I have been involved in the Cullen liquidation from the beginning, I am a Cullen creditor and have had 5 years to get used to it but I watched each day of the October Public Examination (PE) in the Federal Court with increasing outrage at the level of incompetence by so many people.
Subbies, prepare yourselves for an in depth look behind the scenes of large building company on palliative care and how they piss away your money while the QBCC sit back and watch.
I have never heard so many people use the Alan Bond defence and say "privilege, I don't recall, it was 5 years ago" or "privilege, I have no idea".
I can recall who I lent or gave money to going back 35 years down to $100 and anyone will tell you I am not tight, yet the director couldn't remember a large loan of 200k only 5 years ago. If thats true he should be in a dementia ward.
I have waited a couple of weeks to give my disgust time to subside but it hasn't, it's got worse and if I don't stop adding to the story this will end up bigger than War and Peace.
I am mindful of not being too harsh on QBCC employees as they are only doing a job under the guidance, in this case, lack of guidance of others.
Subbies put their trust, huge amounts of product and labour = money and ultimately, their livelihoods in the hands of building company directors who couldn't run a chook raffle, let alone a business with an annual turnover of 60 million dollars. They also rely on an incompetent and poorly managed industry overseer, a political football called the QBCC to ensure the builders license is current and meets the required Minimum Financial Requirements (MFR).
Other than the ineptitude and dishonesty of some of the people running Cullen, one thing stood out like a beacon on a bleak and stormy night.
It wasn't that in 2015 the QBCC gave Cullen a higher licence category based on doctored financials without delving into into the financials, particularly the gross understatement of creditors provided by the company.
Accountants Insolvency Warning Ignored
It wasn't the refusal of the sole director who repeatedly ignored the advice of his in-house accountant Mr Pickering in late 2015 and early 2016. I might add Mr Pickering is a man who is made of sterling stuff. He has shown he has moral fibre when on numerous occasions, he told the director in writing that the company was trading whilst insolvent and that one of the issues was that the director had "ripped 1 million out of the company".
He told the director that the company had a shortfall, was insolvent and without a rapid injection of capital it would fail.
It went down like a lead balloon with the director who refused to acknowledge that Cullen Group had serious cashflow issues indicating insolvency from late 2015 and early 2016.
It wasn't that the director sacked Mr Pickering, the only person in the company who had the decency to be honest and tell the truth, that there were serious cash flow and insolvent trading issues.
It wasn't that Cullen Group failed to respond to an audit notice from the QBCC on 21st Jan 2016.
It wasn't that Cullen breached their contracts when in February 2016 they began what they quaintly called a "creditors squeeze" (delayed creditor payments, stretched out to 45 days and beyond) whether the subbies liked it or not.
It wasn't that they selectively didn't pay them at all or only paid those who had to be paid in order to ensure the progress of their projects.
It wasn't that they would then discard the unwanted and unpaid subbies like burnt out cigarette butts, the ones who were not immediately needed for progress.
It wasn't that they would then hire new subbies to take their place un-benown to the new subbies. By the way subbies, it might help you next time if you joined SubbiesUnited where we discuss these things in advance.
It wasn't that it was shown and proven that in the end Cullen owed creditors in excess of 46 million. The director just passed it off with "that figure came from Viewpoint and it's wrong" and "some of them just doubled their invoices". This is despite the fact the amount was confirmed by Proof of Debt forms after the event.
And this from a man presiding over a 60 million per year company.
Cooked Books to Hide Ponzi Scheme
It wasn't that those responsible cooked the books when replying to the QBCC's show cause notice omitting millions of dollars of company creditors to satisfy their Minimum Financial Requirements.
It wasn't that Cullen Group like many builders, use our retentions as their cash flow and to pad out their financials.
It wasn't the fact that when it was put to the director that he was using income (not even Gross profits as there was none, the company was losing money each month of 2016) from current projects to fund the next project when that income should have been used to pay existing creditors he said, "privilege, thats how the industry works".
Hey bud, that is not how good, organised and well funded building companies work in the industry. It's not how most subbies work either but it IS how a PONZI SCHEME works.
Director Rips 1 Million Dollars out of the Business
It wasn't that the director took 800k from Cullen Group cashflow to invest in a joint venture unit complex or to lend a friend 200k while borrowing money from another friend (now ex friend).
It wasn't that when questioned, the director couldn't recall who he lent the $200,000 to.
It wasn't the signing of Statutory Declarations stating that all creditors were paid in full and on time to facilitate the release of progress claims when it was clear that most creditors were not paid.
It wasn't that the Operations Manager, despite knowing that large numbers of subbies remained unpaid and having access to the accounts, the accounting package and the accountant, blindly accepted the directors word that the "company was at all times solvent" and signed the Stat Decs.
QBCC to Cullen, Why So many MOC's ?
It wasn't that when the director was asked by the QBCC why there were so many Monies Owed Complaints (MOC''s) he blamed subbies. He said "subbies work was substandard so Cullen was cracking down on them and as a result, subbies complained more to the QBCC which resulted in more Monies Owed Complaints".
It wasn't that I found it hard, almost impossible to believe that the QBCC fell for that utter bullshit story but fall for it they did. Under questioning, the QBCC department head stated they give more credence to MOC's from suppliers which I will address below.
It wasn't that in November 2016 the director received insolvency advice and the current company accountant Mr Mangan said in the PE, "They were talking Phoenix". In that same month Cullen Group called a meeting at Boheme where he told subbies "the more you can install, the more we can claim, the more we can claim, the more you will be paid" despite knowing that the company was insolvent. He must have known, after all, he had just received insolvency advice.
$400,000 Payday for a Job Well Done - NOT!
It wasn't that a few days before the QBCC finally got their act together on 13th December 2016 when it was too late for creditors (it only took 10 months) and suspended Cullens licence, that the director almost cleaned the accounts out and paid himself the princely sum of $400,000 for presiding over a company about to liquidate away 46 million of creditors money. At this stage they had "current" creditors of over 20 million.
After all folks, the money wasn't much good to subbies so the director might as well have the crumbs, he was really doing them a favour. If that money had been paid to creditors, under the corporations Act it would have been clawed back by the liquidator as Preferential Payments.
It wasn't the deleting of emails including the damning email sent from the director to his loyal soldiers on Sunday, 11 December 2016 8:01 AM which set out the funding, staffing, projects to start with (all Cullen jobs) and future projects and the partnership structure of the new phoenix company. Oh, and the staff to keep and the staff to let go. It went: Director, Nominee, General Manager (yes you guessed it), Finance Manager, Accounts, Accounts Assistant, Projects, Future Projects, Project Manager, Project Manager, CA, CA, CA, CA, Estimator and finally, staff to let go.
Nothing to see here, when questioned the director said "privilege, I was just offering advice". This was despite him having a 20% share in the phoenix called Onpoint Construction, nominated himself as the Project Manager and put a note from him at the bottom of the email which said "print it out and delete it".
Get rid of the evidence you idiots but someone forgot to and it fell into the wrong hands. The hands of the liquidator.
Reversal of $400,000 Progress Claim Invoices
It wasn't the fact that in the dying days of Cullen, they reversed hundreds of thousands of dollars of project claim invoices to developers with the obvious intent of re issuing the invoices through the new phoenix, providing it with instant cashflow.
No surprises there, while its repugnant to normal people, all of the above was to be expected in the normal course of events from a terminally ill, "end of life" building company. After all, everyone does it yeah?
The Superstars of Gross Incompetence
Cullen Group may have begun its life with good intentions but once the rot sets in, greed takes on a life of its own. When it becomes clear how easy it is to take money from subbies who blindly trust you, after all, you have a valid QBCC licence and they have a signed Master Builders contract (another joke of an organisation). Its just so easy to whack a "creditor squeeze" on subbies or simply extend the payment date or not pay them.
What options do they have other than MOC's and if the builder disputes it the MOC's are worthless, lawyers, debt collectors, letters threatening to stop work under clause Q) 1021 of the 130 page MBA (dickheads) contract.
Problem is that all of the above is an indication to a Liquidator that you supposedly knew the company you trusted was trading insolvent and any money paid to you in the previous 6 months can be clawed back as a Preferential Payment.
No matter what a subbie does to collect, one way or another he's literally quite fucked.
Bottom of the Food Chain Funds the Whole Industry Interest Free
Tell me another industry where those at the bottom of the food chain give dishonest fat faced fucks hundreds of thousands of dollars, in many cases millions of credit with nil surety, no mortgage over property, no guarantees, no nothing.
Everyone else along the food chain is protected, Banks take mortgages over property, the developers have bank guarantees or retentions from the builders funded by the subbies. Home owners have the QBCC home warranty insurance scheme but subbies have sweet fuck all. Free funding for builders is the price we pay to be in the industry.
The building industry would collapse in short order if every subbie went on strike for a few weeks or refused to give these fucks unlimited and unfettered credit but of course, they wouldn't get a job if they did.
The only way to change it is for everyone to stick together but that won't happen because of the nature of the industry and how tight it is for so many subbies.
Cullen Group was run like a Ponzi scheme and while its abhorrent, its human nature that once they get on the gravy train, they would want to milk this massive cash cow for all its worth to the bitter end.
The Beacon - QBCC Incompetence
The thing that stood out most to me while watching the Cullen Public Examination in the Federal Court was the abject incompetence of the licensing body, the QBCC.
After years of looking after SubbiesUnited and fielding calls, emails and meetings with destroyed Subbies and their wives I wasn't really that surprised in what happened inside Cullen Group. Although I was taken aback by what a couple of accountants did, I had a pretty high opinion of them in general because of the accountants I had over the years but not anymore. Some of them are a large part of the problems in the Building Industry. I had seen and heard bits and pieces of what builders do and have put the puzzle together but I must say, I have never seen a boil squeezed of every ounce of puss all at once.
Well, it did take 5 days but it was like watching a 60 carriage train wreck in slow motion then reconstructed again. I saw every moving part dismantled, every nut and bolt taken out and then all of it put back together.
The Nuts and Bolts of the Public Examination
The whole picture was constructed in a methodical and most beautiful way by the Liquidator Michael Caspaney and his legal team led by Barrister Mr Moon. I might add, I have had many a cross word with Michael Caspaney but not this time, he did a very thorough job that left no doubt as to the culpability of many of those who were questioned despite their pleas of ignorance and innocence.
Mr Moon never asked a question he didn't already know the answer to.
The witnesses used the Sergeant Shultz "I know nothing" defence almost as often as the Alan Bond "It was 5 years ago, I can't recall" defence. Some of them excelled with the blank stare perfected by Alan. They would have had to practice in the mirror for hours to get that right.
I was wondering what the magistrate was thinking about the building industry while she was listening to 5 days of some of the dumbest (they played dumb) people in the industry. On the other hand, if that was really them and they weren't playing dumb, then the industry is beyond redemption.
The QBCC's ongoing investigations were abysmal and in slow motion. Those providing false and manufactured financial information to the QBCC were obviously aware of just how useless they are internally and how much they could get away with.
For example, instead of providing an Accounting Package (Viewpoint) printout of a balance sheet, they would doctor their own up on an Excel spreadsheet, omitting important components such as trade creditors and this was accepted by the QBCC.
When questioned, the QBCC would primly say "we rely on those providing the financial information to ensure it is correct". Guys, Subbies, Builders listen up, heres a MFR heads up, to keep your licence, give em dud figures on the back of a beer coaster, they never check!
Information Sharing Inside the QBCC
The QBCC is so secretive, they don't even share information with each other.
Different QBCC departments do not share information or rarely communicate with each other within the organisation.
They operate in windowless silos, each totally oblivious to what other departments are doing.
They are so smug, self righteous and complacent, it borders on narcissism.
In late 2015 and early 2016 there were 5 monies owed complaints against Cullen Group including a judgement for 75k awarded against Cullen (which wasn't reported or paid until October 16) but the compliance officer wasn't made aware of them by the financial Investigations Unit. 3 monies owed complaints are grounds to commence a financial audit.
There are provisions for immediate suspension if it's considered that there can be serious harm to the industry.
By the way, the fact that the 75k judgement wasn't reported by the Court or CreditorWatch or paid by Cullen until October was responsible for me and no doubt others signing a contract with Cullen in August. If I had known about it, I would never have signed.
Until this point they had covered their trail well but the wheels were about to fall off like in early October when my first progress payment was due and didn't materialise. I started digging again and eventually, towards the end of October the 75k judgement awarded in March was finally reported.
When I followed up with CreditorWatch on why it wasn't reported, I was told that the Courts might have sent it through but it sometimes takes months to go through the system. The Courts, yet another inept, slack arsed Government funded behemoth. Thanks guys, you potentially cost me and many others millions by not doing your job in a timely manner.
In January 2016 Cullen didn't have the cash to pay the End of Month Accounts. The accountant was desperately trying to be heard but no one listened. They shunned him like a pariah because he had the hide to tell them that the company had cash flow and solvency problems.
Cullen spent the whole of 2016 attempting to borrow money from banks or any other source and towards the end they tried to attract a partner but other builders were smarter than that. Their figures were horrific but unfortunately subbies don't have access to builders financials and even if we did, they could be doctored like they were by Cullen. Right up to the end these shonky numbers were acceptable to the QBCC but I'm getting ahead of myself.
On 01/03/2016 a notice to suspend was sent to Cullen but the QBCC compliance officer in charge of the financial audit wasn't made aware of the notice.
From the Courier Mails Glen Norris on 21st October 2021.
The public examination heard that the watchdog’s senior investigator Natasha Dennis was contacted in February 2016 by former chief financial officer Joel Pickering warning the company was in serious financial trouble.
The QBCC took no action against Cullen even giving it a clean bill of health financially and allowing it to rack up millions more in debt before it collapsed 10 months later.
In an email, Mr Pickering told Ms Dennis, a QBCC official with almost 30 years’ experience, that the company was trading insolvent, was not being diligent in reporting financial information to the watchdog and believed “they could get away with it”.
Ignore the Inside Information
The QBCC did what it has done numerous times when Subbies United has sent them information. In their all knowing way, they ignored the inside information provided by Mr Pickering and gave Cullen a clean bill of health. Let's not blame the compliance officer, she is a victim of 30 years of political interference and incompetent leadership.
The Cullen director used the words when questioned, "we passed the MFR with flying colours". HEY, thats not hard to do when you omit a large chunk of creditors.
There is simply too much detail to go into here and now, I could write a book about it but suffice to say the QBCC is like a secret society, they are arbitrary, arrogant, lazy, complacent and are completely out of touch.
They missed or ignored dozens of red flags in this disaster.
If they were even a half smart, well run or organised and did their job to protect subbies and the public that rely on their published information that states a builder is financially sound, they could have avoided 10 months of hardship and massive losses by creditors with decisive action in March 2016. Furthermore, a builder allowed to have $60 million in revenue, only needs net tangible assets of $2.4 million. Are they kidding? With a 60 million licence capacity, in simple terms, that equates to only 2 weeks of trading out of 52.
There is little or no correlation between departments. They wasted 10 months missing red flags by the dozen, taking every precaution to ensure the builder was given what they call "natural justice" while subcontractors and suppliers were denied any justice at all.
In that time Cullen Group burnt many millions more of Queensland business and families money. The business, financial and personal relationship ruin that followed was epic.
Huge financial losses were suffered. Some Cullen subbies had to liquidate their own companies and walk away or go and work for others. People lost their homes, marriages and relationships broke down, family units were destroyed and that is not just exclusive to Cullen Group.
Suppliers MOC's V Subbies MOC's
The QBCC takes more notice of suppliers MOC’s than subbies because they say "it's difficult to dispute products delivered to site".
That is rank stupidity on a grand scale. The QBCC were and are on auto pilot and leaderless and its no surprise that over 25 senior staff have bailed out in the last 6 months including their illustrious leader.
Despite having irrefutable evidence of false statutory declarations being
signed and submitted for the release of progress claims, the QBCC allowed the deadline to pass (one year after becoming aware of the fraud) and did not prosecute those responsible. Another massive fail on behalf of the industry.
It's simple even for the QBCC to understand, either get rid of the need for Stat Decs or enforce the laws around them.
Surely it would not be beyond the QBCC to have a trigger in place where a red light flashes and a sign pops up and says "prosecute the bastards" when it's clear a that a few before a company liquidates, stat decs are signed and sent off as usual.
It could be a new income stream for the QBCC because its happened with ever liquidation I have ever had any knowledge of but I have never known of anyone being prosecuted for it.
As for Suppliers MOC's having more value that Subbies, surely they are not that ignorant to think that subbies don't deliver millions of dollars of products to site such as manufactured balustrade, screens, Gyprock, roofing, timber, doors, taps and tiles before they install it. I can vouch for that as I was a balustrade and screen manufacturer for Boheme, you can't buy our products off the shelf.
When Bloomer Construction went into Administration our company had $350,000 of product manufactured, powder coated and ready to be delivered to site for install. QBCC, is that not as valuable as a load of tiles delivered by a supplier?
Makeup of a Subbies MOC
QBCC I will give you an example so that you no longer have such a prejudiced view of Subbies MOC's.
Balustrade and screens don't just make themselves, they are all custom made. The raw material for the products we delivered to site to install was purchased months in advance and paid for in full.
We have the products engineered, staff then go to site to measure the products, we produce drawings, we manufacture the products. We then powder coat them and deliver to site. Our installers attend site, are inducted and then they install these products. All our staff are paid weekly, suppliers paid monthly, taxes are paid, super, insurance, rent, Workcover, Fuel as we go and the rest of it, you know the drill.
All of this is done before we see a cent from these crooked builders and that IS the way the industry works and it has a rancid smell about it.
We do all this without a deposit and do it using our own cashflow. We trust that builders know their own company and keep their cashflow under strict control. They must have a current QBCC licence and are by law, not allowed to operate the company like it's their own personal bank yet they do it and no one is ever prosecuted for these crimes.
Makeup of a Suppliers MOC
In many cases, buy ready made product, resell for a profit.
ASIC is as inept as the QBCC, in fact the Commissioner who just departed was ex ASIC, an organisation notorious for not wanting to get its hand dirty. See the parallel here?
The QBCC Commissioner was asked to call Minister De Brenni's office before cancelling Cullens licence. Why did he need to inform the Minister? Clearly they don't have autonomy.
The Commissioner was worried that if they didn't cancel Cullens license the QBCC would come under scrutiny. What about the millions lost by creditors in the preceding 10 months of inaction by the QBCC? That will come under scrutiny.
Commissioner were you not worried about the massive financial loss of 46 million to all 650 creditors?
No, of course not, you were just worried about an inept organisation coming under scrutiny.
Project Bank Accounts
Oh, by the way Mr De Brenni, thanks a million for all your hard work on Project Bank Accounts and then postponing them or scrapping them when your builder and union mates lobbied you and got in your ear. You were almost there Minister. You will not be getting our vote next time.
Subbies rely on a building company having a current QBCC licence but clearly that means nothing in light of what this Public Examination has uncovered so the QBCC must be dissolved or completely overhauled because the criminality that was ignored in this and many other builder liquidations cannot be forgiven or overlooked. Subbies are just cannon fodder for some of these rogue builders.
Final Free Suggestion for Minister De Brenni
Mr De Brenni, I have some suggestions so when you decide to overhaul this incompetent morally corrupt organisation, give me a call and I will participate strictly on a consultancy basis.
We at Subbies United will no longer be doing your job for free.
I will give you one last piece of advice at no charge, anything going forward will be accompanied by an invoice. The free advice is STOP stacking the QBCC with political hacks, builders and union mates, they only add to the level of gross incompetence.
After all these years of sending dozens of emails to you, the Commissioner and other department heads, loaded with detailed information and the fraudulent behaviour of builders and developers, packed with evidence of deliberate deception and corruption, you all ignored most of it like you ignored Cullens company accountants email, numerous MOC's, numerous Subbies and Suppliers warnings including emails from me going back to January 2016.
I did my due diligence and if it wasn't for the QBCC's incompetence, I would not have been a creditor as my contract was signed in August 2016. I wish I could sue you bastards.
I know people who have been bankrupt 3, 4 and 5 times but they are still in the industry. They are not only financially bankrupt, they are also morally bankrupt.
Cullen Subbies Sued for Preferences in the 10 months Lost by QBCC
Has the QBCC given any thought to all the subbies who were sued for Preferential Payments because of the extra 10 months you allowed Cullen Group to trade while they were insolvent with your "natural justice" only for builders?
I bet you haven't but we have. You get paid regardless and can still sleep at nigh.
Cullen Group Company Accountant
Cullen Groups sacked accountant Mr Pickering cared enough to stick his neck out and do the right thing knowing the cost would be high but if I needed an accountant, he would be the first man I would hire.
Call him a whistleblower if you will but in these shitty situations few men have the guts to make a stand. He was the only person in the company with the intestinal fortitude to do that and was sacked and vilified by the director for his trouble.
And his comprehensive email and offer of insurmountable evidence was ignored by the QBCC who didn't care enough to take his advice on board in March 2016 and do what they are handsomely paid to do.
Immediate Suspension is not Immediate.
Finally, on 13 Dec 16 the QBCC had that "Oh Fuck" moment when the compliance officer recommended immediate suspension.
On 13 Dec 16 the QBCC Assistant Commissioner named at the PE did not agree to suspend and was going to arrange 2 site inspections before making a decision.
That gave Cullen Group another 2 days to operate and based on their turnover, that delay potentially stripped a further $270,000 out of Subbies Businesses.
The licence was suspended on 15/12/2016 and cancelled on 16/01/2017.
As only the QBCC can do so well, they looked a gift horse in the mouth and snatched defeat from the jaws of victory.
Throughout the 5 days of the PE, there was not even a shred of remorse shown by any of the players.