“Follow the money”: Call to examine Gillman “links”
A Parliamentary inquiry should examine whether the State Government’s controversial Gillman land deal was a “sweetener” to encourage a development company to settle a long-running law suit, State Parliament has been told.
The Legislative Council last night supported a motion to establish a select committee to inquire into the deal to sell 400 hectares of government-owned land at Gillman to Adelaide Capital Partners (ACP) without going to tender.
InDaily has reported extensively on concerns by some members of the board of Renewal SA about the ACP deal. After initially advising the government that the land should go to tender, the board – minus a few members – eventually approved the sale.
Last night Greens leader Mark Parnell told Parliament the select committee should inquire into any possible links between the agreement with ACP and the Port Adelaide residential development, Newport Quays, which was being run by development company Urban Construct.
The companies were linked, he said, by two brothers – Simon and Todd Brown.
He said the deal with ACP, of which Simon Brown is a non-executive director, came one day before it was reported that the State Government settled a long-running court action with Urban Construct, of which Todd Brown was CEO.
The State Government this morning rejected outright any connection between the Gillman deal and the Urban Construct settlement and accused Parnell of peddling a “conspiracy theory”.
Parnell told Parliament: “There is an old adage in politics that if you want to get to the truth you follow the money. I think this is exactly what this select committee should do and I have every confidence that it will.
“One aspect that I would particularly like the committee to investigate and report on is whether this land deal with Adelaide Capital Partners is connected in any way with the decision to axe the Newport Quays development at Port Adelaide.
“The possible link between these two developments derives from the links between the key players and, in particular, the Brown brothers—Todd and Simon. The potential link between the failed Newport Quays development and the Gillman deal is something that a number of people have raised with me and in particular a number of journalists who have joined the dots and quite reasonably come to the conclusion that this matter needs further investigation.”
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A State Government spokesman told InDaily today: “”The assertions are simply another Green’s conspiracy theory, and when they are demonstrated to be false, we look forward to Mark Parnell retracting them.”
Parnell claimed that the government’s deal with ACP was done the day before it was reported that the government settled a lawsuit with the Urban Construct Group of Companies, the company behind the Newport Quays housing development at Port Adelaide.
“The deal with Simon Brown’s company, Adelaide Capital Partners—the option to purchase the land at Gillman—was made on 18 December 2013,” Parnell told the Legislative Council.
“The following day, the settlement of brother Todd Brown’s lawsuit against the state government was reported, that is, 19 December 2013. According to The Advertiser, the case settled for around $8.4 million, which is a little more than the $5.9 million that was offered by the government but well short of the hundreds of millions in losses and potential losses that had been suggested.
“This raises a number of questions. One question is whether this relatively low settlement is an acknowledgement by the Newport Quays consortium that their case was weak and it was unlikely to amount in more compensation if it went to trial. It is hard to know whether that is the case, but it seems that they were doing quite well in court up until that point.”
Parnell said the select committee should examine “whether the Gillman land deal is, in some way, a sweetener for Urban Construct settling its legal action against the government after the Newport Quays development was axed”.
“Here is the question: was the Gillman land deal part of an off-the-record settlement of the Newport Quays lawsuit? Or to put it another way, was the state government’s deal with Simon Brown’s company part of some informal arrangement or understanding that would see Todd Brown’s companies settle their court action against the state government for a relatively modest amount of compensation?
“This is why we need this select committee: to get to the bottom of these murky waters. If the government has nothing to hide, it has nothing to fear. I urge all honourable members to support this motion.”
Simon Brown would not comment on Parnell’s speech.
Mark Parnell’s full speech to the Legislative Council
The Greens are supporting this motion to establish a select committee to inquire into and report on the sale of government-owned land at Gillman. Like many in the community we believe that there are important unanswered questions around the decision by the government to not offer this land for sale by open tender or, it seems, by any other process that maximised its value to the community. None of the explanations offered by the government so far are believable and the community has a right to know what is going on.
The government has effectively said that no other credible proposals for the use of the Gillman land have been put forward and that the executive arm of government was quite within its rights to negotiate and strike a deal in secret with a single bidder. We know that a number of other proposals from different companies had been put forward over the years and rejected. There is an old adage in politics that if you want to get to the truth you follow the money. I think this is exactly what this select committee should do and I have every confidence that it will.
One aspect that I would particularly like the committee to investigate and report on is whether this land deal with Adelaide Capital Partners is connected in any way with the decision to axe the Newport Quays development at Port Adelaide. The possible link between these two developments derives from the links between the key players and, in particular, the Brown brothers—Todd and Simon. The potential link between the failed Newport Quays development and the Gillman deal is something that a number of people have raised with me and in particular a number of journalists who have joined the dots and quite reasonably come to the conclusion that this matter needs further investigation.
So how have people come to this conclusion that the two matters may be related? To explain the link we need to look at the main players and we need to look at the timing and, as I have said, we also need to follow the money. Let us start with Newport Quays. The Newport Quays development commenced in 2004 when a consortium of developers comprising the Urban Construct Group of Companies and Brookfield Multiplex Group signed an agreement with the state government through the Land Management Corporation. The LMC subsequently became the Urban Renewal Authority and is now known as Renewal SA.
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The Port Adelaide Waterfront Redevelopment Project Development Agreement was signed on 25 October 2004 and terminated seven years later on 31 October 2011. I do not need to go into all the reasons why the Newport Quays development was axed, but it is probably fair to say that it was a combination of economic, social, environmental and political factors. From the government’s perspective, these were euphemistically packaged up in the phrase ‘change of approach’.
Not surprisingly, the Newport Quays consortium were unhappy with this decision to axe their project, and they commenced legal action against the state government to recover damages. I should at this point note that my source for much of this information is an affidavit sworn by Todd Hamish Brown, the CEO of the Urban Construct Group of Companies, dated 9 December 2011. This affidavit forms part of the evidence considered by the Select Committee into Land Uses on Lefevre Peninsula—a committee which I chaired and which reported on 28 November 2013.
The affidavit was in support of the consortium’s claim for damages against the state government. Mr Todd Brown claims the government was ‘capricious’ and acted in ‘bad faith’. He alleges misleading and deceptive conduct and claims compensation for ‘economic loss, loss of use, loss of profit or loss of opportunity for what was to be a $1.5 billion project—perhaps even more. Mr Todd Brown puts forward a range of alternative rationales for the cancellation of Newport Quays by the government, including that the government did not advise Newport Quays of the potential impact of the proximity of Incitec Pivot or Adelaide Brighton Cement on certain stages of the Newport Quays project.
Todd Brown also believed that the popularity of the Newport Quays development was significantly impacted by media reports of the Texas fertiliser plant explosion, to the point where apartments in Port Adelaide were unsaleable according to real estate expert opinion. Todd Brown also suggests that the government had several ulterior motives for cancelling the development agreement, including their desire to win back public support in the lead-up to the Kevin Foley by-election.
I refer to the affidavit that was filed in court because it is the most comprehensive account of the consortium’s version of events and because it is already on the public record. In fact, I was surprised to get a guernsey in the affidavit myself, largely as a result of the Greens’ efforts to shine some light on the EPA’s misgivings about building new houses so close to noxious and dangerous industry. I am actually immortalised at paragraph 80 of the affidavit, for those who care to read it.
According to the original court documents, the legal claim by the consortium against the government was for unspecified damages; however, media reports refer to compensation of ‘hundreds of millions of dollars’. Sarah Martin, in The Advertiser of 15 December 2011, reported as follows:
"Urban Construct is suing Patrick Conlon and the government over the $2 billion Newport Quays development.
The consortium behind the scrapped Port Adelaide project, comprising Urban Construct and Multiplex, has engaged senior lawyer Michael Abbott, QC, to take action against the Government and its development agency, the Land Management Corporation.
Premier Jay Weatherill last month retracted approval for the 50ha multi-stage development and said the developer would be paid $5.9 million in compensation.
But The Advertiser understands the consortium may be seeking hundreds of millions of dollars in damages."
So, that is Mr Todd Brown and Urban Construct. Let us now look at the business interests of his brother, Mr Simon John Brown. Simon Brown is a non-executive director of Adelaide Capital Partners, the successful (and it seems the only) bidder for the Gillman site. ACP is half owned by two companies: Gerlach Asset Development and ResourceCo Holdings.
Simon is also a director of ResourceCo. ResourceCo is wholly owned by ResourceCo Holdings, which is in turn half owned by a holding company called SJK Brown Investments Pty Ltd. Simon Brown is a director and owner of SJK Brown Investments. Up until 2004, so was his brother, Todd Brown. There may be other business connections amongst the dozens of companies involved in their various business interest, and I would be surprised if there is not, but this is a start. The Brown brothers are linked by business interests as well as by blood.
The story of Adelaide Capital Partners’ deal with the state government to buy 400 hectares of land at Gillman for $100 million has been outlined well enough by others and I do not need to go through it all here, but I would like to follow the money.
Among the issues to be determined by this select committee will be whether or not the value to be received for the sale of the Gillman land was appropriate, and this is a separate issue from the question of whether or not the process was sound and issues around the lack of any competitive tender. Most of the commentary suggests that the land has been grossly undervalued. If that is the case, why was the land disposed of so cheaply?
Let’s consider the facts as best we know them. The deal with Simon Brown’s company, Adelaide Capital Partners—the option to purchase the land at Gillman—was made on 18 December 2013. The following day, the settlement of brother Todd Brown’s lawsuit against the state government was reported, that is, 19 December 2013. According to The Advertiser, the case settled for around $8.4 million, which is a little more than the $5.9 million that was offered by the government but well short of the hundreds of millions in losses and potential losses that had been suggested.
This raises a number of questions. One question is whether this relatively low settlement is an acknowledgement by the Newport Quays consortium that their case was weak and it was unlikely to amount in more compensation if it went to trial. It is hard to know whether that is the case, but it seems that they were doing quite well in court up until that point.
On 23 March 2012, the ABC reported that, at a preliminary hearing, Mr Michael Abbott QC, on behalf of the consortium, told the court that the government ‘terminated this for the purpose of dealing with someone else and getting a higher price. He said, ‘They have used their discretion to line their own pockets.’ Mr Abbott also said that the Port Adelaide by-election may have been another political reason behind the termination.
This argument seems to have landed on fertile ground because, on 31 May 2012, Judge Lunn, a master of the Supreme Court, ordered the government to hand over a range of documents that relate to the LMC’s deliberations and communications in respect of, and the reasons for, the termination of the Newport Quays agreement. So, at that point, the consortium was about to get access to the real reasons Newport Quays was being axed. Judge Lunn said, at paragraph 28 of his judgement:
"There had been a groundswell of constituents in that electorate who were not happy with the development. There is a reasonable possibility that the termination was linked to the forthcoming by-election and that, if so, it would have been capricious on the part of the LMC."
The judge also noted:
"There is no explanation about why the termination was first publicly announced by the Premier and the second defendant rather than the LMC [the second defendant being Patrick Conlon]."
From mid-2012, there is very little on the public record until the case settled on 19 December 2013, some 18 months later. Effectively, Urban Construct and the Newport Quays consortium appear to have accepted that the termination was not wrongful and that it was not entitled to uncapped damages.
What conclusions can be drawn from all this? Ultimately, the select committee will need to hear from all sides, but one proposition that must be tested is whether the Gillman land deal is, in some way, a sweetener for Urban Construct settling its legal action against the government after the Newport Quays development was axed.
Here is the question: was the Gillman land deal part of an off-the-record settlement of the Newport Quays lawsuit? Or to put it another way, was the state government’s deal with Simon Brown’s company part of some informal arrangement or understanding that would see Todd Brown’s companies settle their court action against the state government for a relatively modest amount of compensation? This is why we need this select committee: to get to the bottom of these murky waters. If the government has nothing to hide, it has nothing to fear. I urge all honourable members to support this motion.
