When Tinkler plays politics, ICAC has some tough questions
It’s astounding that former billionaire Nathan Tinkler has wound up at the centre of an Independent Commission Against Corruption investigation into donations to the Liberal Party.
The controversy surrounds his attempt to get approval for a massive new coal loader to be built on the former BHP steelworks site at Mayfield in Newcastle. A lot of lobbying was necessary, because the loader idea was never going to stand up on its merits; it went against a decade of planning underway since the Mayfield site was vacated by BHP in 1999.
The site was zoned for a mix of light industrial and commercial uses. The company proposing the coal loader was Buildev, a successful Newcastle-based property development and construction firm in which Tinkler bought a minority stake in 2008. Buildev had won a state government tender to develop part of the site a year earlier. Nobody had expected a coal loader would be proposed there.
Tinkler’s loader concept was first revealed publicly in December 2010. At the time, Tinkler was at the height of his wealth and influence. OK, it was touch-and-go, but in August he had pulled off his second deal of a lifetime: his major company Aston Resources had bought the Maules Creek project in the Gunnedah Basin from Rio Tinto for half a billion dollars and floated it at a valuation of $1.2 billion within nine months, and its shares were rising.
Tinkler had no ready source of cash flow, however. Maules Creek was just a proposal, years from production (and the project, now owned by Whitehaven Coal, still is not built). On paper, according to BRW, Tinkler was worth $610 million at the end of 2010, mainly due to the value of his one-third stake in Aston. But Tinkler was already reliant on borrowings against that stake to fund his empire and everything he owned was costing him money, not making it: his mining interests were all early-stage development plays, he was burning cash on mansions, fast cars and private jets, and he had sunk $200 million-plus into the beloved Patinack Farm horse stud spanning three states, with no sign of a return. Tinkler’s welcome — but expensive — takeover of the Newcastle Jets and shortly the Knights would only hasten the outflow of cash.
This was nothing new for Tinkler: right across his empire, right from the beginning, there was an almost permanent cashflow crisis. Which is one reason why it is difficult to believe cheques worth thousands of dollars were often signed without Tinkler’s knowledge. There would have been grim laughter up and down the Hunter Valley yesterday when Tinkler’s chief financial officer Troy Palmer was asked about a same-day payment he authorised to the Liberal Party, and denied this was unusually prompt: “When other employees and people ask for payment, I’ll pay it,” he testified, without a hint of a smile.
Tinkler had another problem: Aston had to get the Maules Creek coal to market. Tinkler only went public with his coal loader proposal in December 2010, after Aston got less than half its expected allocation of port capacity from Port Waratah Coal Services, owned and controlled by BHP and Rio Tinto, operator of two terminals at Newcastle. Aston complained about anti-competitive behaviour to the competition watchdog but was rejected. For Tinkler, it was another demonstration of the power of the incumbents he was determined to outsmart, as his mentor, the late Ken Talbot, had done. Tinkler’s grand vision was to create a new, vertically integrated coal business with operations from mine to rail to port, beholden to no one, and getting his own loader was absolutely key to the vision.
In late 2010, everyone knew Labor was headed for a wipeout in New South Wales. That did not mean, however, that the party’s sitting member for Newcastle, Jodi McKay, would lose her seat, which had literally been held by Labor forever.
“In truth, Tinkler was in Singapore. It was reckless — tantamount to flipping the court the bird.”
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