A Wangaratta textile manufacturer has been accused of deliberately entering into a contrived business arrangement to avoid paying the entitlements of 60 sacked workers.
Specialist fabric maker Bruck Textile Technologies was bought last Friday for a token $1 by a company registered a month earlier by its own principal shareholder, Philip Bart, and chief executive Geoff Parker.
The buyer – Australian Textile Mills – immediately announced it was placing Bruck into liquidation, leaving 60 workers redundant, with a further 130 offered new positions.
Australian Security and Investments Commission records show Australian Textile Mills was registered a month earlier, on June 10.
Because Bruck – which has received $2.9 million of taxpayer-funded assistance from the state government over the past 18 months – is now effectively a shell without assets, the company has told redundant workers it will not be paying annual leave, long service leave, notice pay or redundancy pay entitlements.
Instead, those liabilities, believed to be worth about $3.8 million, will be met by federal taxpayers under the Fair Entitlements Guarantee, a scheme set up by the Rudd government to cover entitlements when defunct companies are unable to meet them.
A spokesman for federal Employment Minister Eric Abetz said “urgent advice” was being sought, suggesting any evidence of wrongdoing would be examined with by corporate regulators.
“The government is very concerned at any suggestion of companies entering into contrived arrangements to avoid paying employees' entitlements, and any wrongdoing should be dealt with by the relevant authorities,” the spokesman said.
Bruck has been manufacturing specialist textiles since 1946, including for the automotive industry, the Defence Force, Victoria Police and the State Emergency Service.
But over the past two years the company has been squeezed by the looming demise of the car industry and the loss of Defence Force contracts. In a press release issued on Friday, Mr Parker said Bruck faced a further “dramatic downturn”, with high overheads and high energy costs. “In short [Bruck Textile Technologies] was being squeezed into unprofitability,” he said.
An Australian Textile Mills spokesman confirmed Bruck had been purchased for $1, but pointed out Australian Textile Mills had taken on $18 million worth of liabilities.
The company’s principal owner, Mr Bart, faced controversy in 2000 when a previous company he largely owned, National Textiles, collapsed, leading to a public campaign to recover $11 million in lost workers’ entitlements. The former Coalition government also faced controversy, with suggestions the company's chairman, Stan Howard, brother of former prime minister John Howard, had received special treatment.
State Opposition Leader Daniel Andrews said the contractual arrangement between the state and Bruck must be explained, including what if any stipulations had been in place covering contracts, employment guarantees and paying entitlements and severance in the event of closure.
“There are a great deal of questions that Denis Napthine needs to answer about the money the state gave to Bruck before this dodgy deal was done last week,” Mr Andrews said.
A spokesman for Regional and Rural Development Minister Peter Ryan said workers would get their entitlements, whether from the company or the government.
“The Coalition government values every single job in Victoria and we are disappointed about the job losses in Wangaratta,” he said.
Textile Clothing & Footwear Union of Australia national secretary Michele O'Neil said it appeared the company had deliberately restructured to avoid paying entitlements.
“How can it be this type of restructuring has taken place where the owner of this business has moved the assets out from underneath the workers into another entity and left 60 workers out of a job without the assets to pay their entitlements,” Ms O’Neil said.