The Lala Swindle – ‘corruption-in-confidence’

The following article is a selected summary of relevant information sourced from the Tasmania Times (TT) online newspaper from articles and reader comments (October 2011) concerning the revelation that Tasmanian Premier Lara Giddings unnecessarily paid $34.5 million of taxpayers money to industrial logger Gunns as compensation for it exiting native forestry.
 
Tasmanian Premier Lara Giddings (2011-  )
What will be her legacy ~ accountable and faithful to the people of Tasmania?

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The Charge:

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Previously secret communications between Gunns and Forestry Tasmania, obtained by the Liberals under Right to Information laws, blows a massive hole in (Tasmanian Labor Premier) Lara Giddings’ claim that she had no option but to pay Gunns’ $34.5 million in compensation for exiting native forestry.   (NOTE:  The $34.5 million = 23m for Gunns residual rights and $11.5m to settle the dispute with FT.)

A letter, dated 18 April 2011, from Gunns Chairman Chris Newman, to Forestry Tasmania Chairman Adrian Kloeden, reveals that Gunns not only wrote to Forestry Tasmania to formally terminate their native wood supply contracts (917 and 918) in April this year, they also offered to terminate the contracts on a “full release and indemnity basis.”

In part, the letter reads: “Gunns therefore wishes to terminate CoS 917 and 918…To the extent that FT requires formal notice, please treat this letter as notice of termination under clauses 3.3(b)(i) of Cos917 and 3.3(b)(ii) of CoS918.

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“While Gunns remains ready, willing and able to perform its contractual obligations under CoS 917 and 918 during the notice period, we consider than an immediate separation would be in the interests of Gunns, FT and the Tasmanian forestry industry generally…“I therefore propose CoS 917 and 918 be terminated on a full release and indemnity basis in respect of any and all outstanding issues.”

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Mr Newman also offered to help Forestry Tasmania gain access into the (immoral and greedy) Chinese Woodchip Market, including introducing FT to Gunns’ customers and also offered to hand over roading infrastructure to the value of $200 million over to Forestry Tasmania.

Asian appetite for woodchips cares squat about the forest source,
cares squat about the means.
 
Tasmanians understand:  Asian corporate culture is single bottom line:
Personal ends justifying any eco-social means to maximise personal economic wealth!

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A Tasmanian Case to Answer:

Tasmania’s traditional Coat of Arms
‘Ubertas et Fidelitas’? …”fertility and faithfulness”

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The significance of this letter cannot be under-estimated. Under the hand of Gunns’ chairman, Gunns voluntarily wrote to Forestry Tasmania to terminate its contracts ‘immediately’ on the 18th of April 2011 requesting an ‘immediate separation’ which clearly would have extinguished the Premier’s so-called “residual rights”.

This is supported by the advice of Forestry Tasmania Managing Director Bob Gordon In a subsequent Ministerial Brief dated 10 May 2011 from to Bryan Green, where Mr Gordon informs the Minister that this offer to terminate on a “full release and indemnity basis” from Gunns would “extinguish” the need to negotiate in good faith new terms of agreement for supply, the so-called “residual rights” that Ms Giddings has claimed as the reason for the $34.5 million in compensation.

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Given this correspondence, it appears inconceivable that Lara Giddings could have been advised by the Solicitor-General that the Government was obliged to pay Gunns to extinguish the contracts.  Ms Giddings now has no option but to release the Solicitor-General’s advice on the matter.

Tasmania’s Resources Minister has played down correspondence between Gunns and Forestry Tasmania, which the Opposition says raises questions about Gunns’ right to government compensation for pulling out of state forests.  The Opposition obtained a letter between Gunns and FT under Freedom of Information Laws, which shows Gunns offered to terminate its contracts.  Liberal spokesman Peter Gutwein says it contradicts the Premier’s argument, that she had no choice but to pay Gunns.

The Premier now has no leg to stand on,” he said.

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Community insights and informed analysis:

‘If all the above is genuine, and I can see no reason why it should not be, then the matter needs to be taken further. Much further. Lara and her “advisers” need to peruse all correspondence, memoranda and diary notes etc from Gunns in relation to their claim as to why there should be a payment to them by the taxpayers. Should there be a deliberate deception, or a deception by deliberate ommission that resulted in a serious financial advantage to Gunns then all avenues of recourse should be explored. If criminal charges are appropriate then so be it. It all would depend on the nature of the claims/submissions put forward by Gunns. There should also be cross referencing with any correspondence on the matter by Forest Tasmania. A formal investigation is surely warranted and the reason for the indecent haste in coughing up the taxpayer’s hard earned to Gunns and FT needs now to be justified.

Oh Lara. What a patsy you are. Your only contributions to the negotiations in this “complex” matter were to first publicly announce that “…we need Gunns..”, and secondly to publicly announce that you had $45 million in the “envelope” to resolve the “complex” matter. Brilliant.   Just brilliant Lara.’
~ Len Fulton (a Tasmanian commenting to TT) 20111003

Woodchip stockpile – same colour as the chainsawed ancient Myrtle above

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‘Very interesting documents.  Regardless of whether you support the pulp mill or not there is something extremely fishy about this payment to gunns and all australian taxpayers should be screaming for the tabling for scrutiny of all documentation regarding the justification of this payment.  Just on these produced documents and the fact that gunns had already closed down x no. of mills dismissed employees and placed triabunna on an approx. 8 week closure at the time the payment of compensation was dubious let alone some $34mil for the remaining life of the contract/s.  This has a bad smell about it – now this previously “keep quiet” info is out Mr Gutwein what are you going to do about it?’
~ Ian  (a Tasmanian commenting to TT) 20111003

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‘Liberal complacence has helped foster the culture that has allowed our government to use excuses like “commercial in confidence” to not keep the public informed.  So while Peter Gutwein is bouncing up and down on this issue, will he actually do anything, or remain as noticeable as a fly on the backside of an elephant?
~ Salamander  (a Tasmanian commenting to TT) 20111003

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‘Very revealing letter.  I’ve previously argued that, if required, the Government should be prepared to buy back Gunns timber rights. Now, it seems, there was no need to buy them back at all because they had already formally relinquished them.  This sheds a very nasty light on the way the Government rushed to pay Gunns double the initial offer. It also brings up questions about the $25 million that FT were apparently owned and why the Government felt it necessary to settle this matter to “avoid expensive legal arguments”.
The expense argument always seemed spurious. When there’s $25 million in dispute, surely it’s worth thrashing the matter out in court? On the other hand, the trouble with courts is that all the facts are likely to come out.  I bet the Greens are having some interesting discussions at the moment! On the one hand there’s nothing to be gained by pulling the pin on Lala, but on the other hand, how far can they afford to let their reputation be trashed before they’ll never be able to recover the ground lost?’
~  Steve  (a Tasmanian commenting to TT) 20111003

‘So Mr Gutwein, what are you going to do about it?

Are you quite rightly going to demand the return of all the ill-gotten monies from Gunns Ltd and Forestry Tasmania?  Are you also going to demand FT collects monies owed by Gunns Ltd to them?  Are you going to demand all the IGA (Julia Gillard’s Intergoverment Agreement) monies be shared amongst everyone except these two companies as was intended?’
~ Russell Langfield (a Tasmanian commenting to TT) 20111003

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‘This isn’t the first or the biggest apparent fraud Tasmania has seen – the land swap was far bigger and the pulp mill approval business was more blatant – but it’s still very unusual to see the LibLabs falling out on something like this.  The Tas justice system was magnificent in snatching Bryan Green from disaster,  but do they have they the moxie to save the government’s bacon here?  I suspect that Tas Inc’s closets are too dank to support an explosion, but I hope I’m wrong.’

~ John Hayward (a Tasmanian commenting to TT) 20111003

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‘These damning documents show that the potential financial scam perpetrated upon the Australian and Tasmanian taxpayer is even worse than that stated by Peter Gutwein.  Firstly, a further 10% GST has been added to the payments made to Gunns and FT increasing the amount paid in so-called settlement to $37.95M.  On top of that, FT has effectively written off the $13.5M balance of the $25 million reputedly owed to it by Gunns under the ‘take or pay‘ provisions of its wood supply contracts bringing the total amount gifted by the taxpayer to at least $51.45 million.

Tasmanians must be told why, and on whose advice, was Gunns’ termination offer made on 18 April 2011 not accepted by FT and what part did the Premier and her Deputy play in this?  What was the role of the Solicitor General and what were the circumstances that led to the Premier claiming the need for payment to extinguish Gunns’ “residual rights”?

What is the legal precedence and basis for the taxpayer settling a financial dispute between a private company and GBE over which the Minister has limited jurisdiction and no apparent financial control?  The scale of this matter is beyond the scope of the feeble Integrity Commission and is so serious that it demands a full criminal investigation.

Finally, given that the release of this documentation has the potential to bring down the Government, the motives of the usually recalcitrant FT for being so forthcoming to the Shadow Minister for Forestry’s request are extremely suspect and demand that FT is put into administration pending the outcome of investigations.’
~ PB  (a Tasmanian commenting to TT) 20111003

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‘As per Chris Newman, Gunns ….“I will not recount Gunns’ various complaints of defective performance and non-performance by FT ….”  Why? Not consistent with Gunns previously pretending the woodchip driven industry was sustainable let alone ‘worlds best practice’! Can the public see a copy of those complaints? Surely they are not all ‘commercial in confidence’.

“The reputation and marketability of Tasmanian native forest woodchip product is, and has always been directly affected by FT’s forestry management practices …”  You forgot to add … and Gunns greedy easy street deal to woodchip bio diverse forests into oblivion.  “FT was aware of the damage that its forestry practices were causing to the reputation of Tasmanian woodchip products …”  Oh so FT’s forestry practices haven’t been a beautiful shining example afterall … I’m shocked at having been so deceived!!  “Gunns therefore wishes to terminate CoS 917 and 918, noting our agreement that construction of the pulp mill did not commence by 30 November 2010.” You mean Gunns deliberately didn’t make a commencement of the mill to get out of the contract or used the companys own incompetence and failure to grab a government payout?

“Ünless a commercial resolution can be reached, I fear that these disputes will ultimately result in court proceedings.”  Is that called holding the state to ransom … or bribery perhaps?

“I therefore propose that CoS 917 and 918 be terminated immediately on a full release and indemnity basis in respect of any and all outstanding issues.”  So that’s what Gunns meant as per their ASX market update.

“3. Mutual release between the company and Forestry Tasmania from certain current and future claims arising out of those agreements.”  “At the same time, FT will receive the benefit of a substantial infrastructure, worth in excess of $200 million, established by Gunns in anticipation of harvesting pulpwood from State Forests pursuant to CoS 917 and 918.”  Is that where the touted $200 million figure for the so-called locking up of native forests originally came from? And you mean to say those native state forests being established, (albeit in reality little more than plantations) after wiping out the original diverse forests, weren’t actually being grown for future sawlogs, but indeed for nothing but pulpwood … thought so!

Bobby Gordon to embattled Bryan Green …. “It is unlikely the exchange of letters between Gunns and FT will become public.” … Why, something to hide perhaps? Obviously Labors Braddon office shredder mustn’t have been available.

“In the event that stakeholders become aware of the termination notice, Forestry Tasmania intends to release the following statement….” Is that called conspiring?

Let’s call it as it is, the $23 million for ‘residual rights’ and the Labor Gov gifting Gunns $11.5m to virtually pay itself via FT wasn’t to buy back HCV state native forests, it was hush money!  Gunns are undoubtedly as successful as a trap door in a canoe.  Gunns would be better off to start manufacturing butchers chopping blocks on wheels which they could pass around to their shareholders, directors, contractors, workers and political allies. Afterall, apparently they are attributing any future succusses on continuing to mobilize a self-serving carvery …

Citizens’ justice – doing away with privilege, the French way
[Source: http://www.toonpool.com/user/589/files/it_chops_383035.jpg]

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Caught in an avalanche of their own making, Gunns have at least successfully pulped themselves …Gunns and Forestry Tasmania and indeed blokes like Bryan Green and the Tasmanian Labor Government have been treating the public like fools for far too long … just desserts is the same ridicule and contempt they have shown the state of Tasmania.’
~ Claire Gilmour  (a Tasmanian commenting to TT) 20111003

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‘Other than the pyrotechnic display contained in this letter there are other incendiary devices. Such as the Gunns Chairman admitting that “construction of the pulp mill did not commence by 30 November 2010”  That’s very different from the findings of EPA director Schaap. There is also a clear accusation that FT abused its monopoly position in the Tasmanian pulp wood market.’
~ Karl Stevens  (a Tasmanian commenting to TT) 20111003

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‘Has Gutwein called the Federal Police? If not, why not?

His inference is that The Commonwealth, and the State of Tasmania has been defrauded and if so it is very difficult to see how the Premier and Prime Minister are not parties to the act. In the absense of that call to the police being made, Mr Gutwein is nothing but another useless mouth we are feeding for no discernable benefit. Time to piss, Peter, or get off the bloody pot.If you don’t, many of us will return to our default position which is that we are governed by a coalition of liblab with the greens used as a smoke screen.’

‘Your party’s voting record backs that view to the hilt.. On reflection I would go further: Either it is fraud and therefore conspiracy to commit fraud, or it is extortion. Either way, it has all the hallmarks of something the federal police should be investigating. Why the Feds?  Aside from the obvious reason it is federal money involved. My bet is that Gutwein will do nothing substantial because the bottom line is the Libs are run by TasInc who want the mill built right or wrong by anyone because they can make a dollar out of it.  They fund both wings of the liblab machine. Such is the nature of party representatives. They know what the voters want, but serve the party interests first because that is where their loyalty lies. You get what you vote for.  That gaping hole in the mills risk profile has not and will not go away regardless of any of this. It just keeps getting larger.’
~ Simon Warriner (a Tasmanian commenting to TT) 20111004

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‘Having also read all the FOI it is interesting to see that Gunns had already terminated the wood supply agreements and that after the 15th of October the agreements were finalised.  Also the $200 million of roading and bridge assets that they told FT they would be giving them would have reverted to FT ownership after 45 days under the agreement anyway.  It appears that the rush to give Gunns money was important because after the 25 th October there would have been no reason to pay them anything.  The briefing docs to Bryan Green show that he was fully cognisant of the deal ending.’
~ Pete Godfrey (a Tasmanian commenting to TT) 20111004

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Subsequent revelations…

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‘No advice on $34.5m Gunns deal: Tony Burke’

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[Source:  Matthew Denholm, Tasmania correspondent, The Australian, 20111022, ^http://www.theaustralian.com.au/news/nation/no-advice-on-345m-gunns-deal-tony-burke/story-e6frg6nf-1226173569723]

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Federal taxpayers paid $34.5 million to Gunns to extinguish its rights to log Tasmania’s native forests without Canberra first seeking advice on whether the payment was legally required.  Federal Environment Minister Tony Burke told The Weekend Australian he had not sought legal advice on whether the payments were necessary to extinguish Gunns’ contractual rights.

“I didn’t seek any advice on that,” Mr Burke said.  “Legal advice on that was sought by the Tasmanian government.”

The state Liberals claim the payment was not legally required because Gunns had already voluntarily handed back the contracts to harvest 210,000 cubic metres of sawlogs each year.  Tasmania’s Labor-Green government, which brokered the payment to Gunns, is refusing to release its own legal advice on the issue.  However, Premier Lara Giddings insists the advice backs its stance that the payment was needed to remove Gunns’ “residual rights” over the vital contracts.

Their surrender was key to the protection of 430,000 hectares of forests under the $276 million federal-state forest peace deal signed by (Prime Minister) Julia Gillard in August (2011).  However, Gunns had said it was leaving native forest logging regardless and documents obtained by the Liberals under state right-to-information laws show that on April 18 the company gave “formal . . . notice of termination” of the contracts.

Despite this, on September 15 deeds signed by the Tasmanian government granted $23 million in funds provided by Canberra to Gunns and a further $11.5 million—also federally sourced—to Forestry Tasmania. Mr Burke said yesterday the money had been provided to the Tasmanian government to “facilitate” the peace deal, also known as the Intergovernmental Agreement on Forests.  Late yesterday, federal Agriculture Minister Joe Ludwig and Tasmanian Deputy Premier Bryan Green announced an additional$45 million voluntary exit package for Tasmanian forestry contractors. “This package will assist eligible contractor businesses to exit the native forest harvest, haulage and silvicultural contracting sectors,” he said.

Meanwhile, Forestry Tasmania continues in earnest its wholesale massacre and incineration
of Tasmanian Old Growth for woodchipping pittance
(Upper Florentine Forest old growth, photo taken 28th September 2011)

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‘Minister dodging questions on Forestry handout. Mill buyers. Gunns quizzed’

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[by Kim Booth MP Greens Forestry spokesperson MR, 20111019, ^http://tasmaniantimes.com/index.php?/weblog/article/minister-dodging-questions-on-latest-forestry-handout/]

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The Tasmanian Greens today said the Forestry Minister Bryan Green has failed to explain to the Tasmanian people why he approved another $1.1 million in public funding to prop up the failing forestry industry.  Greens Forestry spokesman Kim Booth said there’s no credibility to the Minister’s claim that the industry could afford the transportation costs to Triabunna, but somehow could not afford to go the remaining 146 kilometres to Bell Bay without receiving public subsidisation.

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“If the woodchipping industry is so unviable that it cannot even afford to pay the cost of transporting logs 146 kilometres, it is about time that the Minister realised that the industry is just not viable,” Mr Booth said.

 

“The Minister must first justify then explain why he thinks woodchippers of native forests should be paid with public funds and should take priority at a time when other areas are having to do it tough by cutting services.”

 

“As for the question of the supposed ‘log jam,’ the question must be asked why Forestry Tasmania is causing these trees to be cut down if the operators cannot even afford to transport them to the point of sale?”

 

“Every other transport business in the state must survive on its own resources, and there’s no doubt that all the other struggling transport operators in Tasmania would love a handout.  So why is the woodchipping industry treated so differently?”

 

“How many million dollars of public money will this Minister rob from the public purse and give to his industry darlings before he wakes up to the fact that public money if for public benefits like healthcare, not to prop up unviable private businesses.”

..The Tasmanian Government’s logo…’explore the possibilities’…at what cost?
A return to Tasmania’s traditional coat of arms would be very appropriate.

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Further Reading:

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[1]    ‘Explosive letter confirms Gunns voluntarily gave up contracts‘, Tasmanian Times, 20111005, ^http://tasmaniantimes.com/index.php?/weblog/article/explosive-letter-confirms-gunns-voluntarily-gave-up-contracts/

[2]   ‘More questions over Gunns’ rights buyout‘, 20111003, ^http://www.abc.net.au/news/2011-10-04/2011041011-gunns-rights-buyout-questioned/3207848?section=tas

[3]   Letter from Mr Newman and subsequent Ministerial Brief:  Gunns_letter_and_Ministerial_briefing.pdf   [Read Letter] [4]   The full Right to Information documents requested by Peter Gutwein MP, Forestry Tasmania, (Part 1), (Part 2)

[5}  ‘Hush Lara Hush‘, by Peter Henning, Tasmanian Times, 20110520, ^http://tasmaniantimes.com/index.php?/weblog/article/hush-lara-hush/

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