Cable car conflicts

Premier Hodgman was dismissive of concerns about State Growth Minister Groom’s close relationship with Adrian Bold, proponent of the Mount Wellington cable car project, as revealed on social media.

“There are a lot of things that require my attention ---- Matt Groom’s Facebook page isn’t one of those”, he said.

What if the chair of Tourism Tasmania was a 50 per cent owner of a company which is the largest shareholder, apart from Mr Bold, in the cable car venture? Would that appear on the Premier’s radar? After all he is Minister for Tourism as well.

Tourism Tasmania is an agency of the government, in most respects the same as a government department like Education say, except a Board runs the show. It does however report to the minister. Board members are appointed by the government. The current chair James Cretan is a tourism operator so he brings a working knowledge of the industry to the table. It also means he brings a possible conflict of interest given that he “oversees the agency's strategic direction and plays a significant role in communication with government and industry” as outlined on the agency’s website.

Mr Bold’s fledgling Mount Wellington Cableway Company Pty Limited (MMCC) reported in September 2016 a successful capital raising : “We're delighted to welcome over a dozen new shareholders into MWCC this past month, after a brief 30 day investment window achieved a fantastic 32% oversubscribed result.” That’s all a bit of an overstatement. Small private companies are limited when it comes to capital raising. Essentially offers are confined to mates and family and those people who satisfy the definition of ‘sophisticated investor’ measured by the quantum of their assets and/or income. The other problem is that Australian Securities and Investments Commission (ASIC) records don’t support the claim that more than a dozen new shareholders were welcomed.

At the time all 2,000,000 ordinary shares in MWCC were owned by Mr Bold and his associates. These had a paid up value of $80,000.

There were also five preference shareholders who had contributed $210,000 for preference shares at $1 each. The rights of preference shareholders vary from company to company but as a rule they don’t get a vote but they do get first bite of the cherry should dividends be declared.

Since September 2016 there have been three new preference shareholders taking the total to eight, who together with existing shareholders contributed a further $552,500 ----- 442,000 shares at $1.25 each. The largest contribution came from Tucre Pty Ltd, now the largest preference shareholder on the register, who chipped in $312,500 for 250,000 shares. One assumes it was a cash contribution but it could have been in kind.

Tourism Tasmania’s chair James Cretan is a director and 50 per cent shareholder of Tucre. Tucre’s MWCC shares are not beneficially owned meaning it holds them in trust. It’s hard to believe that Mr Cretan doesn’t have an interest in the underlying trust. For someone in his position simply to do a favour and front for a mate is scarcely credible given the sensitivity of the project. In any event he has a fiduciary duty to the beneficial owners even if he’s just a trustee. How can he give balanced advice on the strategic direction of tourism in Tasmania and communicate these matters with government?

The Tourism Tasmania website listing curricula vitae of current Board members hasn’t been updated to include Mr Cretan’s recently acquired interest in MWCC. It does however reveal Mr Cretan’s interest in a family company Kriticos Nominees Pty Ltd which owns and operates various tourism venues including the Shoreline Hotel in Hobart. The company which operates the Shoreline is 100 per cent owned by Kriticos. The Shoreline has one of the largest EGM turnovers in the State, sitting comfortably amongst the top ten best performers in terms of player losses. How can the chair of Tourism Tasmania put the industry’s position on future gaming as part of the strategic plan for tourism in Tasmania when his family company owns one of the largest EGM turnover pubs in the State?

MWCC is a typical start up company struggling to organise the necessary permits and plans including the use of public land, which may then produce a windfall gain to the few shareholders who have taken a punt and made contributions. Hyperbole is the stock in trade for such companies and MWCC have displayed plenty.  Using contacts to promote and advance plans is also to be expected.

But it’s the conflicts of interest that need to be addressed. Often participants bring existing conflicts to the table when co-opted onto Boards to advise governments and these need to be carefully managed. It was thus with Mr Cretan’s existing interest in tourism assets, since made even worse due to the current EGM deliberations. But his interest in MWCC wasn’t acquired until October 2016. It beggars belief that it ever occurred.

The Premier can’t be expected to monitor Facebook pages. But being aware of the possible conflicting business activities of the chair of the agency of which he is the responsible minister is an entirely different proposition.

People expect a line to be drawn in the sand. It needs to be drawn this side of the bucket of money.

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