While much of the ire over Whyalla’s struggling steel plant has centred on the billionaire formerly at its helm, how was the situation allowed to fester for so long? Where was ASIC? Andrew Gardiner reports.
The turmoil surrounding Whyalla’s steelworks – now in administration amid a promised Federal-State bailout – took a new turn on Thursday, with attacks on the Australian Securities and Investments Commission (ASIC). The regulator was accused of being “asleep at the wheel” at the plant’s peril, while billionaire owner Sanjeev Gupta “worked on renovation approvals for his $34m Sydney mansion”.
In a letter to ASIC chairman Joseph Longo, Senator Jacqui Lambie called on the regulator to belatedly investigate the plant’s former owners, the Gupta Family Group (GFG), for reportedly trading while insolvent. With 1,100 jobs on the line and hundreds of others relying on the steelworks, Senator Lambie said the signs were there for months that something was seriously wrong.
“ASIC is still oblivious to what’s going on? So I’ve got a message for Mr Longo – I’ve got a Christmas card list and a bullseye list, and you’re about to be shifted from one to the other,” she told MWM.
“GFG has been operating in circumstances of grave financial difficulties and an apparent inability to pay its debts, large and small when they were due,” Lambie wrote in her letter to ASIC. “For months on end, the people and businesses of Whyalla have been suffering (and it) can’t be that GFG directors can just walk away from this scot-free,” she added later.
“In November, Rex Patrick and I publicly called for (GFG subsidiary One Steel Manufacturing) to be put into administration.
Mr Longo is getting paid $858k per annum and appears to be doing nothing for those paying his way.
Senator Jacqui Lambie
In extraordinary scenes on Wednesday, the SA Government moved to place One Steel into administration, appointing KordaMentha as administrator, and ramming changes to the Whyalla Steel Works Act through state parliament with haste some say should have been seen months ago.
From Whyalla to Williamtown, for KordaMentha, where there’s a bill there’s a way
The move came after alarm bells were raised over the failure by GFG – a group with annual worldwide revenue of around $20B – to restore its crippled blast furnace to full capacity, and January’s announcement by the company of 350 contractor job cuts, a move which blindsided workers.
Rescue package in place
On Thursday, the state and federal governments announced details of a $2.4B plan to rescue the steelworks, including plant upgrades and close to $2B in subsidies for a new private owner.
The three-part plan includes $32.6m for infrastructure improvement, $50m for creditors, and $6m for a jobs and skills hub, Prime Minister Anthony Albanese said.
Another $384m of state and federal funds was expected to ensure workers and contractors at Whyalla Steelworks get paid while the plant is in a state of flux.
Albanese said a further $1.9B would be used to “work with a new owner to invest in the upgrades and new infrastructure” to ensure the steelworks has a sustainable, long-term future,
Whyalla Steel has forged some of our country’s biggest projects – rail lines, airports and stadiums. We need Whyalla steel.
But is the bailout package enough? SA’s Treasury previously estimated the cost of transforming Whyalla’s steelworks at $3B, and of the $2.4B pledged, a large chunk is earmarked for paying debts, covering payrolls and other ‘stabilisation’ efforts, leaving a shortfall of at least $1.1B, presumably for the new owner to fork up.
This is by no means the first time ASIC has drawn the ire of a Senator. Last September, Malcolm Roberts expressed serious reservations about the regulator’s investigation of ABC Bullion amid allegations the company charged clients storage fees for metal that wasn’t even in their vaults.
Bullion failures. ASIC disregards Senate and ignores whistleblower evidence
Trading while insolvent is a situation where companies continue to operate and rack up further debts, despite being unable to pay earlier debts when they were due. Penalties under the Corporations Act include a five year ban from managing other corporations and reparations to creditors or liquidators.
Reports estimate GFC’s and One Steel’s debts at more than $300m, while Sanjeev Gupta has a reported net worth of around $2.8B.
An Adelaide-based graduate in Media Studies, with a Masters in Social Policy, I was an editor who covered current affairs, local government and sports for various publications before deciding on a change-of-vocation in 2002.