Making millions out wharf sackings
South News commentary April 15

Patrick's boss Chris Corrigan and Lang Corp chairman Peter Scanlon have literally made millions out of sacking its Australian workforce, with shares in the listed owner of Patrick stevedores, Lang Corporation, closing yesterday at a record high of $2.46.

In 1980 Costigan Royal Commission  into the Victorian Painters and Dockers Union stumbled across a "bottom of the harbor" massive tax fraud involving the use of shell companies, which had been asset-stripped by the scheme promoter. Now in 1998 in the the battle for the waterfront devious entrepreneurs have now found a new use for shell companies.

In the '80s, companies were stripped to a shell to avoid paying tax. In the late '90s, companies are being stripped to a shell to avoid meeting their legal retrenchment liabilities to their workers.

Mr. Scanlon, the biggest shareholder with 15 per cent of the Lang Corporation, by close of trading yesterday had made $10 million on last Tuesday's close, the day Patrick sacked its 1400-strong workforce. A trade union challenge to the scam in Australia's Federal Court, scheduled for April 8 was pre-empted by Patrick in occupying it's docks with masked security guards and attack dogs locking out its union workforce Tuesday night.

Bonus for executives

Mr. Scanlon is also renowned as the shadowy crook behind Australia's  greatest corporate heist. The National Crime Authority alleged that John Elliott and Elders executives embarked on self enrichment programe through enhanced superannuation scheme, one cent part paid shares, bonus shares and secret equity in convertible bonds.

Recently theft and conspiracy charges were brought against Scanlon in 1994 by the NCSC, which related to fraudulent foreign exchange transactions worth $65 million in 1988. But on a technicality Justice Vincent in the Supreme Court agreed with Mr. Scanlon's solicitor, Mr. Leon Zweir, of Arnold Bloch Leibler  that the mountain of evidence was  inadmissible and illegally obtained.

Mr. Scanlon is, once again, back in business, serving Lang Corporation. In 1997 he received $899,000 in management fees and a share of profits from investment services provided to the company. The BRW Rich list estimates Mr. Scanlon's net worth at $70 million and interests ranging from helicopter leasing to wineries in France and Australia.

Over the week Mr. Corrigan's shareholding has improved in value by $256,000 a day, or $2.1 million overall. His 3.8 million shares, which are understood to represent the vast bulk of his personal wealth, were worth $7.2 million last week. Today they are valued at $9.38 million.

For his week's work, Mr. Corrigan is also being paid very well. Lang Corporation's 1997 annual report shows the company's top earner, presumably its chief executive, receives more than $480,000. The report also shows Mr. Corrigan has an outstanding loan of $2.7 million from Lang Corporation.

Insolvency for workers

Patrick boss Chris Corrigan says the wharfies weren't sacked; they were still employed by the four Patrick subsidiaries that had always employed them. It is just that as of last week the four companies no longer have a contract to supply employees to Patrick's operating company.

The Patrick employment subsidiaries have been stripped of most of their assets by the parent company and have accumulated liabilities of $56 million. An insolvency specialist has been called in to wind up the four companies and, as far as Corrigan is concerned, the injunction by the Federal Court stopping the sackings for seven days is no longer applicable to Patrick's operations.

But in the Federal Court in Melbourne today Julian Burnside QC, counsel for the Maritime Union, called for the imposition of penalties on the Patrick companies, the payment of damages by parties including Mr Reith and the Federal Government, and orders stopping any further steps being taken under the alleged conspiracy. He told the court company directors began working on a complicated jigsaw last September. But there actions were only exposed a week ago when it was discovered Patrick had undergone a $300 million restructure and then sacked its 1400 workers.

Institutional investors in the Lang Corporation are also at risk. If Patrick goes broke as a result of its attempt to break the unions on Australia's ports Lang Corporation shares will be virtually worthless.

Hiding the truth

Patrick's writs in the Supreme Courts in Perth and Sydney against picketers and for compensation for secondary boycott damage  is designed to tie up the court in legality and mask the real rorts.

It is a pattern followed years ago when Elders set up a top level legal defence committee of the most blatant management buyout in Australian corporate history. According to David Elias writing in the Melbourne Age it gathered every scrap of documentary evidence it could find and compiled it into a top-secret dossier, called it the Melba File, in the defence of Scanlon and his two former Elders colleagues, Mr. John Elliott  and Mr. Ken Biggins.

"The Melba file was top secret. It was so sensitive that each page of every copy was separately encoded so unauthorised photocopies could be tracked back to individuals. Even the typing was entrusted only to a legal secretary with an impeccable record of discretion."

"Copies were signed out to the most senior of directors and executives at Elders IXL and their corporate lawyers in Melbourne and New Zealand on the clear understanding that they showed them to nobody, and discussed the contents only on a need- to-know basis."

"It has enabled defence lawyers during the past nine months to piece together an alternative scenario for the $66.5 million H-fee that the three men were accused of conspiring to steal from Elders shareholders in 1988"

If Patrick can rort its legal obligations to its employees by hiding behind a shell company  no employee can be sure that he/she will receive due process or legal entitlement in the case of redundancy. It sets a precedent for any company to set up an employment subsidiary that can be stripped to avoid retrenchment compensation.