The fallout from the collapse of construction services company Hastie Group has continued, with investors warning they may ready legal action against the company while Workplace Relations Minister Bill Shorten has flagged the possibility of Federal Government assistance.
The company’s auditors, Deloitte Touche Tohmatsu, have also come under scrutiny for missing a $20 million irregularity, while unions are up in arms, with the Electrical Trades Union applying to reverse a stand-down of hundreds of workers.
The unions claim hundreds of workers were informed of the company’s situation via text message.
Workplace Minister Bill Shorten has said some jobs at Hastie Group will be saved, although he has also raised the possibility of government assistance if the company goes into liquidation.
“In order to get the government-funded scheme for redundancies, the company has to be actually in liquidation or have a very strong possibility of liquidation and it’s not possible to know that this morning,” Shorten told ABC Radio this morning.
“We’ve been asking and we’re meeting with the administrator and others during the week – if they think they’re going to liquidate they should tell us. That can allow me to use the discretion, but if they’re not, we’d care to see who’s going to buy the business and what’s going to happen with the jobs this week.”
The comments come as administrator PPB Advisory said 2,700 workers had been stood down for 28 days, but the actual number of redundancies depends on how many contracts remain.
Overall, Hastie Group employees more than 4,000 Australian workers and 7,000 across the globe.
“It’s certainly my aim people are not kept in purgatory for 28 days. It’s moving quite fast and I know there’s a lot of people working on this,” Shorten said.
“The first thing I can do is, dare I say it, soft diplomacy – the unions have got a clear position on what they want, the administrators are trying to work for what they want.”
The Electrical Trades Union has been angered by the decision, saying workers were told via text message to stand-down. In a statement, Victorian branch secretary Dean Mighell said the move was a “cheap stunt”.
“The administrator has committed an act of corporate bastardry to our members at Watters by keeping them notionally employed, but in reality having them stood down without pay,” he said.
PPB has defended the move, saying it is hopeful head contractors will take on work and then employ the individual workers. The company was contacted this morning, but no reply was available prior to publication.
Meanwhile, investors are reportedly growing angry over the company’s situation. People and companies who have invested include the investment arm of the Pratt family, Lazard Private Equity and a syndicate of seven banks, including the four major institutions.
One investor has told The Australian that some are looking at legal options.
“This is going to be a three-year process (through the courts),” one investor said.
The company owes more than $500 million, with ANZ owed the most at $70 million. Lazard Private Equity put in $50 million.
Although the company’s most recent announcement concerned a $20 million accounting irregularity, the firm had been suffering for months and was attempting to recapitalise.
The company’s banks were reportedly debating whether to continue another line of credit to the company, which already owed $500 million.
“It wasn’t the key reason. The company had been struggling for some time, and management and directors had been trying to find a way to recapitalise the company,” PPB’s IAN Carson told a media conference yesterday.
“We have sent our forensic team up there [Queensland] and they will be looking at that as we go forward. We have to do a report for ASIC and we will report on that.”
This article first appeared on SmartCompany.