Federal election 2016: NXT up, property scandal for Xenophon
The Australian 12:00am June 3, 2016
Michael Owen
Nick Xenophon has failed to declare his directorship of a company run by his father that once owed $2.5 million to the Australian Taxation Office in unpaid company taxes and developed an apartment tower that housed international students who later turned some units into illegal slums.
The South Australian independent, who stands to win the balance of power in the Senate, initially denied any involvement with Adelaide Tower Pty Ltd but after checking admitted he had failed to declare the directorship in his parliamentary register of interests in an “embarrassing oversight”.
Senator Xenophon personally owns two units and Adelaide Tower owns two or three others in the King William Street block, where students created bedrooms in kitchens and living rooms using partitions made from shower curtains and wardrobes.
“It is not good enough that it (the directorship) wasn’t disclosed; I’ll be getting an independent auditor in,” he said.
“I am embarrassed it wasn’t disclosed but I have to take responsibility for it. It was a genuine oversight. It’s a matter of public record through ASIC (Australian Securities & Investments Commission) that I am a director of it.
“It should have been disclosed and I will actually be seeking a reform of the rules which need to be stricter with penalties to have clearer lines.”
The revelation will come as a blow to the credibility of Senator Xenophon, who has campaigned for greater transparency on MPs’ personal interests. His new political party, the Nick Xenophon Team, is polling at 28 per cent in his home state, ahead of Labor on 25.5 per cent and just behind the Liberals on 31 per cent, in the latest polling taken ahead of the July 2 federal election.
He said he was aware of overcrowding issues caused by sub¬letting in the Tower Apartments complex, mostly involving students from China, and the by-laws had since been changed. The Residential Tenancies Tribunal in 2012 found one tenant had illegally partitioned living areas to provide sleeping areas for subtenants, before returning to China but retaining the lease and charging students via an agent to continue subletting the apartment. Adelaide City Council bans the conversion of living areas to bedrooms.
“I was aware of the issues with overcrowding ... I support that (the by-law change) fully because it’s an issue in the past and I know that is something that has been completely unacceptable,” Senator Xenophon said.
Adelaide Tower, a firm owned by Senator Xenophon’s father, Theo Xenophou, was behind a multi-million-dollar refurbishment of the former ATO building, converting the site into 126 apartments in 2004, making it Adelaide’s tallest residential building. Individual investors and owner- occupiers have bought most of the apartments, currently valued at about $300,000 for a two-bedroom, in the complex now owned by a community corporation.
Senator Xenophon joined the board in July 2012, after the company had been through a difficult period. Adelaide Tower Pty Ltd went into administration between March 19 and April 30, 2009, when it entered a deed of company arrangement to pay 12 unsecured creditors part of $6.79m owed.
Administrator Andrew Heard said this week the ATO was the largest unsecured creditor and was likely to have received most of the $100,000 recouped from Mr Xenophou, or 14c in the dollar, for the entire debt.
A building supplier, Proton Investments, had launched court action against Adelaide Tower in 2007 for allegedly failing to pay $57,670 for alarms and security measures in the 19-storey tower but the matter is believed to have settled privately in 2009.
Senator Xenophon said yesterday that as a condition of a refinancing arrangement in 2012, he was asked to be a director of his father’s companies. “I spoke to my father’s accountant — I had to help him refinance and it was a condition of refinancing that I would be a director of his companies,” he said.
Senator Xenophon declined to say whether the $100,000 recouped for the multi-million-¬dollar debts was fair. “I was not a director of the company then,” he said. “It was a case of it going to an administrator and I had no role in relation to that. It was eventually resolved but I was not a director. I felt that it wasn’t appropriate for me to be involved in a dispute.”
In response to questions about his father’s role in the company and its unsecured creditors who were owed money, he said he would support his father, who is now in his mid-80s.
“My father behaved ethically,” he said. “I love my father, I support my father and I won’t say anything against my father; it would be wrong for me to do so.”
He said two of his personal investment properties were located in the Tower Apartment complex, while another two were in the Botanic Apartments on East Tarrace, in Adelaide’s trendy East End, adjacent to where his father also owns a prominent business premises that houses a popular cafe.
He is opposed to Labor’s proposed crackdown on negative gearing and said his four apartments were no longer negatively geared as they were paid off.
Senator Xenophon has cultivated a public image of being a thrifty battler, wearing a cheap Target suit and Lowes shoes in a GQ magazine shoot recently, and driving a 2006 Toyota Yaris. He has said he was forced to mortgage his house for $250,000 to pay for the NXT campaign.
Records show Senator Xenophon has a mortgage on only one of his investment apartments.
He also retains ownership of his law firm, Nick Xenophon & Co Legal Practice, and owns the business premises at Paradise, in Adelaide’s northeastern suburbs.
A former member of the Liberal Party, Senator Xenophon went to an elite Adelaide private school for boys, Prince Alfred College, where annual fees top more than $24,500, and has over the years self-financed many of his famous stunts, including chartering a plane at his own expense to visit drought-affected farmers.
Senator Xenophon, 57, yesterday denied that his personal and family financial situation was at odds with his public image.