Section: 2.4.2 Transactions by some Ministers and Others
Part: (b)
(i) The Ten Mile
(A) Financial Transactions
In mid-1 982 a Bjelke-Petersen family company, Ciasom Pty. Ltd., borrowed from Bill Acceptance Corporation Limited to complete its $1.45 million purchase of a grazing property, the “Ten Mile”. It also acquired a leasehold interest in an adjoining property, “Crystal Waters”. Bjelke-Petersen himself was not a shareholder or director of Ciasom or another family company, Bjelke-Petersen Enterprises Pty. Ltd., but his wife and children were.
Negotiations to obtain refinance from the European Asian Bank Aktiengesellschaft began by at least December 1982 when a loan in Swiss francs looked advantageous.
Lyons advised Bjelke-Petersen and was involved in the negotiations with the European Asian Bank.
So was Bjelke-Petersen himself, according to him “to a very, very limited extent”.
Part of his involvement was a discussion in December, 1982, with an Australian representative of the European Asian Bank who reported on that meeting to its Singapore office and its head office on 9 December.
A recommendation was made that the loan be granted notwithstanding that the information available was rather limited. Part of the reason for the recommendation emerges from the following extract from the report:
Bjelke-Petersen denied in his evidence before this Inquiry that he provided any basis for those comments.
The application to the European Asian Bank was successful and, in April 1983, a foreign currency loan in Swiss francs equivalent to A$3 million was made on the security of a mortgage over the “Ten Mile”. The Bill Acceptance Corporation debt was repaid at that time.
Meanwhile, on 4 February, 1983, Bjelke-Petersen had issued a writ against Queensland Television (Channel 9) claiming damages for defamation arising out of statements made on a current affairs programme which was telecast on 2 February. Subsequently, a company associated with a well known entrepreneur, Alan Bond, took over Queensland Television Limited. Later, Lyons was appointed to the board of the latter company. The Australian dollar later depreciated against the Swiss franc and Ciasom converted its borrowings from Swiss francs into the equivalent in U.S. dollars. However, the Australian dollar also fell against the U.S. dollar. The effect of the currency fluctuation was to increase the amount which Ciasom owed to the European Asian Bank. Ciasom’s financial position was also adversely affected by a lengthy drought at the “Ten Mile”. By 10 April, 1985, the amount of the principal owing by Ciasom to the European Asian Bank was equivalent to A$3.8 million. Under the provisions of the loan agreement, Ciasom was obliged to pay the bank a “topup” amount of $735,000 on 11 April 1985. However, the bank agreed to forego its entitlement to that payment at that time on the basis of a recommendation to head office which relied upon Bjelke-Petersen’s “political standing” and the bank’s “business opportunities through this borrowing”.
It was not demonstrated that Bjelke-Petersen advanced those considerations to the bank or authorized such an approach.By the beginning of 1986, Lyons was no longer a director of Queensland Television Limited and he and Bjelke-Petersen personally were involved in negotiations for the settlement of Bjelke-Petersen’s defamation action. Bjelke-Petersen discussed the matter with Bond and corresponded with him. Early in 1986, Lyons introduced Bjelke-Petersen to Robert Frederick Stowe. The Stowe group of companies included Griffin Holdings Limited, W.R. Carpenter Limited, and the East-West Airlines group of companies.
Lyons was then a director of two of the East-West group of companies. In a transaction which is later discussed in a little more detail, extended landing rights in Queensland were granted by the Government to East-West Airlines (Operations) Ltd. on 30 January, 1986. Early in 1986, Bjelke-Petersen also met Ryoto “Bob” Yahiro, who, on 5 February, 1986, became a director of Griffin Holdings Limited, the parent company of East-West Airlines (Operations) Ltd. Yahiro was also associated with a company located in Japan, Kokan Mining Co. Ltd. At that time, Ciasom Pty. Ltd. and Bjelke-Petersen Enterprises Pty. Ltd. held five leases for the extraction of kaolin. Bjelke-Petersen Enterprises Pty. Ltd. held a further four leases with Raymond Black and Ruth Black, who had been friends of the Bjelke-Petersen family for many years, and there were other kaolin leases held by the Blacks or interests associated with them. Discussions took place between Bjelke-Petersen and Yahiro with respect to the exploitation of the kaolin leases early in 1986. According to Bjelke-Petersen, he was unaware that Yahiro had any connection with the Stowe group of companies.
On 11 March, 1986, the European Asian Bank demanded that Ciasom pay a “top-up’’ sum of $454,396 by 11 April, 1986, together with interest then owing. On 13 March, 1986, Kokan Mining Co. Ltd. wrote to Bjelke-Petersen Enterprises Pty. Ltd. expressing its “definite interest” in relation to the kaolin, and indicating that it was ready to enter into an option agreement. It was suggested that a payment of $150,000 would probably be made early in April 1986. By 24 March, 1986, Bjelke-Petersen’s solicitors had drafted five agreements. None provided Kokan Mining Co. Ltd. with any option to acquire or mine the kaolin leases. Four of the draft agreements related to the leases in which Ciasom had no interest and which were owned by Bjelke-Petersen Enterprises Pty. Ltd., the Blacks, and/or interests associated with the Blacks. Each provided for a payment of $1.00 by Kokan Mining Co. Ltd. to the other party or parties to the agreement.
Further, each was expressed to be subject to completion of a further agreement between Kokan Mining Co. Ltd. of the one part and Ciasom and Bjelke-Petersen Enterprises Pty. Ltd. of the other part. Those were the parties to the fifth draft agreement, which provided for a payment of $150,000.00 by Kokan Mining Co. Ltd. to Ciasom not later than 30 April 1986. Under the respective agreements, Kokan Mining Co. Ltd. was to be given the right, for a period of six months from 5 April 1986, to enter on the kaolin leases to carry out prospecting, drilling, sampling, surveying and testing operations. On 27 March, 1986, the accountants for the Bjelke-Petersen family companies forwarded the draft agreements to Kokan Mining Co. Ltd. with a request that $150,000 be remitted to Ciasom’s account at the Kingaroy Branch at the Westpac Bank by 6 April 1986. On 2 April 1986, Bjelke-Petersen’s solicitors filed a notice of discontinuance in his defamation action against Queensland Television Limited. By then, he had been paid $400,000 damages, an amount which he personally negotiated with Bond. The Australian Broadcasting Tribunal has inquired into that payment and the circumstances leading up to it and has made findings which are a matter of public record. Subsequently, it has been stated that the Tribunal’s decision is to be challenged, and those proceedings have not concluded.
The $400,000 which Bjelke-Petersen received was used to discharge part of the amount which Ciasom was required to pay to the European Asian Bank by 11 April.
In his evidence to this Inquiry, Bjelke-Petersen swore that he told Bond many times during the negotiations that he wished to litigate, and not to settle, the action for defamation which he had commenced. He also said that he repeatedly attempted to prevail upon Bond to allow the terms of the compromise to be made public. Indeed, he claimed that the reason why he insisted upon the huge payment of $400,000 was to make the media aware that if they made incorrect statements about him which tarnished his political reputation, “. . . when they came out with straight lying . . .”, they would be vigorously pursued. However, that cannot have been the only reason for Bjelke-Petersen’s demand for such enormous damages. The terms of settlement to which Bjelke-Petersen agreed required that the amount which he was paid be kept confidential, which on its face made it unlikely that the media generally would receive the intended me ssage . Bjelke-Petersen’s solicitors provided to this Inquiry what was described as the “complete file” of both themselves and the accountants in relation to the transaction with Kokan Mining Co. Pty. Ltd.The file includes a facsimile message dated 4 April 1986 headed “Carpenter” which refers to an “addendum to an agreement . . , made between ‘B.P. Ltd.’ and ‘K.M.C. Ltd.’.” Carpenter is almost certainly a reference to W.R. Carpenter Pty. Ltd., a member of the Stowe group. On Bjelke-Petersen’s evidence, he was unaware that any member of that group was involved in the Kokan Mining Co. Pty. Ltd. transaction. Bjelke-Petersen could not remember whether agreements with Kokan Mining Co. Ltd. were ever executed and there is nothing on the file to indicate that they were. However, by about 18 April, 1986, Kokan Mining Co. Ltd. had paid $150,000 to Ciasom’s Westpac Bank Account at Kingaroy. According to the draft agreements, whatever rights were accorded to Kokan Mining Co. Ltd. would have expired about 5 October, 1986. By then, the European Asian Bank was looking for further payments or additional security, as Bjelke-Petersen had been told in his office on 5 September. Ciasom had failed to pay even all of the amount which had been expected in April.
On 8 October, 1986, the accountant for the Bjelke-Petersen family companies advised Kokan Mining Co. Ltd. that the agreements could be extended to 31 October 1986. Towards the end of that month, the European Asian Bank was pressing Ciasom for a substantial payment, slightly less than $260,000. Ciasom was advised that any application for an extension of the loan after March, 1987 ‘I.. . would now be in severe jeopardy”.On 7 November, 1986, Ciasom paid the bank US$130,000. On 18 November, the accountant for Bjelke-Petersen and his companies received information that Kokan Mining Co. Ltd. was no longer negotiating on its own behalf but on behalf of the Stowe group. According to Bjelke-Petersen, he was still unaware that companies in that group were ever involved in the kaolin transaction.Two successive extensions of the period of the exploration rights were granted to Kokan Mining Co. Ltd..For the first, $500,000 was paid on 24 December 1986. For the second, a further $300,000 was paid on April 1987. On both occasions, payments were made before any written confirmation of the extension was provided.There were no agreements entered into. In all, the rights were extended for a total of less than nine months to 30 June 1987 at a cost of $800,000, of which Ciasom Pty. Ltd. paid $35,715 to the Blacks or interests associated with them.There was nothing in the “complete file” which indicated that there was any option to purchase granted in respect of the kaolin mining leases. Bjelke-Petersen told this Inquiry that the proposal was that the amounts paid were to be deducted from the purchase price in the event that a sale eventuated.There were some further desultory negotiations in the second half of 1987, but the matter was at an end before that year was over.
Part: (b)
(i) The Ten Mile
(A) Financial Transactions
In mid-1 982 a Bjelke-Petersen family company, Ciasom Pty. Ltd., borrowed from Bill Acceptance Corporation Limited to complete its $1.45 million purchase of a grazing property, the “Ten Mile”. It also acquired a leasehold interest in an adjoining property, “Crystal Waters”. Bjelke-Petersen himself was not a shareholder or director of Ciasom or another family company, Bjelke-Petersen Enterprises Pty. Ltd., but his wife and children were.
Negotiations to obtain refinance from the European Asian Bank Aktiengesellschaft began by at least December 1982 when a loan in Swiss francs looked advantageous.
Lyons advised Bjelke-Petersen and was involved in the negotiations with the European Asian Bank.
So was Bjelke-Petersen himself, according to him “to a very, very limited extent”.
Part of his involvement was a discussion in December, 1982, with an Australian representative of the European Asian Bank who reported on that meeting to its Singapore office and its head office on 9 December.
A recommendation was made that the loan be granted notwithstanding that the information available was rather limited. Part of the reason for the recommendation emerges from the following extract from the report:
“we think we have to go along as this would open further avenues in Queensland.
I am told we will be approached first for Queensland Government and semi-
I am told we will be approached first for Queensland Government and semi-
government finance requirements. If this application does not find your consent
we believe that it would affect negatively our business in this State ...”.
Bjelke-Petersen denied in his evidence before this Inquiry that he provided any basis for those comments.
The application to the European Asian Bank was successful and, in April 1983, a foreign currency loan in Swiss francs equivalent to A$3 million was made on the security of a mortgage over the “Ten Mile”. The Bill Acceptance Corporation debt was repaid at that time.
Meanwhile, on 4 February, 1983, Bjelke-Petersen had issued a writ against Queensland Television (Channel 9) claiming damages for defamation arising out of statements made on a current affairs programme which was telecast on 2 February. Subsequently, a company associated with a well known entrepreneur, Alan Bond, took over Queensland Television Limited. Later, Lyons was appointed to the board of the latter company. The Australian dollar later depreciated against the Swiss franc and Ciasom converted its borrowings from Swiss francs into the equivalent in U.S. dollars. However, the Australian dollar also fell against the U.S. dollar. The effect of the currency fluctuation was to increase the amount which Ciasom owed to the European Asian Bank. Ciasom’s financial position was also adversely affected by a lengthy drought at the “Ten Mile”. By 10 April, 1985, the amount of the principal owing by Ciasom to the European Asian Bank was equivalent to A$3.8 million. Under the provisions of the loan agreement, Ciasom was obliged to pay the bank a “topup” amount of $735,000 on 11 April 1985. However, the bank agreed to forego its entitlement to that payment at that time on the basis of a recommendation to head office which relied upon Bjelke-Petersen’s “political standing” and the bank’s “business opportunities through this borrowing”.
It was not demonstrated that Bjelke-Petersen advanced those considerations to the bank or authorized such an approach.By the beginning of 1986, Lyons was no longer a director of Queensland Television Limited and he and Bjelke-Petersen personally were involved in negotiations for the settlement of Bjelke-Petersen’s defamation action. Bjelke-Petersen discussed the matter with Bond and corresponded with him. Early in 1986, Lyons introduced Bjelke-Petersen to Robert Frederick Stowe. The Stowe group of companies included Griffin Holdings Limited, W.R. Carpenter Limited, and the East-West Airlines group of companies.
Lyons was then a director of two of the East-West group of companies. In a transaction which is later discussed in a little more detail, extended landing rights in Queensland were granted by the Government to East-West Airlines (Operations) Ltd. on 30 January, 1986. Early in 1986, Bjelke-Petersen also met Ryoto “Bob” Yahiro, who, on 5 February, 1986, became a director of Griffin Holdings Limited, the parent company of East-West Airlines (Operations) Ltd. Yahiro was also associated with a company located in Japan, Kokan Mining Co. Ltd. At that time, Ciasom Pty. Ltd. and Bjelke-Petersen Enterprises Pty. Ltd. held five leases for the extraction of kaolin. Bjelke-Petersen Enterprises Pty. Ltd. held a further four leases with Raymond Black and Ruth Black, who had been friends of the Bjelke-Petersen family for many years, and there were other kaolin leases held by the Blacks or interests associated with them. Discussions took place between Bjelke-Petersen and Yahiro with respect to the exploitation of the kaolin leases early in 1986. According to Bjelke-Petersen, he was unaware that Yahiro had any connection with the Stowe group of companies.
On 11 March, 1986, the European Asian Bank demanded that Ciasom pay a “top-up’’ sum of $454,396 by 11 April, 1986, together with interest then owing. On 13 March, 1986, Kokan Mining Co. Ltd. wrote to Bjelke-Petersen Enterprises Pty. Ltd. expressing its “definite interest” in relation to the kaolin, and indicating that it was ready to enter into an option agreement. It was suggested that a payment of $150,000 would probably be made early in April 1986. By 24 March, 1986, Bjelke-Petersen’s solicitors had drafted five agreements. None provided Kokan Mining Co. Ltd. with any option to acquire or mine the kaolin leases. Four of the draft agreements related to the leases in which Ciasom had no interest and which were owned by Bjelke-Petersen Enterprises Pty. Ltd., the Blacks, and/or interests associated with the Blacks. Each provided for a payment of $1.00 by Kokan Mining Co. Ltd. to the other party or parties to the agreement.
Further, each was expressed to be subject to completion of a further agreement between Kokan Mining Co. Ltd. of the one part and Ciasom and Bjelke-Petersen Enterprises Pty. Ltd. of the other part. Those were the parties to the fifth draft agreement, which provided for a payment of $150,000.00 by Kokan Mining Co. Ltd. to Ciasom not later than 30 April 1986. Under the respective agreements, Kokan Mining Co. Ltd. was to be given the right, for a period of six months from 5 April 1986, to enter on the kaolin leases to carry out prospecting, drilling, sampling, surveying and testing operations. On 27 March, 1986, the accountants for the Bjelke-Petersen family companies forwarded the draft agreements to Kokan Mining Co. Ltd. with a request that $150,000 be remitted to Ciasom’s account at the Kingaroy Branch at the Westpac Bank by 6 April 1986. On 2 April 1986, Bjelke-Petersen’s solicitors filed a notice of discontinuance in his defamation action against Queensland Television Limited. By then, he had been paid $400,000 damages, an amount which he personally negotiated with Bond. The Australian Broadcasting Tribunal has inquired into that payment and the circumstances leading up to it and has made findings which are a matter of public record. Subsequently, it has been stated that the Tribunal’s decision is to be challenged, and those proceedings have not concluded.
The $400,000 which Bjelke-Petersen received was used to discharge part of the amount which Ciasom was required to pay to the European Asian Bank by 11 April.
In his evidence to this Inquiry, Bjelke-Petersen swore that he told Bond many times during the negotiations that he wished to litigate, and not to settle, the action for defamation which he had commenced. He also said that he repeatedly attempted to prevail upon Bond to allow the terms of the compromise to be made public. Indeed, he claimed that the reason why he insisted upon the huge payment of $400,000 was to make the media aware that if they made incorrect statements about him which tarnished his political reputation, “. . . when they came out with straight lying . . .”, they would be vigorously pursued. However, that cannot have been the only reason for Bjelke-Petersen’s demand for such enormous damages. The terms of settlement to which Bjelke-Petersen agreed required that the amount which he was paid be kept confidential, which on its face made it unlikely that the media generally would receive the intended me ssage . Bjelke-Petersen’s solicitors provided to this Inquiry what was described as the “complete file” of both themselves and the accountants in relation to the transaction with Kokan Mining Co. Pty. Ltd.The file includes a facsimile message dated 4 April 1986 headed “Carpenter” which refers to an “addendum to an agreement . . , made between ‘B.P. Ltd.’ and ‘K.M.C. Ltd.’.” Carpenter is almost certainly a reference to W.R. Carpenter Pty. Ltd., a member of the Stowe group. On Bjelke-Petersen’s evidence, he was unaware that any member of that group was involved in the Kokan Mining Co. Pty. Ltd. transaction. Bjelke-Petersen could not remember whether agreements with Kokan Mining Co. Ltd. were ever executed and there is nothing on the file to indicate that they were. However, by about 18 April, 1986, Kokan Mining Co. Ltd. had paid $150,000 to Ciasom’s Westpac Bank Account at Kingaroy. According to the draft agreements, whatever rights were accorded to Kokan Mining Co. Ltd. would have expired about 5 October, 1986. By then, the European Asian Bank was looking for further payments or additional security, as Bjelke-Petersen had been told in his office on 5 September. Ciasom had failed to pay even all of the amount which had been expected in April.
On 8 October, 1986, the accountant for the Bjelke-Petersen family companies advised Kokan Mining Co. Ltd. that the agreements could be extended to 31 October 1986. Towards the end of that month, the European Asian Bank was pressing Ciasom for a substantial payment, slightly less than $260,000. Ciasom was advised that any application for an extension of the loan after March, 1987 ‘I.. . would now be in severe jeopardy”.On 7 November, 1986, Ciasom paid the bank US$130,000. On 18 November, the accountant for Bjelke-Petersen and his companies received information that Kokan Mining Co. Ltd. was no longer negotiating on its own behalf but on behalf of the Stowe group. According to Bjelke-Petersen, he was still unaware that companies in that group were ever involved in the kaolin transaction.Two successive extensions of the period of the exploration rights were granted to Kokan Mining Co. Ltd..For the first, $500,000 was paid on 24 December 1986. For the second, a further $300,000 was paid on April 1987. On both occasions, payments were made before any written confirmation of the extension was provided.There were no agreements entered into. In all, the rights were extended for a total of less than nine months to 30 June 1987 at a cost of $800,000, of which Ciasom Pty. Ltd. paid $35,715 to the Blacks or interests associated with them.There was nothing in the “complete file” which indicated that there was any option to purchase granted in respect of the kaolin mining leases. Bjelke-Petersen told this Inquiry that the proposal was that the amounts paid were to be deducted from the purchase price in the event that a sale eventuated.There were some further desultory negotiations in the second half of 1987, but the matter was at an end before that year was over.
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