Labor Proposes Company Director ID Numbers to Crack down on 'phoenixing'

In light of the recent solar panel & battery scam by LG Energy Australia, I think this is good to hear, but pretty sad it has taken until 2017 for it.
It should have happened in 1917.

http://www.abc.net.au/news/2017-05-24/labor-proposes-phoenix…

"The Federal Opposition is today announcing new measures aimed at cracking down on dodgy company directors involved in what is known as phoenixing.

Phoenixing involves a company director stripping assets from a business just before it goes broke, not paying workers and creditors but then simply opening another company, with a different name and carrying on trading.

Like the mythical bird, the new company rises from the flames of the old one."

Comments

  • Could've just linked it to their driver's licence.

    Doesn't get away with borrowing overseas student's identity to open/shutdown shop (if they have no intentions to stay here after their study that is).

  • They will just drive around Mt. Druitt and offer someone a few bucks to be the director.

  • To a degree, does the Salomon case not already cover it? I'm guessing this would build upon the principles in that case.

  • There are a few issues I see with it:
    1. It doesn't seem to cover shadow directors - as Airzone says above, shonky people sometimes just get patsys to go on the register as the 'official' directors but they have no real power
    2. If assets have been 'stripped' before insolvency then the liquidator already has a duty to claw them back
    3. Sometimes businesses fail. It would be unfortunate if a director who was involved with a business that failed through no fault or his or hers, was forever unable to restart a new business.

  • A friend of mine, after having been made redundant, has been forced to take up a job at a dodgy company because the WA economy is in a shocking state. This company never pays superannuation; apparently there is a loophole where if you pay the fine for not paying super, you do not have to pay the super (and the fine is cheaper than the super). The company does not pay its bills, and then goes into administration, in order to be reborn as another company and continue as if nothing happened. How do they get away with it? Lawyers. The CEO is untouchable.

    I'm all in favour of laws which prevent dodgy practices.

    • How do they get away with it? Lawyers.

      You'll never guess what the majority of people in duh gummints used to be.

    • He's probably got an ABN and worked as a sole trader subbie which meant the rate he's being paid should've been inclusive of super so it's entirely up to him to sort out his affair.

      • No. He's an employee entitled to super. Does not have ABN. All employees there aren't getting their super. Some are still chasing it years after having left.

        • Go to the ATO then if that's the case.

        • @mini2: If you read my original comment you will see that this company isn't bothered by that. They have actually been reported many times, according to my friend. But by paying the fine (and constantly going into administration), they get away with it. The ATO can't force a company to pay, as far as I know.

          But I agree with you, however. I would have reported them. Unfortunately my friend is not in a situation where he can afford to loose his job by reporting his employer.

        • +1

          @Make it so: I would take matters against the CEO into my own hands. Balaclava prerequisite

        • All employees there aren't getting their super

          Quit and find another job.

        • @whooah1979: Yeah, here's the thing. We're in WA here. Not trying to make this a political thing, but the money made during the mining boom went to the Eastern States. The mining boom is long gone, and money is still going to the Eastern States, to the point of government departments here being unable to pay bills or approve new projects. Suffice to say there has been some impact on available jobs here….

        • @yoyomablue: Bikies.

        • @Make it so:

          The mining boom is long gone,

          So your mate is working for an employer in the mining industry?

        • @whooah1979: He works in an industry which is indirectly related. The reality is, though, that the mining industry indirectly affects 80% of the economy here (or 100%, if you take into account the GST-share debacle).

          So it's not a matter of "well, don't take the risk of working for mining".

    • Who are the clients of this company? I own a company that does mainly government IT contracts. Having any kind of bankruptcy or legal rulings against the company would make it almost untouchable for government contracts. Also, I give subcontracts to other businesses as my suppliers. If one of my suppliers came to me telling me they were letting themselves go broke to avoid paying suppliers and could I please novate their contract to the new entity or could I please just re-contract them at the new company I would be refusing. Even telling me that this was how they did business and treated their staff would have me looking for a way to dump them and find an alternative supplier ASAP. If they treat their workers this badly they would have no conscience doing it to their clients, partners and suppliers either. I have also had contracts previously where I am held accountable for the actions of subcontractors so no way would I be trusting dodgy suppliers or giving them work.

      It would be very hard to maintain a relationship with suppliers and clients if you were doing this regularly. Similarly, in my industry particularly for niche skills and good workers different employers get a reputation. If I had a bad reputation for not paying people or ripping people off none of the good people would come to work for me and I would go out of business very quickly. For my best employees I have to almost treat them with kit gloves because if they left i would be in real trouble.

      I recently hired 10 or more IT people for some large development contracts. Out of the 10 I have had to sack 2 and I have found 2 superstars, the others have been OK. The superstars have made themselves invaluable and i now have large projects worth considerably more than I pay the 2 superstars. If they were upset at how they were treated and they quit the whole project would be at risk. I could try and find a replacement but my strike rate, even through headhunters and focused recruitment via networks etc is about 20% effective at finding these superstar guys. Why would I risk large projects on a 20% chance of finding a replacement.

    • Don't think this will work mate.
      For some time now directors have been personally liable for certain tax payments - including super.

      • I don't know. I know very little about such things, so I won't dispute what you say. But what I know is that just because something is illegal, doesn't mean people actually get punished. This particular employer is getting away with it somehow, and has been for a long time.

  • +1

    Like the mythical bird, the new company rises from the flames of the old one.

    Looks like even ABC writers are not immune from speeding up mythology in our hectic age; the myth specifies rising from the ashes.

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