Two Australian businesses owned by the Tory peer and former Australian Liberal party donor Michael Ashcroft have collapsed in the space of a year with debts totalling almost $150m, raising questions about their demise and – in one case – the means used to bring it back to life.
The financial services group Anne Street Partners and the house builder QNV Constructions were put into administration after falling into difficulty over the past 12 months.
But the nature of the resurrection of Anne Street from failed firm to going concern has angered its former chief executive, who alleges it involved a transaction “tainted by fraud”.
The transaction – reluctantly agreed to by the administrator – has left the ex-CEO more than $1m out of pocket.
Meanwhile up to 100 customers of QNV Constructions, which collapsed this month, are waiting for a restructuring proposal – as are unpaid subcontractors and suppliers, who are owed about $2.5m.
It has also emerged that a director of QNV, Chris Eaton, has been described by a court (in relation to a different business) as “a knowing participant in a dishonest and fraudulent design” who lied to a business partner.
There is no suggestion that Lord Ashcroft, who owns Anne Street and QNV through a company based in Belize called Mayfair, has done anything wrong.
Ashcroft, an extremely successful businessman who has donated more than £5m to the British Conservative party and $1.5m to Australia’s Liberal party – including $1m donated in 2004 at the request of the then party president, Shane Stone – has been a controversial figure in the UK over his residency in Belize and his use of offshore financial vehicles.
His best-known Australian venture is Anne Street, which he acquired in 2010 after it ran into strife under its founder, the alleged fraudster Craig Gore.
Gore, a two-time bankrupt described by one judge as “a rapacious Gold Coast property developer with grandiose plans”, is due to stand trial next month on fraud charges after the corporate regulator accused him of filching $800,000 from investors.
At its peak, Anne Street is understood to have employed about 300 people and was a one-stop shop financial services firm, offering customers financial advice, legal advice, tax accounting, home loans and real estate agency services.
Sources say it also acted as QNV’s “big sister”, receiving fees from the construction company in return for services including payroll processing, office furniture and referrals to build houses.
But it came under financial pressure owing to the damage to its core service, financial advice, inflicted by a wave of scandals engulfing the industry at large.
Until 2017 its chief executive was the Queensland lawyer Michael Adamson and its directors included Stone, the former Northern Territory chief minister and Liberal party heavyweight.
Stone has long been close to Ashcroft – for many years he served as deputy chairman under the peer at Impellam, a large staffing company listed on London’s secondary stock exchange that also operates in Australia.
But Adamson is believed to have handed in his notice in December 2016 and both he and Stone quit as directors of Anne Street late the following year. About the same time, Stone stepped down from the Impellam board.
Stone and Adamson declined to comment on why they had fallen out with Ashcroft, but documents show that by the time Anne Street went into administration it owed Stone as much as $1.3m and Adamson $1.14m.
With Adamson demanding his money, and Mayfair refusing to advance any more funds, the loss-making Anne Street was put into administration on 8 August last year under Marcus Ayres of Ernst & Young.
At the point of its collapse, Anne Street owed about $145m to staff and creditors – mostly to other parts of the Anne Street group – but had assets of just $12m, a report of the company’s affairs shows. Its debts included almost $18m owed to Mayfair, back in Belize. On top of that it owed about $2m to another Belize company, Nova Global.
Nova Global’s position as a secured creditor made it a key player in the fate of Anne Street because, if it didn’t like how things were going, it always had the right to call in a receiver and take control of the process.
It is believed to be linked to Mayfair and was represented during the administration by the law firm that looked after Ashcroft’s interests.
The key to bringing Anne Street back to life was a new company, also owned by Mayfair. This new company agreed to take on responsibility for all of Anne Street’s staff, and pay suppliers who were owed about $1m. It would also take on responsibility for $7.8m owed to Mayfair. Nova, meanwhile, agreed not to pursue Anne Street over the money it was owed.
Ayres, the administrator, said he was unhappy with the proposal. “There’s a transaction to switch across to a related party and you want me to sprinkle holy water on it,” he said. “The deal that was put on the table put me in quite an uncomfortable position for quite a while.”
He told Guardian Australia he had tried to push for a better deal but had “very limited cards to play” and had recommended the transaction as the best available at the time.
“I’m surprised even Lord Ashcroft bought it,” he said. “I looked at the budgets going forward and they were very, very optimistic.”
Minutes of creditors’ meetings show that Adamson had threatened to report the alleged “presence of illegal phoenix activity in relation to the sale proposal” to the corporate regulator. He “stated that his concern was that there was a real risk that the sale of business was tainted by fraud, specifically so far as an attempt to defraud certain creditors”.
It is understood Adamson made a complaint to Asic but the regulator decided against taking any action.
Stone and Adamson were also directors of QNV, but quit in 2017 about the same time they departed Anne Street. Eaton was appointed a director in late October 2017.
This came a month after a Queensland court found he was “a knowing participant in a dishonest and fraudulent design” in a dispute over $125,000 reaped from a property development joint venture he used for unrelated expenses, including making repayments on his home loan.
The district court judge Kiernan Dorney said Eaton had deliberately obstructed efforts by his partner in the venture to recover money from him.
While giving evidence Eaton also admitted he had lied to his business partner about the project’s progress. He had not responded to messages left on his mobile phone answering service and sent by text.
Since December QNV has been relying on credit advanced by another offshore company with Nova in the name, Nova Global Overseas, which gives an address in the British Virgin Islands.
It is believed to be another finance vehicle connected to Ashcroft and loan documents obtained by the Guardian show it agreed to lend QNV about $1.4m. The loan documents name Andrew Ashcroft, who sources say is Michael Ashcroft’s son, as the company’s sole director.
Despite the support QNV’s Queensland building licence was suspended in January after it failed to pay subcontractors and suppliers more than $174,000. In May New South Wales authorities cancelled QNV’s registration there because the company did not have a qualified building supervisor, although the ticket was later restored.
Internal financial records obtained by the Guardian show that since March QNV’s Victorian division had also struggled to pay suppliers.
Ashcroft could not be reached for comment. Both he and his associate Ian Robinson did not respond to emails sent to their last known addresses.
Homebuyers and creditors met on 16 August to discuss QNV’s fate and are waiting for a deal to resuscitate the group, known as a deed of company arrangement, to be proposed by one of the parties apparently connected to Ashcroft.
One homebuyer, Peta Armstrong, said she hoped the collapse would bring to an end a fight with QNV over the $259,000 new home it built for her family just north of Newcastle in NSW that has been running for more than a year.
Armstrong said that at one point she and her partner, James Reid, had become so desperate they even broke into the house and left their son to protect the property in case unpaid tradespeople came back to the site to take things away.
“He stayed here alone for two weeks, just him and the cockroaches,” she said. “It was a whole lot of heartache and I look back on it now and say thank God it’s over.”
