SubbiesUnited and Subcontractors Alliance were waiting in anticipation to see how well the Project Trust Accounts (PTA) would serve Queensland's subbies after PBS Building appointed RSM Australia administrators.
Reading an article by Newscorp Australia's Kathleen Skene, it appears that something may not right with the PBS PTA's;
"PBS Building is considered a test case for the state’s new project bank accounts, however, the directors’ report shows the accounts do not appear to hold anywhere near enough to cover the debts."
"PBS Building (Qld) declared less than $38,000 in two project trust accounts and $352,920 in trust for subcontractor retentions."
Failure to set up trust accounts where required under BIF is a jailable offence.
Maximum penalty—500 penalty units.
(2) The project trust account must be opened within 20 business days after the contracted party enters into the first subcontract for the contract.
38k in 2 trust accounts for projects over 10 million raises questions that we hope will be answered by the Administrators and if illegalities are found, those responsible are held to account.
There was $352,920 in another trust for subcontractor retentions.
That would indicate they had received 3.5 million or more in claims and PBS withheld the usual 10% in retentions. That money belongs to subbies and in the past, would be lost in administration/liquidation but not in this case because it's in trust for those it belongs to, subbies.
That is a PTA working like it should.
It appears that one of 2 things have happened with the two main PTA's,
- All money in trust was distributed to the recipients or
- The trusts were not set up at the start of the project.
We hope it's the former.
Penalties For Not Depositing Money into Trust Accounts:
4) If an amount is paid to the contracted party or its agent in contravention of the deposit obligation, the contracted party must deposit the amount into the project trust account as soon as practicable after receiving the amount.
Maximum penalty for subsection (4)—200 penalty units or 2 years imprisonment.
You have to love how the Government gives the judiciary a lighter option than jail.
19A Limited purposes for which money may be deposited in project trust account:
(1) A trustee must not cause an amount to be deposited into the project trust account for any purpose other than—
(a) paying the trustee, as the contracted party, an amount the contracting party must deposit into the account under section 19(2); or
(b) paying a subcontractor beneficiary an amount the contracted party is liable to pay the beneficiary in connection with its subcontract; or
(c) repaying an amount withdrawn from the account in error; or
(d) making another payment prescribed by regulation.
Maximum penalty—200 penalty units or 1 year’s imprisonment.
(2) This section does not apply to an amount of interest credited to the project trust account by a financial institution.
Must Pay Beneficiaries Out of Trust Account
20 All payments to subcontractor beneficiaries to be paid from project trust account;
(1) This section applies if a project trust is required for a contract and the contracted party is liable to pay an amount to a subcontractor beneficiary in connection with its subcontract.
(2) The contracted party may only pay the amount to the subcontractor beneficiary—
(a) from the project trust account; and
(b) by depositing the amount into the account of a financial institution nominated by the beneficiary.
Maximum penalty for not depositing into Trust—200 penalty units or 1 year’s imprisonment.
The list of penalties go on:
Limitations on what you can use trust monies for:
for https://www.legislation.qld.gov.au/view/html/inforce/current/act-2017-043#sec.20A penalties and jail time.
Trustee cannot pay itself if there are insufficient funds to pay a beneficiary:
https://www.legislation.qld.gov.au/view/html/inforce/current/act-2017-043#sec.20B fines and jail time.
Where there are insufficient monies must pay beneficiaries in proportion:
Cannot prematurely close down trust account:
There are also penalties for failing to give notices and all sorts of other procedural aspects.
The items above are the main ones so builders who have made a habit of ripping off subbies, the noose is tightening, your day of reckoning is coming.
All subbies need to give them some security is a Qld government with enough backbone to escape their captors the MBA and a commitment to put an end to the theft of an estimated 1 billion of money belonging to subcontractors. It has been institutionalised fraud on a grand scale for too long to remember.
Think about it for a moment, 1 billion would rank as one of the worlds greatest ever heists but builders proceed unchecked and add to it on a daily basis and that is a failure of not just the muppets in Qld Labor, but all levels of Government.
Some of the data supplied here was researched by our Industry expert friends and joint architects of PTA's at whojungle.net
Subbies add a level of protection to your business and join SubbiesUnited and make use of our private members forum for up to date information.
But a warning, if you are NOT a subcontractor, DO NOT JOIN, you will not have access until we approve you and in the approval process, we will weed you out, you are not welcome.