Friday, 22 October 2010

Entsch's media advisor business in liquidation, owes $257,000

Federal MP for Leichhardt Warren Entsch has only been at the helm for just two months, and is now facing the uncomfortable news that his newly-appointed senior media advisor, is under ethical questions from Cairns business owners following the liquidation of her media business.

Around 70 local businesses are owed a total of $257,000. Gerry Mier and Tony Jonsson of KPMG have been appointed liquidators of Danae Jones' In Touch Media (ITM) Corporation.

It is believed that Entsch, who is also Chief Opposition Whip, offered the media and PR savvy 31-year-old Danae Jones, the role as his senior media advisor the night of his election win on August 21st, when he ousted first-term MP Jim Turnour, in an 8.6% swing, to reclaim his former seat. Jones had offered her services as media officer throughout the Leichhardt campaign, however it's unclear the extent of her involvement.

For over nine years, Danae Jones has been running her media company, ITM Corporation, trading as It Touch In Business, well-known for the free insightful business magazine. However, last year the cost of printing the glossy magazine became prohibitive, and Jones moved the publication into a electronic magazine and, according to her website "15,000 copies are distributed directly to the email inboxes of business executives from Cooktown to Townsville each month."

In a panel discussion with Charlie McKillop on ABC Far North in April last year, that I also participated with the Courier Mail's Neil Melloy and Danae Jones, we talked about the role of new media with the advent of online publishing. Danae said that 96% of people in Cairns are online, quoting from Bill Cummings' Compass Research media survey. It's a figure I have grave doubts about.

According to the Department of Finance's Black Book, Jones is remunerated between $64,000 and $72,000, however sources in the Federal Opposition have told CairnsBlog that her package, including entitlements, could be as high as $90,000. Perks includes a daily allowance in excess of $200 that includes travel, accommodation and meals. Currently she is resident in Canberra for two weeks, whilst Parliament is sitting.

Warren Entsch was uncomfortable discussing the matter. When asked if he was aware of Ms Jones' business going into liquidation, he appeared to be caught off-guard.

"....[pause]...... No. I'm... look I'm aware, but that's got nothing to do with her work," Warren Entsch told CairnsBlog. I asked Entsch if the relationship with local media might be compromised, given that many of the creditors are in the media and public relations business.

"That's not going to affect her at all. She did an outstanding job on me," Entsch said in reference to her role as his campaign manager. He said that the Jones' business difficulties were part of the problems many in Cairns have faced.

"The problem was not through incompetence, it was just through the dreadful situation that we find ourselves in, in our region at the moment. It's as simple as that. People just couldn't afford to spend the money, so there's a flow on effect to other businesses."

Warren Entsch says that local businesses that are owed money by Jones' company, says they understand.

"It was not through any deliberate attempt by her. I'm just so glad I could offer her an opportunity. I have a bloodly good girl there," Warren Entsch said.

Assets total $32,900 of which $24,900 are preferential creditors, leaving less than $8,000 available. The major creditors are the Australian Tax Office who are owed $89,900, and S4 Group $41,200. O'Reilly Stevens Bovey Lawyers $6,000, Skilled 360 $9,200, and Westpac Equipment Finance $47,500. Jones' mother Kim Fairweather, is also listed as owed $13,280, along with some former staff members.

The list of creditors also includes many media organisations: Radio 4CA ($15,500), 7 News ($20,200), Ten ($3,500), Media Monitors ($2,600), Mareeba Express ($890), FNQ Broadcasters / Sea FM ($8,200), APN Newspapers ($4,100), Tableland Broadcasting / Hot 97.9 Mareeba ($960), WIN TV ($2,280), Cooktown Local News ($1,787). Local internet firms, graphic design businesses, and some small home businesses make up the balance, 72 organisations in total.

4CA Prime Radio sought $12,000 owing, and was the final trigger that forced the company to be wound up, however station manager, Kim O'Loughlin refused to talk about the matter, suggesting it was "unprofessional" to even be questioned about the company's collapse. "People are doing it tough in Cairns, and I'll make no comment, none at all," she said.

Danae Jones told CairnsBlog that she was taking "pro-active measures" to restructure the company before the decision to put it into voluntary liqudation last week on the 14th October.

"I believe the restructuring of the company would have pulled us through, but unfortunately we never got the opportunity to complete the restructure with one of our main creditors calling in their debt."

"I am gutted that almost 10 years at the helm for my team and I, has ended like this," Danae Jones said. "This is one of the most gut-wrenching weeks of my life. My team and I have worked so hard over the past 9.5 years to build the company and to have to hand it over to liquidators is absolutely heart-breaking. I am committed to working with liquidators to get the best result for all involved."

Jones says she has received many phone calls, emails and text messages, from fellow media, to pass on their "heartfelt condolences" since the decision was made last week.

"We like many businesses have been affected by the Global Financial Crisis and the downturn of the local economy and I think most people who do business with us, including creditors have shown a deep sense of sadness that it has all ended like this," Danae Jones told CairnsBlog yesterday.

The company's office at 259 McLeod Street, the historic Fulton House, is, according to Jones, nothing to do with her company, In Touch Media. Fulton House has a proud history and connections with the Labor Party. The house was home to Bill Fulton, a Cairns councillor in 1946, and Mayor in 1952, in the days when there was no salary with the role, only a small payment for attending meetings. In 1958 Bill Fulton became the Federal member for Leichhardt, until 1975 when the Governor General sacked the Whitlam Government.

"The McLeod Street building where the company operated out of, is completely unrelated to the business of ITM Corporation Pty Ltd," Danae Jones told CairnsBlog. "Everything is now under the control of KPMG."

However, an ASIC search shows that S4 Group, that is owed $41,200 on the creditors list, has only two directors, namely Danae Jones, and her partner David. S4 was established in December 2006, just over a month after ITM Corporation. Both companies have the same directors, same share structure, same share holders, and even PO Box.

In stark conflict to her statement about the business connection of the office property, Jones penned a revealing and contradictory email to those seeking outstanding payments on Sunday 26th September, three weeks before signing KPMG's Liquidation letter.

"As you are aware, In Touch Media has been experiencing some very difficult times of late, due to the downturn in the economy and therefore the payment of your account has fallen overdue," Jones wrote. "I write to advise you that we are in the process of reviewing and restructuring our business interests and hope to be in a position in the near future, to propose a mutually suitable repayment arrangement to you."

"I have put the main asset of a related company, the building at 259-261 McLeod Street, Cairns North, on the market to be sold within the next 5-6 weeks. We expect to be able to use part of this equity in the proposal that we submit to you, however, we will need to have a firm contract in place in order to know what funds will become available to distribute before I can formalise a proposal to you," Danae Jones wrote.

"This email is to ask you for your indulgence for a period of 6 weeks to allow us to commit to this sale and to formalise a valid and achievable arrangement proposal for your consideration," she wrote in late September. "Of course, we will submit a proposal to you sooner should we be fortunate enough to secure a sale more quickly than expected. I thank you in advance for your patience and for allowing us the time to achieve a positive outcome for all."

After this email was sent out, In Touch Media continued to trade with various media companies. It's unsure if Jones was contracted to purchase any media placements for Warren Entsch's LNP campaign, that she was formally engaged with since at least the beginning of August. However, Dennis Quick from the LNP office said that Ms Jones had nothing to do with any media purchasing during the Federal election campaign.

"Keep the campaign out of it, that has nothing to do with it," Dennis Quick said. "It has nothing to do with us."

Jones' September 26th letter went on to say....
"As we would like to continue the strong and ongoing relationship we have built up with your company, with your approval we would like to continue to trade with your business on the proviso that we provide a 50% upfront deposit for all works to be carried out with the remainder payable upon completion to ensure that payment is made on time for all future work," Danae Jones wrote.

Penridge Commercial Real Estate have listed the property and Monique Robert confirmed an asking price of $1.5 million. S4 Group, whose sole directors and shareholders are Danae and David Jones, purchased the property for $525,000 in December 2006 from the Fulton family. Jones spent a considerably amount refurbishing the property before relocating her In Touch Media business there in March 2008.

The company's old website was upgraded substantially, and a new site launched in an effort to re-position and marketing the business through struggling times, however ITM were having difficulty paying bills as far back as September 2009. It's likely that there were warning signs on the horizon months ago, yet the fact Danae Jones actively sought employment with Warren Entsch immediately following the election on the 22nd August, indicated she was probably not going to commit to running her media business any longer.

A creditors' meeting on Monday will determine if a committee of inspection should be appointed, and approve remuneration of $15,000 to the Liquidators. A number of creditors that have spoken with CairnsBlog, will question the legality about the separation of the company's related property, in order to seek a financial dividend from the sale to pay debts owed.

"There's a moral argument here," one creditor said. "I mean, if they profit from that sale, and I expect Ms Jones will, whilst also on a huge Government salary, then there is a moral duty to do the right thing."

In a rare and precious photo from the CairnsBlog archives, one that was sanctioned by former mayor Kevin Byrne, I snapped this gem of Kim Fairweather (Danae's mother and account manager with In Touch), Kevin Byrne and Danae Jones, at the Hilton on the 24th November 2009, just after Kevin launched his 2012 Council election campaign, well, that's what it sounded like. Danae also helped organise the right-wing Cairns Forum late last year.

Jones, and her family, has had a long association with the Labor Party, and has worked on political campaigns for Desley Boyle and Jim Turnour. She is the granddaughter-in-law of Labor stalwart and former member for Cairns, Ray Jones. She now finds herself on the opposite side of the political fence working for Warren Entsch representing the Liberal National Party. Being a parliamentary staffer, Jones now opens herself and her business dealings up to public scrutiny. She told a Cairns Councillor this week that she is apolitical.

Whilst any company closure of this nature is devastating to those directly involved, especially given the depressed local economic climate in Far North Queensland, many will aptly question how her role as Warren Entsch's media advisor can be maintained with effectiveness, as Ms Jones leaves a legacy of media businesses across the region that are adversely impacted by the collapse of In Touch Media.

23 comments:

Constance Lloyd said...

WELL, Well, well! What a murky minefield of mayhem we have here?

My first reaction is that ITM has been asset stripped and monies moved elsewhere. This is often an issue when two companies with same directors and the same shareholders in same proportion are being run. Directors “lose” track of proper allocation of income, expenditure, and profit draw-downs.

Unfortunately an all too common occurrence.

Three points do come to mind over my coffee this morning.
1. The ITM website (and why is it still up spruiking for business – is there a “In liquidation” tag?) list a number of staff. If the Australian Taxation Office is owed big bucks, my experience is that often employee superannuation is likewise unpaid. My advice to any employee, or recent ex-employee, would be to check with your superannuation company to ensure that all your entitlements have in fact been paid into your fund. If not; then get hold of a 536 Form and lodge your claim NOW.

2. For the ATO to be owed such a large sum from a small business means that there is either or both a hell of a lot of staff PAYG not remitted or a large net GST liability unpaid, or a combination of both. For the un-initiated, net GST liability is the difference between amount charged to clients and the amount paid to suppliers of goods and services. For a business such as this which is in fact a brokerage of media services, with clients and suppliers, this represents a substantial sales turnover.

For the ATO to be looking for $90K this could mean that a sales turnover of well over a million dollars that has not been properly dealt with. I doubt, from the size of the ATO debt that the financial difficulties of ITM are recent; more likely a buildup over many years. And whilst on GST, over my morning bacon and eggs, I did a search of the Australian Business Register on S4 Group Pty Ltd. No ABN registered! Sounds a little bit dodgy! Again sloppy practice.

3. The regulatory authority, ASIC, says that as a director, you must:
“Ensure that your company is able to pay all of its debts as and when they become due for payment. A company is ‘insolvent’ if it cannot pay all of its debts as they become due and payable.

(continued next comment....!)

Constance Lloyd said...

(continued....)

By law, you must prevent your company from incurring a debt when it is insolvent or about to become so. This means you must consider whether you have reasonable grounds to believe that the company will be able to pay a new debt when it becomes due, as well as pay all the other debts.

You may expose yourself to criminal prosecution, substantial fines or to action by a liquidator, creditors of the company or ASIC to recover amounts lost by creditors due to your actions.

Your personal assets—not just your company’s—may be at risk.

Common signs of financial trouble are:
• low operating profits or cash flow from the main business
• problems paying trade suppliers and other creditors on time
• trade suppliers refusing to extend further credit to the company
• problems with meeting loan repayments on time or difficulty in keeping within overdraft limits
• legal action taken, or threatened, by trade suppliers or other creditors over money owed to them.
If your company is in financial difficulty or in danger of being insolvent, seek immediate advice from an insolvency professional. They will be able to explain your options to you. Your options may include re-structuring your company’s affairs, changing your company’s activities or appointing a voluntary administrator or liquidator to the company.

Do not assume that you will be able to trade out of the problem. Delay could be damaging to the company and to you personally, and may reduce the options available.”

I would suggest that with the disparity between realizable assets and the demands of known creditors that ITM has been insolvent for some time – and HAS continued trading. That the precarious financial situation of ITM has existed for more than just a few months can easily be seen by the amount of the Tax Office debt. This is not a recent problem with this company. Which then raises the issue of whether the Directors could (or should) be charged.

On a political note, the Coalition parties support the concept of adherence to the law and the payment of taxes when and as due. Whip Entsch is very senior in the Coalition and having Ms Jones working in his office may be an embarrassment that he, and Tony Abbott, just do not need. Condoning business mismanagement? Danae may yet be the weakest link that Warren needs to say “goodbye” to.

It’s just not acceptable to blame the economic climate in Cairns- it looks like possible incompetence of the Directors at best and given the S4 link, something baser as worst case. If I were one of the many ITM creditors, I would be mightily annoyed to see Ms Jones on a cushy tax payer funded job after running her business into the ground.

Just doesn’t seem fair, does it?

The Essence of Good Taste said...

I have no involvement in ITM and have not traded with them. However, it seems inconsistent to me that MM has done such an expose on a small business that has gone into liquidation and is trying to access funds from related companies to pay its creditors; when very little was exposed on much larger and more experienced business operators who closed their doors some time ago. Eg Hedley, CMC, ReMax (former licensee not current), AusSteel Sheds - from what I understand all left plenty of creditors unpaid but are still spending money on other business interests and have not been called to account and use these 'personal' assets to pay their creditors... Fair's fair...

Leigh Dall'Osto said...

Well what do you know.......CEC go off the scale as far as debt and mismanagement go and here we have another of Entsch's business affiliations going down the gurgler. The sad part is, except for the couple of hundred people who read this blog, nobody will notice. They don't call the man 'teflon' for nothing!

Leigh Dall'Osto said...

I don't think I have ever been accused of being much too conservative in my estimates before!! I stand corrected Michael and await with anticipation the mainstream media's take on the topic.

Michael P Moore said...

Actually Leigh, there are currently around 26,400 regular return readers on CairnsBlog (about 2,500 - 3,000 / day).

I understand that the mainstream media are picking the story up as a result.

"The Essence of Good Taste" I should state that the written information I have divulged has been provided by disgruntled creditors. It was not sought for any other reason, and the connection to a politician gives this of higher public interest than just a commercial company.

If Hedley creditors etc had similarly forwarded material, then I would have done the same.

Chris Forsberg said...

chris forsberg saysL

I am inclined to agree with Essence
of Good Taste - the coverage of In
Touch Media's demise is well-done
and comprehensive, but there ARE
most certainly other, bigger 'fish
to fry'.

I feel fairly sure that Ms. Jones
cannot be accused of any form of
dishonesty - it strikes me as a
case of 'too much, too soon'.

'Essence' mentions the Hedley
collapse and a couple of others
that have crashed in Cairns.
There seems to have been a belief
is some business circles in the
city that any ackowledgement of
the fact that our's is, and always
was, a boom and bust town should
have been totally ignored...

Any cautionary advice to high-
rollers that 'what goes up must
come down' was stridently rejected
as "negativity". I am aware of
one instance where the gung-ho
founder of a very large operation
rebuked senior executives who
repeatedly warned that the local
economy had over-heated, that the
company was over-stocked - and
that preparations should be in-placed for the inevitable downturn.

"I will have no negativity around
this table" thundered Gung Ho,
shutting-down wiser, sager executives who understood the
nature and frequency of boom-bust
cycles, which are as 'perenial as
the grass'.

This myopic misunderstanding of
the realities of the boom & bust
cycles (which have always been
more pronounced in Cairns than
elsewhere) has been fostered by
a few self-acclaimed "business
consultants", who chanted the
mantra of 'the power of positive
thinking', even when subbies at
the coal-face were well aware
that the local economy was headed
south. Familiar as they are with
the boom and bust cycles.

Warren Entsch is quite correct in
attributing Ms. Jones misfortune,
at least in part, to the global
financial crisis - which obviously
exacerbated the downturn, and was
less predictable, less foreseeble,
than the normal downwards cycle.

Perhaps the fact that Ms. Jones is
now Entsch's 'senior media advisor'
(a position she is fully-qualified
to hold) triggered the cairnsblog
expose'... I would suggest that the professionalism of both the MP
and his newly-appointed spin-mistress should ensure that the
collapse on In Touch will not
impact detrimentally on the work
they do on behalf of the electors
of Leichhardt.

Ms. Jones conduct of Entsch's
campaign was exemplary. Clearly
the concerns she must have had at
that time did not impact on her
capacity to contribute significantly to an excellent political campaign.

It is understood that it IS darn
difficult for cairnsblog and other
media to comprehensively 'get to
the bottom line' on the dubious
business practices of the 'bigger
fish' - but Essence's point is
well-made.

And Mr. Entsch has no reason to
feel embarrassed by his media
officer appointment.

chris forsberg bayview heights

John Downer said...

"Actually Leigh, there are currently around 26,400 regular return readers on CairnsBlog (about 2,500 - 3,000 / day)."

Mike, I think you may be confused as to the numbers visiting your blog, it's highly unlikely that 20% of Cairns visit here.

According to http://websiteoutlook.com/www.cairnsblog.net your daily pageview is 747, which seems to me a much likelier figure.

Michael P Moore said...

Thanks for your layman's observation "John Downer" however I use Google Analytics (as the Blog is built on their platform for detailed data info and tracking, not a free website that says CairnsBlog is "most populer [sic] in PHILIPPINES."

Nice to hear from you though. I'll add you to the log in stats. :-)

John Downer said...

Google works on IP addresses, and as these are dynamic, which means you get a different one every time you log on, they are about as accurate as Bryan Law is on Wild Rivers.

Are you really claiming that 20% of Cairns regularly visit your blog?

Michael P Moore said...

No, I'm not claiming any such thing. I know that only 6 to 7% are not local / Australian ISPs thou.

John, as this topic is unrelated to this blog post thread, can you either email me directly or post any follow-up conversation to the Open Debate - there's a link in the right hand side bar. Ta.

Mike

Chris Forsberg said...

chris forsberg adds:-

As an addendum to my earlier blog-
comment, I might add that Gung Ho
was 'advised' by one of these
"power of positive thinking" adherant 'business consultants' -
and that mainstream media will
most likely spare Ms. Jones the
angst of detailed coverage, for
the obvious reason that mainstream
media is among the un-paid creditors of ITM.

Entirely appropriate that the manager of Prime Radio declined to comment.

It's also the case that ANY good
spin-doctor is tasked to keep stuff
OUT of the media, as much as
employed to get the glowing,
favourable stuff IN.

chris forsberg bayview heights

Bryan Law said...

Danae sure did a good job on the media component of Warren's campaign.

I'm not competent to comment on her business circumstances.

If I want a "business operator" to hate I find it hard to go past Tom Hedley who, in his brief (but not brief enough) career managed to push more alcohol into the community through off-licenses than any other individual or corporation.

Hedley also oversaw the destruction of many caravan parks, and their replacement with air-conditioned dog-boxes. Plus he lowered the standards andraised the prices of construction in Cairns.

Following all of which his liquor and gaming assets ended up with Woolworths.

Hedley was a comprador - a person who makes a percentage from selling off community assets to foreign corporations.

Danae is a saint in comparison.

Bryan Law said...

John Downer, will you be my first best friend? Pleeaaase! (I'm desperate).

KitchenSlut said...

The issues around the related company structures and property do deserve attention particularly as Danae referred specifically to the property in the email and indicated equity from this would be available to pay creditors. However from this account it seems this may have been part of a restructuring which will now not proceed because of the intervention of 4CA Prime? This is interesting because on these numbers 4CA will get nothing anyway unless the property equity is included?

There may be issues around this and directors liability for the position of the firm especially if the inclusion of property equity in the email was used as a basis for continued trading. However this is premature and there is no reason at this stage to query Danae's Govt role and ultimately this will come down to a political decision on Entsch's judgement.

Similarly, Leigh, I don't think it's accurate to refer to this situation as a "business affiliation" of Entsch. However in line with your comments on CEC, and comments from Essence and Chris, there has been less than adequate scrutiny placed on CEC, and Entsch's role at CEC, with far more consequential risks.

The recent comical events surrounding the CEC accounts, with auditor qualifications, different numbers from the prelimminary report, and suspension of CEC building licences by the BSA to protect tradesmen creditors smacks of highly questionable coprorate governance and procedures. In my opinion this reflects poorly on the competence of Entsch and his role as an 'independent' director and Chairman during the course of the year in question which leads me to query his appropriateness for his elected office.

I absolutely agree about the lack of attention and reporting on other bigger fish such as Hedley, CMC etc. However this is a blog with limited resources and unlike the Cairns Post it has posted critical analytical commentary on some of these situations including some contributions from me (particularly on Hedley).

I think i'm on a similar path to Chris here in that too often our support for local business has meant we should only say positive things. Criticism and debate is essential to a healthy economy and society and when it is stifled we create the weaknesses which have become evident. I recall the Compost extolling Hedley as some kind of hero for funding the survival of his NSW pub lessee at the same time as a highly respected business columnist in The Australian had written that it was a suspiciously dubious deal and Tom had actually reneged on another deal in the process.

Yes, there should be more follow up and openness on these other more prominent failures but this can be time consuming and expensive with ASIC searches and it is far harder to get relevant information on private interests than ASX listed companies.


P.S. Bryan not sure I would place the same blame on Hedley re alcohol under Qld's arcane licencing laws which helped enrich him, however he sold to Coles not Woolies, and as far as I am aware neither is very foreign?

GERMAINE QUEER said...

leigh too many letters to write .
The last thing we need southside is another labor dickwit .
No brained woman stay home clean make babies and zip your big gob.

mark said...

KitchenSlut - Thanks for correcting Bryan.

It irritates me the amount of comments on here from people that obviously have no idea what is happening.

I feel for the creditors who are owed, i currently work for a company in receivership (well coming out of it on Monday)

If the liquidators do there job properly I cant see why the creditors would be out of pocket that much (if at all)

Syd Walker said...

Why does Chris Forsberg
Who lives in Bayview Heights
Always write his comments
As though they are poems?
Is it the word-processor he
Uses? (In which case an upgrade
Might be in order)
Or does he prefer to write
Comments like e.e. cummings
But with occasional capitals?

I notice that his poems
Seem to have an irregular
Metre but barely ever rhyme
Is that significant
I wonder

Leigh Dall'Osto said...

KS, I believe you are indeed correct in your assertion that I was perhaps off the mark with my earlier comments about the 'affiliation' of this company with Warren. As you may have guessed by my reference to CEC, I am extremely disappointed that the folding of that particular company, one which WAS affiliated with Warren, has occurred without any proper investigation.

In this case however, I do feel that a full investigation will occur, the truth will be outed regardless of views and those adversely affected will hopefully be paid what they are owed.

In the case of CEC........only time will tell.

KitchenSlut said...

leigh, I am also extremely disappointed witb wHat is happening at cec!

for what it is worth I put my faith in this company (not finan cially but morally), especially Roy lavis, and its people whom i specifically distuinguished from the likes of Hedley and Kern, in the context that i supported for some time their genuine attempts at governance standards which in the last year or so have been just blown away ...... i feel very let down ....

Evil Munchkin said...

Rumour is this Danae owes some of her former employees $10,000+, in addition to not paying PAYG.

Heard this from more then one place and wheres theres smoke theres normally fire.

Probally just the tip of the Iceberg if you ask me, one wonders if her pretty face will be able to get her out this pretty pickle.

MG said...

Wow you people really dont know anything do you?

Ever heard of the domino effect that has hit Cairns previously like the pilots strike?

When that happened businesses went bust as someone owed someone owed someone.

Its a damn shame but that is the economic climate. Christmas is going to see things worsen in Cairns and lets hope and pray that somehow we all survive.

Cheers

Evil Munchkin said...

MG not paying staff for lengthy time periods is not the fault of the current Economic Climate.

Its pure and simple incompetence and arrogance, anyone in business for the long term know that your staff are the first to get paid, even if you have to go without yourself. Furthermore having your head in the sand and ignoring them when they ask to be paid is beyond belief.

MG make no mistake this was an ongoing situation and the writing was on the wall a long time ago.