Pasminco administrator comes under attack in Parliament

22nd August 2019

In an attack launched by both major parties and supported by Independent Lake Macquarie MP Greg Piper, Ferrier Hodgson was accused of only looking after its own interests in its management of the former Pasminco lead and zinc smelter site.

Ferrier Hodgson, that was purchased by professional services giant KPMG earlier this year, pocketed well in excess of $35 million in fees since being appointed to clean up the old Pasminco site and claw back cash for creditors.

Reports prepared by Ferrier Hodgson for creditors in 2014 revealed it was paid on average $2.55 million a year since it was appointed in September 2001, or more than $49,000 a week.

It's unknown how much Ferrier Hodgson was paid from 2015 as KPMG refused to disclose the amount.

The NSW government announced this week it would use compulsory acquisition powers to take control of the remaining Pasminco land at Boolaroo because Ferrier Hodgson had "failed" in its management and did not have the funds to maintain a huge containment cell full of toxic material on the site.

It is understood the government acquisition will put previous expressions of interest from IKEA and Costco for land back on the table after the deals stalled under Ferrier Hodgson's management.

Shadow Minister for the Hunter Clayton Barr accused Ferrier Hodgson of "years of failure".

"What we have seen is the maladministration of the site," he said. 

"I have had the misfortune since becoming a member of parliament... to see a number of administration processes take place and quite frankly I find them perverse.

"I find them unaccountable to anybody in particular and I find them bringing about the best possible outcome for only one person in that process, and that is the administrator, and everybody else can suffer at the hands of their actions."

Boolaroo Action Group spokesman Jim Sullivan continued the attack, describing Ferrier Hodgson as having "complete disregard" for the community.

"We got nothing out of Ferrier Hodgson," he said.

"But they got plenty, more than $40 million in fees would be a fair estimate."

Mr Piper described how he'd had a "lot to do with" Ferrier Hodgson and said "very little of it" was enjoyable.

"I believe they have frustrated the community, the council and the state government in being able to deliver a good outcome that the community of northern Lake Macquarie and the region deserve," he said.

In 2014, Ferrier Hodgson's fees included charging $190 an hour for a ''junior accountant'', described as studying accountancy part-time at university.

A partner's fee was $595 an hour and the ''administration supervisor/assistant'' was charged out at $135 an hour.

The insolvency firm took on the role of property developer at the smelter site in a bid to maximise returns for Pasminco's 39 creditors, finance companies owed $2.6 billion.

The government has estimated the creditors were paid out at least $550 million.

In June, Ferrier Hodgson advised that $1.2 million had been secured from workers compensation claims liabilities.

"The chairperson advised that with the additional funding received there would be no benefit for creditors to pass a resolution for the company to be wound up," a Ferrier Hodgson staffer wrote.

Under the government's acquisition plan, Property Minister Melinda Pavey said any interest in the Boolaroo site that is protected by a caveat, and not recorded on the land's title, would be extinguished. 

This included an interest in the land asserted by Fiddletown Investments Limited, a company incorporated in the British Virgin Islands, that is believed to have provided a recent loan to Pasminco Cockle Creek Smelter Pty Ltd, under the administration of Ferrier Hodgson, now KPMG.

A KPMG spokeswoman said it was aware of the new legislation.

"While some issues remain to be resolved, we are committed to working to achieve the best result for the site, the creditors and the local residents," she said.

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