Media Release: National Distribution Union

Thursday 25 February 2010

Innocent employees and creditors biggest losers from Commerce Minister’s decision

The National Distribution Union says that innocent employees and creditors affected by business collapses will be the biggest losers from Commerce Minister Simon Power’s hasty decision to rule out requiring large non-issuer companies to file financial statements with the Companies Office.

"Simon Power may want to appease a business lobby who wish to maintain a culture of secrecy and privilege, but he has failed to take account of the damage inflicted on innocent employees and creditors when a business collapses," said Robert Reid, General Secretary of the NDU.

"Had the clothing manufacturer, LWR, been required to file public accounts as a significant private company concerns over its management may have arisen at an earlier stage."

LWR collapsed in April 2009 with 228 workers losing both their jobs and some of the redundancy and holiday pay owed to them.

The receivers of LWR, BDO Spicers, highlighted that inadequate financial reporting and corporate governance were "significant factors in the company's underperformance and entry into receivership”.  They also noted that there is unlikely to be any funds left for unsecured creditors.

“Requiring private companies to file public financial reports should be a quid pro quo for the public granting them the benefits of incorporation and limited liability,” Robert Reid said.

The proposal to require significant private companies to file public accounts was supported by the NDU, Australian Treasury and independent commentators, Robert Reid said.

In its submission the NDU also highlighted how privately owned bus and ferry operators under contract to regional authorities receive most of their income through public subsidies, but refuse to make their accounts public.

Simon Power’s comments come less than a month after submissions closed on the issue. The National Distribution Union understands the Ministry of Economic Development was not due to make recommendations to the Minister until the end of May. 

Ends. 

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