Boilermaker Bill sometimes regrets having a day time job, as he could
spend many profitable hours combing the AEC Electoral Returns.
Yesterday’s story demonstrated the tax advantages that accrued to
Greens’ MPs as result of their party placing a levy on their elected
representatives. Basically, a full income deduction is available to MPs
where they are required to pay a levy to their party whereas they would
obtain a deduction only for the first $1500 of any donation to their
party.

Well a check of the NSW ALP’s donations show that they levied their MPs
in the NSW Parliament for at least $400,000 in 2002-03 (this is the
figure paid by the NSW Parliament to the ALP, which presumably collects
the levy at the time it pays MPs)  – again all of which
is fully deductible for the MPs according to an ATO ruling. Mark Latham
wants to look at rorts in public life – there’s a nice dip on the
public purse that he might want his colleagues to have a look at.

After establishing that, Boilermaker Bill pulled up a full list of the
donors to start a systematic analysis, and got no further than A before
deciding to look deeper into the donations made by an outfit called
Arena Management to the NSW ALP last year.

What is on the public record reveals that questions should be asked at
the highest levels about the relationship between a series of donations
made by Arena Management to the ALP, the tender for the management of the Sydney Entertainment Centre, and a $600,000 bath the
NSW Government took on a twenty five percent holding in Arena
Management.

According to its own return, Arena Management made four donations to
the NSW ALP in 2002-03. It started off slowly by making a donation of
$5500 on 9 January 2003, but picked up the pace on 24 January 2003 with
a $20 000 donation to Frank Sartor’s campaign for the seat of Rockdale
(but it was sent to Sussex Street, so presumably it went into ALP’s
campaign coffers). Then on 29 April, it made a donation of $25 000, and
finally on 18 June, it made another donation of $25 000.

So what’s Arena Management? Well, it’s the entity that has managed the
Sydney Entertainment Centre (SEC) since its opening in 1983. Chaired by
Ted Harris (former Chief Executive of Ampol), and its shareholders
reportedly include a number of promoters, including Kevin Jacobsen and
Michael Edgely.

The SEC itself – one of those concrete monstrosities much loved of
constructors operating in the CBD in the 70s and 80s – is located at
the back of Sydney’s Chinatown, and its location makes it the major
large venue of choice for touring acts alongside the Hordern Pavillion.
However, the NSW Government (somewhat unrealistically) hoped that after
the Olympics the venues at Sydney Olympic Park, such as the SuperDome,
would pick up a big number of events away from the city venues.

(Warning – the following anecdote requires some Sydney knowledge:
Boilermaker Bill remembers attending a briefing at Olympic Park way
back then from the then Olympics Minister Michael Knight and his
henchmen, sorry, advisers, where one of the site managers said they
hoped to take the Gay and Lesbian Mardi Gras Party away from the
Hordern Pavillion (which is at the end of the parade route). Your
correspondent asked – with some tongue in cheek – wouldn’t the Mardi
Gras participants be too tired to party after parading up Parramatta
Road from Darlinghurst to Homebush? He didn’t receive a reply.)

Anyway back to Arena. In 2000, the Government’s big commitment to
ensuring that Olympic Park didn’t become a white elephant led to some
nervousness on Arena’s part that Abigroup, the constructors and owners
of the SuperDome, were moving to have the Sydney Entertainment
Centre closed down to guarantee big events for the SuperDome. Arena was
less than two years into its new centre management lease, and it took
some pre-emptive action in the Supreme Court to see if there was any
basis to the Abigroup plan. That action was probably enough to kill
such plans if any existed. SuperDome’s struggled ever since, so much so
that after Bilfinger Australia made a takeover bid for Abigroup
launched last October, it announced that it would sell off the
SuperDome as part of the takeover.
So the Sydney Entertainment Centre is still the major venue of choice,
and after ownership of the centre was transferred to the then Darling
Harbour Authority from the Ministry of the Arts, it is now part of the
Sydney Harbour Foreshore Authority’s property holdings. (The SHFA
absorbed the DHA when it was created.) The SHFA virtually has total
control over all the Sydney Harbour foreshore, Darling Harbour, and the
Austalian Technology Park in Redfern (which has always amused me, as it
doesn’t even have harbour glimpses).

The SHFA is the planning consent authority for, as well as landlord for
many of the properties in, the area under control. It’s headed by one
of the few men who strikes fear into the heart of Boilermaker Bill –
Gerry “The Cardinal” Gleeson, head of the Premier’s Department under
Neville Wran, and currently head of the Remuneration Tribunal for
public servants.

Widely respected (and feared), The Cardinal reportedly calls the Wran
Premiership the “Wran-Gleeson” era, and was called in by Bob Carr after
his election in 1995 to scrutinise every appointment to Ministerial staff for the incoming Government. The Cardinal took his
screening duties so seriously that one Minister had a fierce argument
with Gleeson over their preference for Chief of Staff.

The Cardinal usually avoids publicity, but in November 2000 the
Australian Financial Review had a look at some dealings involving the
Darling Harbour Authority (DHA), the precursor to the SHFA, and
Amalgamated Holdings limited (AHL), owner of Greater Union cinemas and
other tourism and hospitality holdings. The AFR reported that The
Cardinal was a member of the board of Amalgamated Holdings and was
Chairman of the DHA in September 1997 when the DHA approved a sublease
on Pier 26 for a charter boat authority owned by an AHL subsidiary.
Pier 26 now features a flash pub and charter boat mooring directly
owned by AHL.

The Cardinal resigned from the AHL Board on 6 March 2000. The
Australian Architecture magazine reported the following in May
2000: 

“NSW harbour planning supremo Gerry Gleeson resigned his directorship
of tourism firm Amalgamated Holdings (Rydges and Matilda Cruises) just
24 hours before it won approval from his Darling Harbour Authority to
build new headquarters beside the bay. He remains deputy chair of Walsh
Bay developers, Transfield”

However, when the Treasurer Michael Egan was asked in November 2000
about a potential conflict of interest for The Cardinal in the 1997
approval, he showed the regard in which The Cardinal was held: 

“He is a very distinguished public servant and is a person who, I am
sure, would always act with complete propriety. I suggest that the Hon.
R. H. Colless should have no concern about anything Mr Gleeson would
do.”

So back to the Sydney Entertainment Centre. In September 2002, with the
SEC management contract to expire in April 2003, tenders were called.
The Cardinal was a member of the tender selection panel.
According to an article by Valerie Lawson in the Sydney Morning Herald
on 4 March 2003, this tender was terminated in mid-November.

She wrote:

“A Sydney Harbour Foreshore Authority spokesman said its “evaluation
panel” was “unable to satisfy itself that there was a tenderer who met
the criteria”.

“However, it is understood the tender document was so prescriptive that
the whole process might have been subject to a legal challenge. In the
view of prospective tenderers, the first round appeared to favour
Arena, eliminating competitors based within 200 kilometres of the
Sydney Entertainment Centre.”

So a new tender was called, and was underway when Arena Management made
donations to the NSW ALP amounting to $25,500 in January 2003. Tenders
closed at the end of February, and Valerie Lawson’s article was
published on 4 March 2003 and indicated that Arena was facing stiff and
unexpected competition:

“It is understood that Arena’s competitors are developer and motelier
Brian Allen, and Ogden IFC, controlled by one of the world’s biggest
developers, the New York-based Covanta Energy Corporation.

Mr Allen, who lives in Castle Cove, would not comment yesterday. Asked
whether he was associated with any company connected to Abigroup, which
owns the SuperDome and has the right to run that venue for 30 years, Mr
Allen said: “I don’t know anything about that.” ”

Valerie Lawson updated SMH readers on 3 April 2003:

“Bids for the lease of the Sydney Entertainment Centre moved into a
fresh phase yesterday as competing tenderers presented their case
before the the centre’s landlord, the Sydney Harbour Foreshore
Authority.

Bidders include Arena Management, Brisbane-based arena operator Ogden IFC, and developer Brian Allen.

The lease has been held for 20 years by Arena Management. Its current
five-year lease expires this month but the company, whose major
shareholder is Kevin Jacobsen, has a six-month extension until
September.

Allen is associated with Abigroup, owner-operator of the SuperDome at
Homebush, a competitor of the Sydney Entertainment Centre. He is the
sole director and shareholder of Sydney Venue Management, a company
registered on August 27 last year, six days before the deadline for the
first tender for the Entertainment Centre lease was called by the
Sydney Harbour Foreshore Authority.

Australian Securities and Investments Commission records also show him
as a director and shareholder in Vercot Pty Ltd, along with John
Cassidy. Vercot is a major shareholder of Abigroup, whose chairman and
chief executive is Cassidy.

Ogden IFC operates the Brisbane Entertainment Centre, Cairns Convention
Centre, Newcastle Entertainment Centre and in Western Australia, His
Majesty’s and the Perth Convention Centre.”

Four weeks after making this bid presentation, Arena Management made another donation to the NSW ALP of $25,000.

Then in June 2003 the SHFA selection panel made its decision.

What was the outcome? Well, let me allow Tim Worton, the General
Manager of SEC, to tell you that in his own breathless prose from the
SEC Newsletter of June 2003:

“Almost 2 weeks ago, I was sitting at lunch with some friends from the
Sydney Kings and our Marketing Guru Natalie, a great red had just been
poured to toast to good health, and our meal was ordered for us,
then my phone rang. What ensued was just music to my ears..

Greg Quinn, our Financial Controller read to me a fax that had been
received from the Foreshore Authority to advise that Arena Management
was the successful tenderer for the lease of the Sydney Entertainment
Centre.

Whilst Nat sat there bleating out superlatives (that one can’t repeat
in this newsletter) wondering what was being said, I sat in a quite
numb state and it wasn’t the red. Then I felt tremendous relief,
excitement and satisfaction. We did it !!

Needless to say, the next bottle ordered was champagne (French of
course) as we celebrated, appropriately with our anchor sporting tenant
and NBL Champions.

We are so thrilled to have won and we are really looking forward to a
great future and to working with our many clients and friends and of
course, serving the public of Sydney. A lot of hard work went into the
tender by our management team and Directors in varying degrees. We are
very proud of the document and of course the result. I know most of you
reading this knew all of the above, but I’m sure you’ll forgive me
rehashing it.

We just celebrated our 20th birthday – there could not have been a nicer present.

What was to come over the next few days was overwhelming. Once the news
broke, emails and phone calls started pouring in from well-wishers. I
was really touched by the outpouring of congratulations and a genuine
delight from so many people that Arena had won.

I would finally like to thank my staff and my Directors and clients and
friends of the SEC for your support, loyalty and friendship over 20
years. We look forward to continuing this into the future. A particular
thanks to those who provided references for our tender bid.”

Arena’s successful tender was reported in the Sydney Morning Herald on
9 June. It won not only a five year lease, but two options to extend.
Three weeks later Arena Management made another donation of
$25,000 to the NSW ALP. But that’s not all. The NSW ALP’s return
records that on the same day it received Arena Management’s donation,
it received a donation from Kevin Jacobsen Promotions of $22,727.27.

According to Valerie Lawson’s reports, Kevin Jacobsen is the majority
shareholder of Arena Management. He made a donation of $2,000 in
November 2002. This was around the time of the first tender, which was
cancelled soon after. Another donation, this time for $20 000, was made
in December 2002

So, according to returns lodged by the NSW ALP, during 2002-03 (while
the tender for SEC management was underway) entities associated with
the Sydney Entertainment Centre gave the ALP over $125 000, as
follows:

Sydney Entertainment Centre: $13,050
Arena Management: $75,500
Kevin Jacobsen Promotions: $44,727.27

(By the way, for some reason in their return the NSW ALP understates
some of the actual amounts received from these donors. So the $25,000
donations that Arena reports making are recorded by the ALP as
$22,727.27. Is this the GST in action? Also, Jacobsen has till now
submitted a return reporting only $2000 – the $44,000 figure comes from
the ALP’s return.)

Even more questions could have been asked about these donations if one
of the original shareholders in Arena Management was still there: the
NSW Government. In 1980, the Sydney Entertainment Centre Act was
passed, specifically allowing the Government to buy and hold 5000
shares in Arena Management, which amounted to a quarter holding in the
company.

So for 20 some years the NSW Government held a quarter share in the
company that managed the Sydney Entertainment Centre, which it owned
and for which it granted the management contract. In April 2002,
finally realising that there was a conflict of interest, the NSW
Government authorised the sale of the shares.There’s another case study
against governments holding shares in private companies.

The 2002-03 Annual Report for the NSW Ministry of the Arts reported the
sale of the shares for $615,000. The Auditor General’s most recent
report says that somewhere there was a Government valuation of the
shares of $1.3 million, but on Crown Solicitor’s advice, the Government
took the $615,000 – a potential loss of $685,000. What would be
interesting to know is to whom the shares were sold. The Crown
Solicitor’s advice apparently noted that the Articles of Association
for Arena Management determined the value of the shares – presumably it
determined to whom they could be sold.

The short of this all – and what should be the subject of some
questions – is that the Government got out of Arena Management after
taking a bath, while entities associated with it and the management of
the Sydney Entertainment Centre made donations of nearly $125,000 to
the NSW ALP, with some of the donations were made around the time of
critical stages in the tender process for the SEC management
lease.

Boilermaker Bill’s only on the A’s in the AEC return register – and
he’s convinced more than ever that the serious reforms need to be made
to political donations. Now he’s off to the B’s.

Boilermaker Bill can be reached at [email protected]

Peter Fray

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