liquor and Gaming Administration Board approval, more than $350,000 was spent on poker machines  later disposed of for almost nothing.

The directors still talk today of how shocked they were when the pokies replaced the bowlers’ change room and the bowling club Honour Rolls came down off the walls.

Director Terrence Henville told the inquiry that during this period, “ I, for one, am not a businessman – everything just ran away from us, from the renovations to the bar and poker machines .. We really just lost it.” . The directors pressed the Malouf’s and their managers for financial reports but only occasionally got them.

Bruce also gave evidence that the law was ‘way out of his league’. He became unwell and was hospitalised after which his brother Philip Malouf played a role in managing the Club.

After Bruce recovered, he introduced barefoot bowling which was an immediate success. ‘Paddo Bowls – was no longer for the olds’ http://www.paddobowls.com.au/  As Bruce told the Inquiry: “ They flew in from everywhere…everyone was beering and cheering and playing bowls. “ As one director told the Inquiry, even the GPS (private school) crowd from the upmarket pubs made PBC their base, at least for a while.

While the PBC Directors could see the club was busy, they could not work out why it was still making a loss. They asked to see accounts but never received them.

Evidence was later given that more than $200,000 was missing against which no expenditure was recorded. The inquiry heard that other sponsorship funds which were owed to PBC ended up in other accounts. No income from bowling activities was recorded. When the accounts were later reconstructed, the Club was recording losses.

Although a Malouf company was now effectively running the club, the directors were still liable for its management. They soon got another fright. In August 2000, the Malouf company B52 sent the Club an account for nearly $1,200,000. The directors denied in evidence to the Inquiry, and have continued to insist to this day, that there was ever a loan. Philip Malouf gave evidence that there was a verbal agreement about the loan but the Inquiry found there no evidence for the loan. Guest found:

“There  is no loan document to support the contention and the directors of the club deny that they ever agreed to any financial liability. They are unanimous in view that it was always the case that the Maloufs did everything at their own cost and risk and if it didn’t work out they would walk away.”

This alleged loan for which the Inquiry could find no evidence is the single most important factor in PBC losing control of the Crown lease. It remained on the books of the club until at least 2010 when the club last filed accounts with ASIC. No accounts have been filed since then and there was no Annual General meeting last year.

This supposed unpaid Malouf load to the Club meant that PBC was always in debt however well it traded.

In 2002, the old Directors got another nasty fright. They had been signing cheques to pay group tax  but instead of it being paid, the Malouf appointed managers left the cheques stapled to the chequebook. The directors received letters from the tax department saying they would be personally liable for the tax debt.

Now the Club was in serious trouble. On the recommendation of Philip Malouf, the NSW Supreme Court appointed experienced Liquidator Andrew Wily as an external administrator. When an administrator is appointed, directors lose control of day to day management until a company becomes solvent again. The old directors were told that if they did not agree to the administrator, they would be liable for debts. Thus began one of the longest administrations in corporate history. It was only terminated by Wily when the Crown finally transferred the lease to CSKS in 2011.

At the Inquiry, Wily said that he accepted that the PBC owed the Maloufs more than a million dollars without asking the Directors if they accepted that the debt existed..

Having accepted without investigation that the loan existed, Wily decided that the only way to make enough money to pay the creditors was to “arrange for the Club to purchase the leasehold land on which it was located and then for the land to be sold to a property developer with the proceeds of the sale being used to pay the creditors.”

Wily introduces Sanchez to Paddington Bowling Club

This is when Wily called in his friend developer Michael Sanchez, who had also been a Double Bay real estate agent. Not surprisingly for a real estate agent and property developer Sanchez told the Inquiry: I was more focused on the property side of things.

Q. When you say “the property side of things”,are you talking of the potential for development of the site?

A. Well, the potential for development ….

Sanchez examined the underlying value of the lease that was supposed to be held in perpetuity for the benefit of the public and decided to become involved.

Who is Michael Sanchez? 

An early proponent of high rise in the Eastern suburbs, Michael Sanchez was a successful real estate agent, firstly in Maroubra and later in Double Bay. But over the last ten years, Sanchez, his son Christian and their companies including Benchmark have faced several major business challenges that will be covered in a third report.

Michael Sanchez first caused an uproar in 1989 when he formed a company with the then Mayor of Randwick Council Paul Bayutti and knocked down an old mansion Ostara that was about to get heritage protection in order to make way for a development. Bayutti later resigned from the company.

Sanchez successfully fought off bankruptcy in 1992 after he fell into financial difficulties when he employed Andrew Gibbons who was suspended by the Real Estate Services Council.

A few years later, Maroubra residents campaigned against Benchmark’s plan for high rise apartments. As the well known journalist Elisabeth Wynhausen who died last year reported in the Sun Herald at the time, Sanchez attracted attention when he sent a barrister along to a residents’ meeting who disrupted proceedings. A group of men dressed in Benchmark t shirts were also in attendance. When some of those opposing the development claimed they felt intimidated, Sanchez’s solicitor explained the men’s presence was intended to remind residents that jobs were at stake.

In 1998, Sanchez and his wife Lynette acquired a 50% share in a huge development in Port Melbourne on an old publicly owned site. When Macquarie Bank with whom he had already had a dispute became involved in financing the project , one of its senior officers Bill Moss objected to Sanchez being involved. Sanchez sued the Bank and so began a series of court actions that would eventually result in a humiliating loss for Sanchez. The Victorian Supreme Court found in 2002 that Sanchez’s evidence was unsatisfactory and it found that there was a consensus that Sanchez should be removed in the “sense that neither he or any interest associated with him should have ownership or a controlling interest.” This was a significant set back for Sanchez.

Wily, Sanchez and Kirk get together

Back in Paddington, Sanchez called in another long term business associate and planner Brian Kirk who according to Inquiry evidence was also a business associate of Wily. As meeting minutes referred to at the Inquiry showed, Kirk represented Sanchez in early discussions about an agreement with the club and in later negotiations with the government.

Kirk also became President of PBC and remains so today. He signed the document transferring the land to CSKS on behalf of the Club in December 2011 and has provided planning advice for the current development. He told me he could see no conflict in his roles. ( I will report more on Kirk’s role as President of the Club in a later story.)

After several meetings, It was agreed that Sanchez’s company Woollahra Gardens ( now CSKS Holdings) would pay the club $50,000 for an option to purchase the land if the government agreed to sell it to the Club. Sanchez also paid the Maloufs $200,000 and took over the so-called loan on their behalf. The Maloufs were now out of the picture.

Sanchez brings in daughter Vanessa Sanchez and husband Marcus Levy

But there was more to the deal. Sanchez required that PBC hire his daughter Vanessa Sanchez and her husband Marcus Levy to run the club. The jobs were not advertised and neither of them had any experience in clubs.  Levy was made Secretary of the Club but also formed a management company that ran the club. Vanessa also formed a company that was paid high fees for her work for the Club.

An agreement between Wily, PBC and Woollahra Gardens ( CSKS Holdings) was signed that allowed Sanchez’s preferred arrangements to proceed.

Wily suspended for four months

In 2004, Wily had to be replaced by another administrator from his company after he was fined and suspended as a liquidator for four months for failing to detect a fraud and to identify losses which should have closed a business. He was also found to have broken the Corporations Act in a number of company administrations and failed to lodge minutes of meetings and reports within required time.

Payments to Marcus Levy and Vanessa Sanchez

The Inquiry examined in detail payments to these Marcus Levy and Vanessa Sanchez companies. ML Management received $1,378,889 over 4 years and $245,183 worth of frequency points from purchasing goods for the Club.  Levy resigned as secretary manager after the Inquiry was announced but in 2007, Wily agreed to pay him even more money. As was pointed out to Levy at the Inquiry, under Section 41L of the Registered Clubs Act, a secretary of a club or his or her relatives cannot enter into contracts with that club. Levy resigned his Secretary role when the Inquiry was announced.

Vanessa Sanchez’s company VS Management Pty Ltd also received $686,737. Vanessa told the Inquiry that she did not actually receive these payments but instead was paid a wage out of other family accounts. She told the Inquiry that she did not really understand bigger business issues and that her father was in control.

Marcus Levy and Vanessa Sanchez did improve turnover at the club introducing more corporate bowling. In their opinion, their high fees were justified because they would not benefit from  ’goodwill’ they were building in the club.

Guest summarised it in his questions to Marcus Levy this way:

Q. ML Management? A. Yes.

45 Q. Really, to boil it down, as I see it, the club has to make a profit of $480,001 before the club gets $1 profit? A. Correct.

The report found that “looked at objectively the consequence of the arrangements with Mr Levy’s management company, ML Management (NSW) Pty Ltd is that the majority of the financial benefit of the turnaround has gone to Mr Levy via ML.”

The Quarry Bistro

The Inquiry also inquired into Quarry Bistro Pty Ltd which provided catering for the club.  The Inquiry found this company had no written agreement with the Club and paid no rent or commissions to the club. A large amount of money that was spent at the Club on food flowed into Quarry Bistro Pty Ltd.

Wily was asked whether he made any inquiries about the arrangements with Quarry Bistro and he responded that he hadn’t done so and had left such matters to Levy.

An ASIC search shows that Michael Sanchez’s son and daughter Christian and Vanessa Sanchez were directors of Quarry Bistro, which was fully owned by Christian Sanchez during this period.

In 2007, the Sanchez family set up Benchmark Hotels for the purpose of investing in hotels including the Allawah Hotel. ASIC records show that both Michael and Christian Sanchez were directors of Benchmark Hotels which at one stage was fully owned by CSKS Holdings. Andrew Wily is now the appointed liquidator of Benchmark Hotels.

Marcus Levy later bought the Lansdowne Hotel in Chippendale. He and Vanessa Sanchez also took up a contract to manage the Crest Hotel bar in Kings Cross. They were still involved there at the time of the murder of Sydney businessman McGurk who was reported to be interested in buying the hotel at the time of his death. At this time Michael Sanchez was reported to be also interested in buying the hotel but as his business interests unravelled, the sale never proceeded.

Land sale knocked back – Tony Kelly becomes the Minister for Lands

Sanchez had originally hoped that he could buy the PBC land reasonably quickly. The first knock back came in November 2003. Tony Kelly becomes Minister in 2004 and two months later application to buy the land was resubmitted.

Evidence at the Inquiry showed that negotiations to persuade the NSW government to sell the land were costly for the Club. Between 2004 and 2007. PBC paid $92,797 on trying to buy the land, This included bills for for lawyers, surveyors valuers and $10,000 for ‘consultants’. Sanchez told the Inquiry that Kirk was the person who conducted the negotiations along with other unnamed consultants. Part of this evidence was given in confidence after barristers representing Sanchez objected that the matter was commercially sensitive.

The sale was finally approved in 2006 and Sanchez told the Inquiry that as far as he was concerned it would have gone ahead if it had not been for Woollahra Council persuading the Labor government to back out of the deal and set up the Inquiry.

But Sanchez was not taking ‘no’ for an answer. He told that Inquiry that Kirk was continuing to hold negotiations directly with the “Minister’s office” and also approached the Leader of the Opposition Peter Debnam. Debnam had publicly opposed the sale.

The Guest Inquiry report was finalised in 2008. According to a Council document, some public servants in Liquor and Gaming recommended that it be tabled in parliament but the Minister declined. However, PBC was required to post it on its website.

In the following months, then MP for Sydney Clover Moore, Greens MLC Lee Rhiannon and Woollahra Council all asked the Labor government questions about what action would be taken.

In July 2008, the then Minister for Gaming Graham West replied to a question from Greens Lee Rhiannon: The “Director of Liquor and Gaming is currently reviewing the report and other information obtained in the course of the Inquiry to determine if there have been any breaches of State or Commonwealth Law, or grounds for taking complaint action against the Club.”

If you were to assume that the Inquiry would prevent the land transfer to CSKS or that the accounts would be adjusted to reflect the lack of evidence for the loan, you would be wrong. Although the MInister for Trade and Investment Andrew Stoner has not answered questions about what actions were taken, it would seem no prosecutions were laid.

Despite a healthy income, the Club could never make enough money to pay of the million dollar debt. So the PBC stayed insolvent and under Wily’s administration.

PBC is required to hold an Annual general meeting each and lodge financial reports with ASIC. No accounts have been filed since 2011 when the 2010 report explained that no annual general meeting had been held due to “complex and drawn out negotiations with the state government”.

Kirk who signed this report told me that the Club is now going ‘quite OK’. Asked about the failure to file accounts with ASIC and hold regular Annual General Meetings, he said “I suppose we have been a bit tardy, we are finalising them now.’ He said, “I don’t see that as a major difficulty…I am making sure we get on top of that’. He declined to tell me the identity of the accountant.

Then, on the last business day in 2011, the Lands Department with the approval of Minister Stoner allowed Brian Kirk and Christian Sanchez to transfer the prized site. Although Woollahra Council was not informed, PBC was now CSKS’s tenant. We do not know what officers of the Lands Department or the Minister knew about the state of Sanchez family business affairs at that time because the Minister has so far declined to answer any questions about that as well.

(The Shoebridge and Greenwich parliamentary questions and a Woollahra Council report would provide some answers.)

Michael Sanchez certainly knows what he thinks. He told me the Inquiry was an “utterly fruitless exercise. It was an expensive undertaking by OLGA ( office of Liquor and Gaming) which showed nothing other than the club was being run immaculately – in fact the template that was shown was the template that should be used in all clubs. That was the upshot of the Inquiry. It was a wasted exercise . You read it and tell me what you think…”

I have read it and in my third report, I will further explore the affairs of PBC, what the Council were told by the NSW government about the transfer of the PBC lease to CSKS Holdings and the business activities of Michael and Christian Sanchez during the period leading up to the transfer.

Note: Let me know if you know more or find  inaccuracies in this report. My blog applies the MEAA code of ethics. I strive for accuracy and will correct any errors. I can be contacted on wendybacon1@gmail.com or on Facebook or Twitter. I’m always interested in receiving more information. Some minor editing changes were made after this article was first published on March 10, 2014.

How Developers took over Prime Crown Land in Paddington

This story includes Part One of my Paddington Bowling Club series. It was first published in New Matilda, a non profit independent media outlet of the sort that is so badly needed in Australia. Tomorrow, I will publish Part two in this series about threats to publicly owned land in NSW.

Part one appears below but firstly, an update on recent events. Part Two and Three will follow.

Greenwich and Shoebridge ask Minister Stoner some questions

This week, Independent MP for Sydney Alex Greenwich and Greens MLC David Shoebridge asked questions in NSW Parliament about the NSW government’s role in the transfer and development of publicly owned land leased to CSKS Holdings. You can read more about these questions at the end of the post.

On Monday March 10, Greens Woollahra Councillor Matthew Robertson will put a motion calling on the Council to prepare a report on the circumstances surrounding the lease transfer to CSKS Holdings in 2011, the rationale for the transfer and whether or not the NSW government consulted with Woollahra Council.

Recently with Council permission, I have gone through its PCB file going back to the late 1990s. Although, as I report in Part One, Councillor Andrew Petrie and some Council officers successfully reversed the NSW government’s decision to sell the entire site and a section of Quarry Street to Woollahra Gardens ( now CSKS) in 2006, I could find no evidence that Council was informed. let alone consulted, between 2009 and 2011 when the lease transfer took place.  This period covered approvals by both Labor Minister Tony Kelly, who the NSW Independent Commission against Corruption found had acted corruptly in relation to the sale of land on Sydney’s Pittwater, and Liberal Minister Andrew Stoner. ( Kelly was not charged but is now being investigated in another ICAC inquiry involving Liberal Minister Chris Hartcher).

Stoner has declined to answer questions about the transfer.

I will be following the story on this blog and on twitter as it develops. As I investigate this issue, I am learning about other local communities concerned about the handling of Crown land including Friends of the Randwick Literary Institute.

Part One – this is the first article that was originally published on New Matilda. It was removed after an unwarranted defamation threat

Like most tussles over development this story is a long and complex one. But don’t be turned off. I have tried to summarise the issues in this first piece. Later on, I will publish some pieces about how I researched the story and issues relevant to publishing local journalism of this kind. These issues are relevant to many communities and often do not get sufficient attention in the mainstream media, mainly because  journalism resources in the traditional media have shrunk.

At one level, this is a community story about a development application for a childcare centre on Crown land in the inner-Sydney suburb of Paddington. On another, it’s a story about how state authorities and corporate regulators failed residents and local councillors who struggled to hold politicians, developers and public servants accountable for dealings with publicly owned open space.

It’s a tangled web of closed-door negotiations and business deals that disadvantaged a community club, leaving older members feeling overrun, some residents intimidated and the local council sidelined.

Over the course of more than a decade, locals lost control of a bowling club and the valuable public land on which it sits. Having effectively gained control of the site, the developers that once tried to purchase the land outright managed to persuade the NSW government to make a valuable addition to the land and transfer the lease to a company they control.

The club is Paddington Bowling Club (PBC) , which sits on publicly owned land leased from the NSW government. In 2011, the NSW Minister for Lands and Deputy Premier Andrew Stoner approved the transfer of the lease from the club to developer CSKS Holdings, which now wants to build a large childcare centre on some of the land currently occupied by tennis courts.

View overlooking Paddington Bowling Club and Sydney cityView overlooking the club and the city

Recently, local action group Friends of Quarry Street called on Stoner to suspend the Crown lease and hold a judicial inquiry into the handling of the lease and the club. This would put the developer’s application to Woollahra Council on hold.

Director of CSKS Holdings Christian Sanchez says the issue is only about childcare and anything else is a “crazy story”. But Friends of Quarry Street co-convenor Lesley Scott says the principle is one of “fair play”.

“Just because you are a developer … doesn’t mean you should be allowed to ride roughshod over the democratic process. This land should never have been allowed to fall into the hands of a developer … While we acknowledge that there is a great need for childcare, open space in the inner city is finite,” she says.

The group is also unhappy that a centre for more than 100 children is proposed next to licensed premises on a small dead-end street with very limited parking.

Ex-Mayor and current Woollahra Councillor Andrew Petrie described the issue as one in which private interests have been allowed to benefit from “underhand dealings with the government to the exclusion of the public”.

The story includes two players who were involved in a Crown land scandal over land at Currawong on Sydney’s Pittwater in the dying days of the Labor government in March 2011. In December 2011, Tony Kelly and Warwick Watkins, Minister for Lands and Planning under Labor and ex-Chief Executive of NSW Lands and Property respectively, were found by the NSW Independent Commission against Corruption (ICAC) to have acted corruptly in relation to the Currawong Land. Watkins later pleaded guilty to attempting to mislead the ICAC but was acquitted of two other charges. Kelly was not charged. He and other Labor and Liberal Party MPs are now under investigation in relation to another deal.

Both Kelly and Watkins were also involved in decisions in relation to this Paddington Crown land deal.

It also involves current Deputy Premier Stoner who provided other key approvals, and has rebuffed Friends of Quarry Street’s calls for an investigation.

He has also ignored appeals from local MP Alex Greenwich who told New Matilda: “… the NSW government must protect this community asset.” Greenwich says he has heard “very serious allegations” going back to 2000 that, “must be properly and independently investigated. In the light of recent ICAC investigations about misuse of government land and leases, the government must ensure that this lease is above board. I’ve repeatedly asked the responsible minister to do this”.

Firstly a summary of events.

For over half a century, PBC has leased open space Crown land that was permanently set aside for recreational and community purposes. The PBC site which now includes a clubhouse, two bowling greens and tennis courts adjoins publicly owned land Trumper Park.

Back in 2000, PBC got into financial difficulties and external administrator Andrew Wily was appointed to manage the club. He decided to call in Michael Sanchez, with whom he had been associated in business for more than 10 years.

A real estate agent, hotel owner and developer, Sanchez is well known in the eastern suburbs, partly because of his involvement in several controversial developments and court cases. Sanchez, who told New Matilda he no longer has anything to do with the PBC, became bankrupt last year. His son Christian is now sole director and shareholder of CSKS.

The Sanchez family are well known for their development company Benchmark Australia. Although Benchmark is still registered with the Australian and Securities Investment Commission (ASIC), it currently has no directors, a breach of the Companies Act which ASIC says will be picked up in a compliance audit this year. Michael Sanchez’s wife Lynette is now the sole owner. Christian Sanchez told New Matilda that he has never been a director of Benchmark Australia but an ASIC company search shows he was once director and secretary. Benchmark was described as the client in architects’ plans for the childcare development application, which New Matilda inspected at Woollahra Council.

After meetings with Wily, Michael Sanchez became heavily involved in the club. As he later told an inquiry, his objective was to buy the Crown land then leased by PBC for development. He and Wily agreed that his company Woollahra Gardens (now CSKS Holdings) would pay $50,000 to the club in return for an option to buy the land if PBC could persuade the NSW government to sell it to them. (There were other aspects to this deal which benefitted the Sanchez family as readers will learn in the next story in this series).

Sanchez then introduced another key player — planner Brian Kirk, who Sanchez and Wily had both known for years. Kirk, who had previously worked for the NSW Lands Department, became Sanchez’s key negotiator with the Minister for Lands and the Crown Lands department. Kirk also became president of the club in 2003 and is still president today. His small planning consultancy company has also provided a planning and environment expert report supporting the childcare application. Kirk told New Matilda that he saw no conflict between his various roles.

Benchmark, which is not usually a political donor, paid $4000 in two donations to the NSW and Queensland Labor parties between 2002 and 2005. Property developer donations are now banned in NSW.

After two years of negotiations with Kirk, the Crown agreed in 2006 to sell land to the PBC for what was reported by the Sydney Morning Herald to be a low Crown assessed price of $2.2 million. As soon as PBC bought the land, it would onsell it to the Sanchez company.

All of this had happened without any consultation with Woollahra Council, which controls adjoining Trumper Park. When a member of the Council’s open space staff was told about the sale, he was shocked. Not only was the Crown preparing to sell the club land but also the public access way that provided essential access for Woollahra Council managed facilities in Trumper Park. This would have greatly enhanced the development value of the PBC property and jeopardised the Council controlled activities. Staff prepared a detailed report opposing the sale.

View of the narrow entry and parking outside the bowling club. Residents fear the new development will overwhelm itView of the narrow entry and parking outside the bowling club. Residents fear the new development will overwhelm it.

Council called on the NSW government to halt the deal. Council minutes show Council staff reviewed NSW Independent Commission against Corruption guidelines on direct “no tender” negotiations between state and private parties and found direct private negotiations were not appropriate in this case.

Woollahra Council had effectively blown the whistle on the deal. The Minister Tony Kelly withdrew approval for the sale and the NSW Director of NSW Liquor and Gaming, Albert Gardner, set up an inquiry to investigate allegations of “corrupt and improper dealings” in the affairs of PBC. The terms of reference included an inquiry into payments to Sanchez’s extended family members by the club, club dealings with poker machines and the deal with the NSW Crown Lands department. The inquiry was limited to making findings of fact. Any decisions about whether corruption or legal breaches had occurred were to be left to the Liquor and Gaming Director. New Matilda has not being able to find out what, if any, decisions were made.

Despite several SMH reports and 38 days of public hearings, the inquiry report, which was completed in March 2008, flew under the public radar.

New Matilda’s next story will include the first media coverage of the report. Minister Stoner has declined to answer New Matilda’s questions about what actions were taken after the inquiry.

Michael Sanchez describes the 2007 inquiry as an expensive and “utterly fruitless exercise” that showed “the club as being run immaculately” and provided a template for how clubs should be run in NSW. He dismissed any further questioning of the club’s administration, including its failure to file annual reports, as simply “an attempt to stir up up mud”.

After the inquiry, the issue disappeared again from public view. Residents only became aware CSKS had gained control of the land when the development notice was posted on the club premises last year.

In fact, behind the scenes negotiations between the company negotiators, the Minister’s office and the department never stopped.

Woollahra Council also pursued the matter. Councillor Andrew Petrie, who attended meetings with ministers (including ex-Premier Kristina Keneally when she was Planning Minister) and the then head of the Crown Land department, Warwick Watkins, remembers the period this way:

“We were always defending. We had the land around it, we were the ones that were going to be impacted. It always really surprised me that however many ministers we visited …we were always saying but minister, but minister, but minister. [CSKS] always seem to be there before we got there. That’s why we had to fight it so hard… it seemed at one stage that they had been given carte blanche to deal with the site as they wanted.”

Petrie said then local MP, now Sydney City Council Mayor, Clover Moore, strongly supported the Council.

Petrie was surprised by a meeting in which Warwick Watkins was “aggressive towards us … It particularly stuck in my mind. He had made up his mind and that is the way it was going to be.” New Matilda has attempted to reach Watkins to interview him without success.

Woollahra Council did succeed in stopping the “carte blanche” sale of the land. But in 2009, not long before the government changed hands, a series of dealings with the land received ministerial approvals.

In 2009, Woollahra Council was told it could take control of the access way but crucially a strip of this small road was excised and granted to PBC considerably enhancing development possibilities for the site. The perpetual lease was changed to a 50 year lease.

Three days after the 2011 state election that brought the O’Farrell Liberal party to power on 27 March, changes were made to the title that provided for ministerial approval to be given for transfers, subleases and mortgages of the PBC land.

On 30 December 2012, with the approval of the Liberal Minister for Trade and Investment Andrew Stoner, the Crown transferred the lease from PBC to CSKS for one dollar’s consideration. The PBC and tennis courts operator now pay about $100,000 rent a year to CSKS, which pays approximately $52,000 to the government.

The secretary manager of the club, Robert Ashton, told New Matilda that the club had “absolutely no say” over the transfer decision and that all decisions were made by the administrator Wily. The documents show that both Kirk and Ashton signed documents on behalf of the club.

On the same day Minister Stoner approved the transfer, he also approved a mortgage on the land allowing the company to enter into agreement with the Commonwealth Bank for more than $1 million finance. Last year, the Minister also provided necessary approval for the land to be developed. These events happened at a time when publicly available basic law and corporate checks would have revealed that PBC was failing to file reports required by the Corporations Act and both Michael and Christian Sanchez were in financial difficulty with other developments.

In two further reports, New Matilda will probe these events and raise questions about whether there has been a failure of public and corporate governance. Last week, New Matilda sent Stoner a list of questions about the handling of the land and responses to the 2008 Inquiry into the club. A spokesperson for Minister Stoner, John McClymont said that a response to questions about the land would require a “detailed review of the file going back” which is not going to happen. Another spokesperson for Minister Stoner, Mark Nolan told New Matilda that after the PBC 2008 report, the Labor government developed but did not pass reforms to the Registered Clubs Act to protect clubs from entering into private contracts which result in the takeover of club assets or property. These amendments were passed by the O’Farrell government late in 2011, well before the PBC handed over the lease to CSKS Holdings.

Follow the story and judge for yourself whether you agree with Deputy Premier Stoner’s and Crown Lawyers’ response to Friends of Quarry Street complaints that described CSKS Holdings as a “private equity financier who rescued the Club from insolvency”. Or is it, as Woollahra Councillor and ex-Mayor Andrew Petrie suggests, that private interests are benefitting from “underhand dealing with the government to the exclusion of the public”?

If you have any further information contact Wendy Bacon directly on wendybacon1@gmail.com or via twitter or facebook or through her twitter at Wendy_Bacon You can also comment on this blog.

An update

On March 6, MLC Greens David Shoebridge , an ex- Woollahra Councillor, asked the Minister for Trade and Investment Andrew Stoner:

  • As per the requirements of the Crown Land Act, could the Minister advise the dates and newspaper/s that advertised :The proposed lease of Crown Land Torrens Title 3/1156846? The proposed reassignment of the lease to CSKS Holdings P/L?
  • Were Crown Lands officers aware that CSKS Holdings P/L was the same company as Woollahra Gardens P/L which was the subject of the 2007 Inquiry in Relation To Paddington Bowling Club Limited conducted by Commissioner Brian Guest pursuant to section 41X of the Registered Clubs Act 1976?
  • On what basis did the Department form the view that was communicated to the Minister and residents in a letter written on 28/8/13 on behalf of residents that CSKS Holdings P/L could be described as a “private equity financier”? At the time the lease was transferred to CSKS Holdings P/L was due diligence undertaken to confirm they were financially stable? If so what inquiries were undertaken?

Alex Greenwich , who has been persistently trying to get responses from the government to residents’ concerns, also asked the Minister questions including about the dealings between the government, the Paddington Bowling Club and the Sanchez company, and about what actions were taken after the Inquiry report?

News on Roseanne Beckett petition & Questions for NSW Government

Last week I published a story which laid out the terrible conspiracy by NSW police and Crown witnesses that led to Roseanne Beckett (Catt) spending ten years in prison for crimes she did not committ. The Crown and the NSW DPP continue to sanction that conspiracy.

On Sunday Night, Channel 7 did a short follow up on its earlier story about the case. Reporter Rahni Sadler put this proposition to Roseanne’s ex-husband Barry Catt: You put an innocent woman in jail for 10 years. You helped to put an innocent woman in jail for 10 years. Shortly afterwards (at least in the edited version) Barry Catt asks to be excused, saying that he has an answer ‘up his sleeve’. As he departs, he thrusts his fist into his hand – suggesting to the audience that he could resort to ‘biffo’. In fact, Barry Catt has assaulted many women as the NSW DPP well knows. Even at the time of her arrest, Roseanne had charged Barry with two very serious assaults. These were part heard but were simply allowed to lapse while the NSW police got on with framing Roseanne. In their introduction, Channel 7 summarised the case this way:

Roseanne had lost the best years of her life in what’s been described as a grave miscarriage of justice. But her battle is far from over: she now has to fight for compensation. Ironically Barry Catt, who has had AVO’s taken out against him by at least nine different women, did receive compensation when Roseanne was jailed that he has not had to pay back. Today Barry still claims his ex-wife is guilty, describing her as ‘Satan’ .

Also on Sunday, Mary Court who first met Roseanne as a prison visitor in 1996 and has continually campaigned for her ever since, started an online petition. The Blue Mountains Gazette reported on Mary’s fight for justice for Roseanne this week.The petition calls for compensation and a public inquiry into the case. Amongst many other issues,such an inquiry would find out who was responsible for the NSW DPP being prepared to continue to rely on the word of ex-detective Peter Thomas, who had been proved to have lied in another case. Why wasn’t he charged with perjury? You can find the petition here:

The first politician to sign the petition was Greens Senator Lee Rhiannon who first raised questions about this case in November 2000, not long after our first reports appeared in the SMH. (I republished those early stories on this blog.) Rhiannon later asked further questions about the police role in the case and about the case of Jake Sourian, another Thomas frame-up.
I will continue to report on this story and will pursue my questions with the authorities.If the Crown had not been so determined to cover-up and there were avenues for redressing miscarriages of justice in our society, Roseanne would have been compensated years ago. As another supporter Claudette Palmer has reported the Attorney General’s department were involved in negotiations for compensation in 2006.For some unknown reason these negotiations were abandonned.
Given that there has been a lot of discussion in the media about journalism, neutrality and politics this week, I thought I’d add a small comment on that topic.Some people may wonder why as a journalist, I’m promoting a petition, which is after all a form of political action. Suffice it to say here that I regard the essential obligations of a journalist as being to the evidence and the’truth’. I apply the MEAA code of ethcis which mirrors that of most organisations of journalists around the world. My views on Roseanne’s case are based on months of research over many years. But once convinced by the evidence that she had been framed, I have an obligation as a citizen and a journalist to hold power accountable. The topic of politics and journalism is a much bigger one about which I will do more posts. I’m proud to be part of a long tradition of radical journalism and last year published a chapter in Left Turn, a book edited by Antony Loewenstein and Jeff Sparrow and published by Melbourne University Press.