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05 Mar

Revamped laws a double-edged sword

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A round of property law reforms are delivering good news for big landlords, but a mixed result for the big commercial agents. Photo: iStockCommercial property professionals are no longer required to hold a real estate agent’s licence for large property transactions under NSW government red tape reforms.
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The winds of change in this area have already blown through Queensland and Victoria and now NSW agents are facing a double-edged sword.

The changes, under an amendment to NSW’s Property, Stock and Business Agents Act, are aimed at

alleviating the costs and compliance paperwork for the vendors and also for the agents, who, if they complete the forms incorrectly, face losing commissions.

It comes at a time when larger vendors, of the ilk of real estate investment trusts, which own about 80 per cent of investment-grade properties in the country, are embarking on asset deals. For the larger acquisitions or disposals, most of them will probably still use an external, independent agent, but the same probably isn’t true for deals worth a lot less.

Under the Queensland law the thresholds are properties worth about $10 million and 10,000 square metres. In NSW, the exemptions are based on the principal/owner, whereas in Queensland they are based on the property or the parties for the relevant transaction/agency agreement.

According to Jodie Masson, partner at the property-exclusive law firm Massons, new exemptions to the act for commercial agents, which came into effect on  August 15, provided a windfall to large property owners but were a double-edged sword for large commercial agents.

Similar rules came into Victoria in early 2014.

“The new exemptions are great news for large property owners who manage, lease and sell their own assets via a separate, but related, licensed entity, which usually charges a fee to the owner,” Ms Masson said. “It means that those internally controlled agency entities no longer have the administrative burden of maintaining a real estate agent’s licence, including paying fees, required signage, managing trust accounts and holding personal indemnity insurance. It’s easy to understand why some large shopping centre owners have been pushing for this change for many years.

“On the one hand, large commercial real estate agencies will no longer need to ensure that they strictly comply with NSW agency law, particularly in the area of having compliant agency agreements, for their large clients,” Ms Masson said. “The courts have been brutal with real estate agents who do not have strictly compliant agency agreements, that is, signed at the right time, containing all of the prescribed terms in the right places, and signed and served properly.

“In a commercial property industry which is largely dependent on relationships, it makes sense to relax the strict requirements so that agents can collect the agreed commission without having to jump through hoops.”

However, Ms Masson said the downside for commercial real estate agents was that they would have to work harder to entice business away from those large corporate owners who manage, lease and sell their own assets.

“If large property owners can now easily internally manage their property management, leasing, acquisitions and disposals, there is now less incentive to outsource this previously troublesome role to an external licensed real estate agent,” Ms Masson said.

“However, there’s always a place for absolute experts and the large commercial agencies are well set up to provide excellent support and coverage for property owners.”

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05 Mar

Storage Wars: The billion-dollar business based on junk

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Penrith Auctions both sells and buys the contents of storage units, when the buyer has defaulted. Auctioneer Arron Caller holds a 1950s Golden Fleece petrol station sign. Photo: Peter RaeVery often it’s trash. But this time the “delinquent” storage unit contained a $37,000 stash worthy of a big reveal on the television reality show Storage Wars.
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“Lo and behold, there was a safe with five exquisite watches,” said Jason Lee*, the owner of Penrith City Auctions.

Mr Lee spotted the locked safe after buying the entire contents of the unit sight unseen. The owner, Lee was told, had defaulted because he had been deported for overstaying his visa.

Each watch was worth $7500. Another unit he bought contained the stock of a sex shop including thousands of “devices” in different colours, shapes and sizes.

As overall demand for storage has gone up, so too have complaints about unfair pricing and the seizure of goods for non-payment.

The number of unpaid storage units for auction on GraysOnline, for instance, has increased by 50 per cent, with around 50 “delinquent” auctioned each week. Bidding on units starts at $9, but can reach the thousands, driven by Storage Wars’ inspired buyers who are looking for treasure.

According to a report this month by IBISWorld, a research company, the storage industry’s 692 players generate $1.1 billion in revenue, resulting in profits of around 20 per cent. As rents and property prices go up, consumers are finding their stuff no longer fits in the smaller dwellings. E-commerce has also created a need for more storage for small online businesses, often operated at home.

No one knows exactly how many storage units exist in Australia, but at best guess there are as many as 700,000 individual units. National Storage, which has 8.5 per cent of the market has 59,000 units, said a spokeswoman for the company.

Occasionally Mr Lee will find himself bidding against a frantic owner, who wants to recover the contents of their seized unit. “You can tell when they bid, a storage unit worth only $500 (and the owner) will bid $2000.”

Auction houses like Mr Lee’s are also contracted by local storage companies to sell and clear out the contents of delinquent units from Sydney sites.

NSW Fair Trading has received 24 complaints this year, mostly relating to fees, charges and loss and damage of property.  Three concerned the seizure or sale of storage unit contents.

IT consultant Laszlo Molnar complained about unfair pricing on ProductReview杭州m.au about National Storage’s policy of increasing prices every nine months on the unit he rented to store furniture for his daughter.

“Every nine months I got an increase of between 12 and 18 per cent. And when I asked National Storage, they said it was their policy to do a rental increase. It was above any rate of inflation or CPI.”

You never know what you are going to find in a delinquent storage unit. Photo: Peter Rae

When the price of the 1.8 metre square storage unit in Melbourne, which he originally rented for $105 a month, was about to hit $150, he decided that was enough and moved out. He said the manager of his storage centre  had written to him that the price increases were company policy, handed down from head office.

A spokeswoman for National Storage told Fairfax Media that price increases were determined on a supply and demand basis, akin to hotel or airline industry pricing. Different centres have different pricing structures, she said.

Mr Lee said he was increasingly competing against consumers who have watched the American television show Storage Wars and believe that they will find a jackpot by bidding on a delinquent unit on GraysOnline.

“They’ve watched the TV show, and believe they will buy a unit or two at auction and hit the jackpot by finding a five carat diamond ring. But you’ve got more luck (of getting rich) on the blackjack table,” said Mr Lee. His auction house Penrithcityauctions杭州m.au specialises in selling deceased estates and unsold units.

Mostly Mr Lee finds “decrepit old stuff” in amongst the abandoned household goods, motorbikes, hi-fi units and suitcases. GraysOnline advertised a unit this week where the highlight was a DVD of the 1989 Julia Robert’ movie, Steel Magnolias. 

Storage units are a billion-dollar business and profitable, generating shows like Storage Wars in the US and shown on television here. But many people default on these units, and the contents are sold online and at weekly auctions by companies like Penrith City Auctions. Photo: Peter Rae

National Storage’s spokeswoman said before the delinquent unit went to auction, the goods are catalogued and lodged with GraysOnline for sale. “Items are detailed and we don’t sell units as unseen lots as they do on Storage Wars.”

The company didn’t sell personal items (eg documents) and these are held for collection by the customer.

“We are not obliged to do this but feel this is the right thing to do in these circumstances,” she said. 

* Lee is not his real last name.

Storage by numbers  Industry revenue $1.1 billion Industry profit $214.8 Number of businesses 692

One of the treasures sourced from an unpaid storage unit, and up for auction at Penrith City Auctions. Photo: Peter Rae

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05 Mar

ASX to start flat ahead of retail, capex data as US rates remain in focus

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Local data returns to the spotlight this week for Australian investors emerging from reporting season, while globally markets wait on employment data from the US to validate commentary from US Federal Reserve chair Janet Yellen.
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Markets last week traded in quiet anticipation of news from the Fed’s annual meeting at Jackson Hole, Wyoming, including the hotly anticipated speech from Dr Yellen, which disappointed interest rate hawks on Friday night.

While leaving the option to raise interest rates as early as September open, depending on employment data due on Friday, Dr Yellen also pointed to stimulus tools available should conditions deteriorate, leaving the impression that monetary policy was likely to remain accommodative in the long term.

Fed fund futures moved, albeit not dramatically, from pricing around a 32 per cent chance of a hike in September to 42 per cent. Asian region markets will have a chance to respond to the commentary, in the wake of the US dollar which surged higher, sending the Australian dollar tumbling 1.5 per cent from a high of US76.8¢ to as low as US75.6¢.

The Australian dollar clawed back some ground, sitting at US76¢ flat at the weekend, while sharemarket futures point to a slightly weaker open on Monday morning.

“While the move towards another Fed rate hike will likely cause bouts of consternation in investment markets I don’t see the same degree of uncertainty that we saw around last year’s Fed rate hike,” AMP Capital chief economist Shane Oliver said.

“It’s clear from the Fed’s actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blowback to the US economy and of the impact of a rising US dollar in doing some of its work for it and so acting as a limitation on how much it can hike.”

While investors will be awaiting Friday’s non-farm payrolls for the US for a strengthening case for a rate rise at the Fed’s meeting on September 26-27, as well as commentary from four Fed speakers throughout the week, there is plenty of action to keep local traders occupied.

Building approvals data is due on Tuesday, followed by retail sales for July and June-quarter business investment data due on Thursday.

“Industry reports, including those from the current reporting season have been mixed [regarding retail sales],” National Australia Bank senior economist David de Garis said.

“One major market chain had a strike affecting distribution in Melbourne from mid-July, possibly hampering sales through its outlets. Still quite difficult trading conditions were also reported by department stores in July with David Jones having July as an additional clearance month.”

Consensus forecasts expect growth to sit at 0.3 per cent month on month, a slight improvement on June’s disappointing 0.1 per cent figure.

As for second-quarter capex, consensus estimates from Bloomberg expect a contraction of 4.1 per cent for the quarter, following a trend of declines on the previous quarter’s 5.2 per cent fall. The release from the Australian Bureau of Statistics also includes expectations for the 2017 financial year. Mr de Garis said “some normal seasonal upgrade on early tentative estimates is usually evident, and NAB expects some upward revision on this basis from $89.2 billion to $97.6 billion for spending”.

Other data points to watch include the purchasing managers’ indices manufacturing gauges from China, the eurozone, Britain and the US all on Thursday.

This week also marks the tail end of company reporting season, with only a few major companies left to report, including Harvey Norman, Ramsay Health Care and Adelaide Brighton.

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05 Mar

Americans pay millions to whistleblower at BHP; we hound them out of their jobs

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Dr Kirstin Ferguson is a director at Thiess’ parent company, Leighton Holdings (now named CIMIC), and responsible for company ethics. Photo: YouTube The US paid for evidence of alleged bribery by BHP Billiton.
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Separate to the BHP Billiton case, a whistleblower claims he was victimised because of disclosures he made about alleged corruption at mining services giant Thiess. Photo: Supplied

Got a story? Contact us securely via JournoTips or SecureDrop or at [email protected]杭州m.au

The US government paid a huge bounty – nearly $5 million – to a former employee of Australian mining giant BHP Billiton in a case that exposes the weakness of Australia’s whistleblower regime.

In Australia, those who flag corruption inside companies receive limited or no protection and are often sacked or mistreated, while in the United States, which paid for evidence that exposed alleged bribery by BHP Billiton, whistleblowers are encouraged to come forward.

News of the bounty comes as the new, more powerful crossbench in Federal Parliament shapes up to pressure the big parties to change Australia’s whistleblower protection laws.

The calls for reform are being made as Fairfax Media can reveal new details of another whistleblower case that suggests serious ethical failings by a top Australian businesswoman and ABC board member, Kirstin Ferguson.

A Fair Work Commission complaint filed by the whistleblower alleges he was “victimised as a result of the disclosures” he made to Dr Ferguson about alleged corruption at mining services giant Thiess. Dr Ferguson is a director at Thiess’ parent company, Leighton Holdings (now named CIMIC), and is responsible for company ethics as ethics committee chairwoman.

Dr Ferguson declined to comment on detailed questions sent to her by Fairfax Media.

Key MPs Nick Xenophon, Jacqui Lambie and Andrew Wilkie, as well as the Greens and shadow attorney-general Mark Dreyfus have all said they will push in Parliament for stronger whistleblower laws to encourage reporting of corporate corruption.

Australian Securities and Investments Commission senior executive Warren Day also said he backed calls for major whistleblower reforms, saying new legislation and the prospect of compensation should be considered.

Minister for Financial Services Kelly O’Dwyer said the government was looking at strengthening Australia’s corporate whistleblower regime.

Huge bounty

In May, the US corporate watchdog, the Securities and Exchange Commission, revealed it would pay a bounty “to a company employee whose tip bolstered an ongoing investigation with additional evidence of wrongdoing”.

Legal sources have confirmed that the whistleblower was a BHP Billiton insider, paid US$3.75 million (about $4.96 million). The former employee provided detailed information to US investigators about the mining firm’s activities overseas several years ago.

The allegations remain the subject of an active Australian Federal Police bribery investigation. To protect their identity, Fairfax Media is not revealing evidence of the conduct the whistleblower exposed.

It is the first time an employee of an Australian company has received a US whistleblower bounty. Under the US Sarbanes-Oxley Act, the SEC can reward whistleblowers by giving them a cut of a fine extracted from a company, with payouts often reaching many millions of dollars.

In May 2015, BHP Billiton agreed to pay $US25 million to the SEC to settle an inquiry into trips to the Beijing Olympics that the company gave to government officials. The officials represented countries where the miner was operating, and where it was sometimes seeking government permits.

BHP Billiton said in a statement that, during that inquiry, the SEC had made no findings of bribery or corrupt intent against the company, and that the US Department of Justice had investigated but took no action.

“The SEC recognised BHP Billiton’s ‘significant cooperation’ throughout the investigation and its ‘significant remedial efforts’,” the company said in a statement.

The company said it was not aware of the involvement of any whistleblower as part of either investigation.

“We respect and fully support protections for all whistleblowers, and the importance of providing confidential avenues for reporting,” the statement said.

Australian whistleblower persecuted

Leaked company and court documents reveal a whistleblower from mining services giant Thiess asked Dr Ferguson to protect him in 2014 in her capacity as director and chair of the ethics committee at Leighton Holdings, Thiess’ parent company.

On July 25 that year, the whistleblower allegedly told Dr Ferguson of Thiess’ involvement in an alleged bribery conspiracy in India. He had told her the company had failed to disclose the allegations to the stock market as required under law.

Records of conversations and text messages between Dr Ferguson and the whistleblower reveal she was told by the whistleblower that he had uncovered “the biggest ethical issue this company [Thiess] has and would be the biggest in Australia”.

“My role is under serious threat,” the whistleblower told Dr Ferguson on July 25, 2014.

Twelve days later, the man was sacked, and forced to go on “garden leave” by Leighton, legal documents say.

Forty-eight hours after that, Dr Ferguson texted the whistleblower and said she was “following up” on his allegations. “I … will be sure to call you when I am done,” her text states.

In response, the whistleblower texted Dr Ferguson that he was being sacked and needed urgent help: “This matter requires urgent escalation … Kirstin, when can I expect to hear from you?”

She did not contact him back.

A formal complaint filed with Leighton Holdings and lodged in the Fair Work Commission states that as a result of whistleblowing to Dr Ferguson, “he was victimised”.

The whistleblower had earlier tried to get the company to fully investigate and respond to allegations of Thiess’ involvement in bribery in India in connection to a multibillion-dollar coal deal. The whistleblower’s complaint details a subsequent “cover-up” of information from the market by Leighton Holdings, which has been renamed CIMIC. The company has never passed the matters raised by the whistleblower to corporate watchdog ASIC or the federal police.

CIMIC and the whistleblower confidentially settled the Fair Work Commission case.

Reform needed

ASIC executive Warren Day believes new whistleblowing laws could provide far greater clarity and protection for employees who wanted to report a range of misconduct, spanning financial crime and environmental or health and safety breaches.

Mr Day says there was merit in compensating whistleblowers, although he cautioned against aspects of the US scheme.

Senator Nick Xenophon has told Fairfax Media that “whistleblowers in the US get rewarded and protected, but here they get punished and ruined”.

Andrew Wilkie, who was recently elected as an independent MP in Tasmania, said Australia had a cultural problem in which whistleblowers were scorned as untrustworthy dobbers, or unhinged: “In the US whistleblowers are celebrated, but in Australia they’re often vilified,” he said.

“Greater whistleblower protection is one of the building blocks of a healthy democracy and … of a healthy corporate culture.”

Senator Lambie, who has taken up the cause of a Defence Department whistleblower, said she wanted “world’s best practice” whistleblower laws which would “strengthen our democracy, prevent and uncover official corruption, decrease government waste, save lives, money and prevent damage to our environment”.

Shadow attorney-general Mark Dreyfus said private sector employees should enjoy the same whistleblower protection as people in the public sector because their information is “just as valuable to our community, and they should not be treated differently under the law”.

“Recently a string of brave private sector whistleblowers have come forward with valuable information, including those who have exposed wrongdoing in our banking sector. They deserve our protection,” Mr Dreyfus said.

Minister Kelly O’Dwyer said that, as it looked to strengthen legislation, the government would “follow usual process, and will consult publicly”.

She said in a speech in July that the government would consider ways to “encourage, protect and reward whistle-blowers whose information reveals artificial tax structures and misconduct”.

“Big business will have to get their house in order, or suffer the consequences,” she said at the time.

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05 Mar

Australian writers’ festival season in full bloom

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Erica Jong will be at Ubud Writers & Readers Festival in October. Photo: Bill O’Leary/Washington PostA FEAST OF FESTIVALS
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Writers’ festival season is well underway wherever you may be in the country with the inaugural Canberra Writers Festival on this weekend (canberrawritersfestival杭州m.au) and Melbourne Writers Festival (mwf杭州.au) sprawling over this weekend and next. Closer to home, Sydney Jewish Writers Festival opens on Saturday evening at Bondi Pavilion, continues all day Sunday at Waverley Library (sjwf杭州.au). I will be part of the launch of Rebellious Daughters, an anthology of memoirs by Australian women, along with editors Maria Katsonis and Lee Kofman, and another contributor, Leah Kaminsky, who will also join me with novelist Steven Amsterdam and Rabbi David Freeman in a session called “We Need to Talk about Dying”. Other speakers include David Gonski, Arnold Zable, Mireille Juchau and in the children’s program Anna and Barbara Feinberg, the mother and daughter who for 20 years have created the popular Tashi books.

The Festival of Dangerous Ideas at Sydney Opera House on September 3-4 (fodi.sydneyoperahouse杭州m) features talks by speakers ranging from Alexei Sayle to Andrew Bolt on politics, asylum seekers, fishing, the arts, gender, drugs, sport, sex addiction, suicide and many more topics. Events continue through September, if you want a weekend away, from the large Brisbane Writers Festival on September 7-11 (uplit杭州m.au) to tiny gatherings in beautiful locations – Batemans Bay Writers Festival (batemansbaywritersfestival杭州m) on September 9-11 and the St Albans Writers Festival on Septembers 16-18 (stalbanswritersfestival杭州m.au). You’ll find some of the same writers on the circuit, from international names such as Lionel Shriver and Yann Martel to locals Meg and Tom Keneally, Rod Jones, Nick Earls, Suzanne Leal, George Megalogenis, Tim Fischer and Jane Caro. And each festival has its exclusive surprises. NO FEAR OF SAILING FOR JONG

You might wonder what it’s like to travel with feminist Erica Jong, who made her name with the 1973 erotic novel Fear of Flying. You can find out at the Ubud Writers Festival, which has just released its program for October 26-30. Jong’s bestseller was more about changing attitudes to sex than flying, coining the term “zipless f—“, though it opened with 117 psychoanalysts on a flight to Vienna and a narrator fearful of hijacking. The entertaining Jong, whose latest book is Fear of Dying, will be among 160 writers in Ubud. She will also join 10 guests on a six-day post-festival cruise from Flores to Komodo, along with festival director and cook Janet DeNeefe. Having taken this cruise in its first year with Indian writer Amitav Ghosh and his American wife Deborah Baker, I recommend its combination of sightseeing, cooking, dining and discussion of books. See ubudwritersfestival杭州m and seatrekbali杭州m. SUPPORT INDIGENOUS LITERACY

Singers Justine Clarke, Josh Pyke and Deborah Cheetham, and writers Andy Griffiths, Richard Flanagan and Alison Lester will join school children from remote communities to celebrate Indigenous Literacy Day at the Sydney Opera House on September 7. Clarke and Pyke will perform a new song, Words Make the World Go Around. Visiting children from Tjuntjuntjara, Mt Margaret and Menzies schools will read their stories from The Goanna Was Hungry, a book they have written and illustrated with Ann James and Sally Morgan. All children can take part in The Great Book Swap at the Opera House or at their schools by taking along a book and a gold coin in support of the Indigenous Literacy Foundation, which has provided 150,000 free books to communities across Australia. See ilf杭州.au and greatbookswap杭州.au to register.

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