Brian Burston (NSW, United Australia Party) Share this | Link to this | Hansard source

I have in my possession a voluntary administrators report to creditors for Endeavour Industries, a not-for-profit company limited by guarantee and a registered charity in the Hunter Valley township of Maitland, as well as several other Hunter locations. Mitchell Griffiths and Chad Rapsey of Rapsey Griffiths were appointed administrators on 4 June 2018.

It must be noted that Endeavour had been operating profitably for 50 years under the guidance of a voluntary board. Chairperson Mr Andrew Hughes joined the Endeavour board on 10 November 2014, just before the rollout of the NDIS in the Maitland region. He instigated the implementation of a new constitution on 16 June 2015, to reflect payment to directors. Mr Hughes is also chairperson of Kurri Kurri Community Services, KKCS, a not-for-profit company limited by guarantee and a registered charity located in Kurri Kurri. It's been operating for more than 30 years under the guidance of a volunteer board. Mr Hughes joined the Kurri Kurri Community Services board in 2016, just before the rollout of the NDIS in the Cessnock-Kurri Kurri region. He also instigated the implementation of a new constitution, on 23 August 2016, to reflect payment to directors. Neither organisation sought the minister's approval for directors to be paid, as is required by law. Any payment to directors is therefore fraudulent.

There were three directors of Endeavour—Andrew Hughes, Sally Coddington and Danny Litwin—at the time of the appointment of the administrator. Sally Coddington is the wife of Kurri Kurri Community Services CEO Mike Coddington. Nowhere in the report does it detail the amounts paid to directors, but I understand they were paid in the order of $3,000 per meeting. Mr Hughes, a former lawyer, describes himself as a motivational speaker deriving income from government affiliates as well as the private sector. He boasts qualifications in NLP, or neurolinguistic programming. There is no scientific evidence supporting claims made by NLP advocates. It is a con. Mr. Hughes has surrounded himself with close friends and associates on both boards, and they are all deriving benefits that enhance their lifestyles. His presence at Endeavour has been a miserable failure.

Annexure A of the administrators report details a 'Declaration of Independence, Relevant Relationships and Indemnities'. On page 7 of the report, under the same heading, the administrator admits to a relationship not listed in annexure A, and describes it as 'an engagement undertaken by our firm between May 2016 and August 2016'. What it doesn't say is key to any considerations: Mitchell Griffiths worked as acting CEO of KKCS for that period, on an attractive remuneration, working side by side with Andrew Hughes—they are good friends. I believe Rapsey Griffiths has a pecuniary conflict of interest and should not be in the position of administrators. Endeavour leases real property from KKCS and is indebted for the amount of $17,329. KKCS was not reported as a creditor at the time of the administrators' engagement. Was this illegal collusion between organisations?

Endeavour received funding from the Department of Social Services for the sum of $425,655 from the supported accommodation fund. This has not been expended and is being called in. No doubt this money was used to prop up the business due to lack of liquidity. With less than $150,000 in the bank, Endeavour is unable to return the funds. Where else would the money have been spent?

Endeavour accrued losses of $2.67 million from 30 June 2015 to May 2018. Management estimated that it had been accruing losses of $130,000 a month yet continued to trade. The administrators' report states that the company began displaying indicators of insolvency as early as 30 June 2015 and may have become insolvent in February 2018. There was plenty of time from 2015 to right the ship, but the directors were more concerned with what they could get out of it for themselves. The directors have failed their fiduciary duty, and compensation ought to be sought from them.

Any thoughts of KKCS taking over any Endeavour services should be dismissed for obvious reasons. The relationship between Mike Coddington and Sally Coddington and the relationship that Andrew Hughes has with both parties should disqualify KKCS.

On pages 31 and 33 of the report, the administrators say, 'We do not anticipate that a liquidator is likely to bring a claim for insolvent trading.' Then, on page 36, they say, 'We propose that we, Mitchell Griffiths and Chad Rapsey, will be appointed as liquidators of the company.' There is no doubt that Mitchell Griffiths is going to look after his mate.

The board has destroyed Endeavour and the lives of its employees and those with a disability who accessed it. If the administrators' recommendations are followed, Endeavour will no longer exist. The directors must be held accountable. The administrators have listed their fees as at 28 September 2018 as $678,373.09, with further administrator and liquidator fees in the vicinity of $100,000 and $200,000, all ex-GST—a total of around $1 million.

There is no doubt that the administrator intends to let Andrew Hughes and his sidekicks off the hook. I can picture Andrew Hughes, with his arm around his mate's shoulder, saying, 'Thanks a million, Mitch.' Andrew Hughes and KKCS CEO Mike Coddington should stand aside from their respective roles at KKCS due to conflicts of interest. The real tragedy of the situation is the loss of jobs and the displacement of those with disability. Andrew Hughes, Sally Coddington and Danny Litwin should be forever banned from standing for any type of board. I believe this justifies a Senate inquiry.