Doubts on abalone firm's death rates
Michael Owen, Pia Akerman
Additional reporting: Gavin Lower
The collapsed aquaculture company that has drawn the Rann government into the national debate about the growing influence of political lobbyists has been challenged about the accuracy of information it provided on the number of abalone dying before maturity.
Concerns have also been raised over whether Australian Bight Abalone's leases -- initially granted for research purposes -- should have been approved by the South Australian government for commercial activities.
The process under which ABA received its commercial licences fell under the spotlight this week as the fallout from explosive corruption revelations in Queensland spread across the country.
The South Australian government is now embroiled in a fierce public debate over the growing influence of political lobbyists and cash for access to premiers and ministers.
An investigation by The Weekend Australian has revealed several links and private meetings between ABA chief Andrew Ferguson, Premier Mike Rann and several of his senior ministers.
ABA's collapse has left 1200 people, who invested $43.8 million in the company, in limbo. Its 27 employees are now redundant.
The revelations come amid industry concern about how ABA's aquaculture leases, each with corresponding marine abalone farming licences, were converted by the state government from pilot leases to development leases, and then to production leases. The process of converting the leases, which is approved at ministerial level and does not require public consultation under the state's Aquaculture Act, was undertaken and completed within one year of ALP fundraiser and political lobbyist Nick Bolkus, a former Labor senator, being appointed to the board of ABA as a director on July 1, 2007.
"There was some opposition and then, all of a sudden, the whole consultation process was shut down and ABA were given commercial licences on what were previously leases set aside for research," a source said.
"Later, divers that used to go up there would say 30 to 40 per cent of abalone had died, yet the company was claiming the lowest mortality in the industry. There were problems with growth rates and sale prices -- everything about it was misleading."
Mr Bolkus said the board had been concerned about the mortality rates, and undertook an investigation.
"That was never an issue until the last few months," Mr Bolkus said. "We had been getting reports from an acclaimed local company as to the mortality rates and we were satisfied that things were under control. At the end, the advice we got as a board was that it was a matter of feed, and we were taking steps to address that."
Former director Peter Woodhead, one of the company's founders, whose retirement from the board in 2007 made way for Mr Bolkus, has also questioned how ABA's collapse came about with so little warning. Monthly checks on the abalone are meant to provide regular updates on the progress of the precious stock.
"I could not understand how a great concept could go so horribly wrong," Mr Woodhead said. "The original business plans we did really only showed the company needing to be involved in the MIS (managed investment scheme) fundraising up until about 2008.
"What I don't understand is if the mortality rates are as high as what people are saying, that management didn't know about this a long time ago. If it has been, then there have been people misleading people."
When The Weekend Australian asked Mr Rann whether the government had any concerns about ABA's operations and its relationship with the government, a spokeswoman for the Premier said it was a private company.
"In terms of its relationship with the government we have no concerns," she said.
In the lucrative abalone industry, prized aquaculture licences and the growing Chinese middle-class's insatiable taste for the delicacy hold the key to multi-million-dollar fortunes.
Raising funds through managed investment schemes, ABA boasted in its publicity material that it was "perfectly poised" to reap gains from the proposed Australia-China free trade agreement.
The impact was huge. Net assets doubled in the 12 months to June last year to $18.1m, with the directors crediting that to "improved operating performance" and proceeds raised from the 2008 MIS. Now the company is in voluntary administration.
According to industry sources, ABA ignored warnings about the risks of abalone farming in the areas covered by the leases first granted in 2005 and, with government approvals in place, pushed ahead in a rush for profit.
"The connections that were made at that time let it expand at an out-of-control rate without any real checks or measures," said one source close to the company. "There is no doubt they were very well-connected politically."
The Adelaide-based aquaculture firm operates abalone farming operations at four sites near Elliston, on South Australia's remote Eyre Peninsula.
Before ABA was placed into voluntary administration last month, Mr Ferguson and other executives had met Mr Rann, Deputy Premier Kevin Foley, Infrastructure Minister Patrick Conlon, Planning Minister Paul Holloway and Fisheries Minister Paul Caica at his company's official functions, government events and exclusive ALP fundraising events.
Mr Rann and senior ministers in his cabinet have this week sought to avoid scrutiny over their links to the company, following an exclusive report in The Australian on Tuesday that Mr Bolkus was headhunted by Mr Ferguson to become a director because of his connections with the government.
Mr Bolkus -- one of Australia's top political lobbyists and a founding partner in Adelaide-based lobbyist firm Bespoke Approach with Howard government minister Alexander Downer -- said yesterday he had never used those connections to promote ABA.
"I haven't made any representations to ministers about ABA," Mr Bolkus said. "Nor did I discuss any question as to the state of the licences or the changeover."
Mr Bolkus chairs the state Labor fundraising body, SA Progressive Business, which organises events every month offering access to the Premier and senior ministers for up to $1500 a person.
Mr Ferguson is a regular at some of those events. Earlier this week, he said he had been to intimate boardroom lunches hosted by Mr Holloway "because we operate on government leases and it is important to us to know what the government is doing, and it is important for the government to know what we are doing".
Mr Holloway said Mr Ferguson had asked for a meeting to discuss ABA when he was fisheries minister, but he could not remember the details of the conversation.
"He sought an appointment and I met with him about some of the issues," Mr Holloway said. "It was years ago now."
He said that although he "regularly" saw Mr Bolkus, the former senator had never approached him regarding ABA.
"The company wouldn't appoint him (as a director) if they didn't think there was a benefit, but maybe he brings some other skills they need," he added.
Mr Conlon, who describes himself as a mate of Mr Bolkus, said this week he had met "people from Australian Bight Abalone many times and discussed issues concerning their business".
Mr Bolkus is a close factional ally of Mr Conlon, the state parliamentary leader of the Left.
Mr Conlon declined to be interviewed or answer written questions, including: who from ABA he met and when; who arranged the meetings and whether Mr Bolkus was present; the nature of the business issues discussed; and why he was meeting company representatives to discuss a business outside his portfolio.
In an emailed statement, Mr Conlon said that "as the Minister for Transport, Infrastructure and Energy, I meet with many businesses in South Australia".
"There isn't a business in South Australia that doesn't touch on my portfolio areas," he said. "I have met with Andrew Ferguson on a few occasions -- I cannot imagine why I wouldn't have."
The minister responsible for ABA's lease conversions in 2007 and 2008 was Rory McEwen, who remains a state MP but is no longer in cabinet. In 2007, Mr McEwen admitted he had not disclosed five electoral donations worth more than $750 each. The scandal damaged the Rann government and almost cost him his cabinet position at the time.
When contacted by The Weekend Australian about his dealings with ABA, Mr McEwen refused to comment. A primary industries department spokeswoman said all ABA's conversion applications were assessed by its aquaculture division "to confirm lease performance criteria were being met".
Mr Rann's office initially refused to respond to inquiries, claiming the Premier had never met Mr Ferguson.
After Mr Ferguson was quoted in The Australian on Tuesday saying he had met Mr Rann and several senior ministers, the Premier's office said Mr Rann had been the guest speaker at ABA's end-of-financial-year drinks on July 9 last year at The Loft, above North Restaurant at Skycity Adelaide Casino. The event was arranged by Labor-aligned lobbyist firm Hawker Britton, whose South Australian director is Stephen Halliday, a former chief-of-staff to Mr Rann as Premier and opposition leader.
Mr Halliday has not responded to calls for comment.
A spokeswoman for Mr Caica, who took over the fisheries portfolio from Mr McEwen when he resigned from cabinet on March 2, insisted Mr Caica had not "formally" met Mr Ferguson and that he had only a "very informal chat" with Mr Ferguson at an aquaculture announcement in Adelaide on June 25.
Mr Ferguson, who received a $412,500 loan from ABA in 2007-08, has declined to comment further about the company.
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