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Category: Government and Politics / Insurance / States and Territories / Federal - State Issues

Liberal powerbroker's voluntary administration deal revealed

Monday, 26 Sep 2016 14:28:47 | Conor Duffy

Michael Photios denied there was "anything untoward in relation to the voluntary administration" of his lobbying business MP Consulting. (AAP: Tracey Nearmy)

The lobbying business of former New South Wales Liberal Party minister Michael Photios was in voluntary administration six years ago and owed the Australian Taxation Office $350,000, a 7.30 investigation has revealed.

Key points:

  • Lobbying business of Michael Photios owed ATO $350,000
  • ATO was repaid just seven cents in the dollar
  • Mr Photios's business now lobbying State Government on CTP insurance changes

The ATO was the biggest creditor of his business MP Consulting Pty Ltd and was paid just seven cents in the dollar on the debt.

Former ASIC investigator and insolvency expert Niall Coburn said the deal was favourable to Mr Photios's business.

"I would think if you only had to pay six or seven cents in the dollar you would think that was a very good deal, probably the best in Australia," he said.

"My assessment of the voluntary administration is that ... there are real anomalies here and the most important one is that there is no reason given why the creditors should accept this deed of arrangement."

Aside from the ATO, the other creditors were owed relatively small amounts of money.

Two of them were close to Mr Phorios, including his ex-wife Mela Purdie, who was listed as being owed $200, and his father Henry Photios.

Mr Photios declined to be interviewed by 7.30 but defended the voluntary administration deal in a statement.

''I have no comment to make other than a genuine and sincere denial that anything untoward in relation to the voluntary administration was done and was only completed in accordance with the law and discharged with the unanimous support of the creditors," he said.

Battle for control of Liberal Party

Mr Photios's lobbying firm today is Premier State and has some of the biggest names in Australian business on its books. It returned to a strong position after the election of Liberal governments at state and federal level.

Mr Photios is at the heart of an ongoing battle for control of the Liberal Party. His faction the moderates are dominant and his dual roles as lobbyist and powerbroker have seen him come under attack from rivals in his own party.

Earlier this year former prime minister Tony Abbott hit out at lobbyists.

"Some of these factional warlords have a commercial interest in dealing with politicians whose pre-selections they can influence, now this is a potentially corrupt position," Mr Abbott told Four Corners.

There is no evidence or specific allegation of corruption.

Lobbying for insurance changes

The NSW Bar Association has expressed concern over Liberal-linked lobbyists and donations from insurers regarding changes to Compulsory Third Party (CTP) insurance the State Government is considering legislating.

Under the proposed reforms only 10 per cent of injured drivers — the most seriously injured — would be able to take legal action against their insurer.

Mr Photios's lobbying business is acting for insurance giant Suncorp and the Insurance Council of Australia has another Liberal powerbroker, Richard Shields, as its lobbyist.

Elizabeth Welsh from the NSW Bar Association said she believed insurers have had better access to the government than the legal profession, which is against the changes.

"There were a lot of meetings with the Government before the formal consultation process began," she told 7.30.

"Once the minister announced that the Government had decided on what's called Option 3, of the four options it put forward, information about this scheme went up on a website, which looks almost identical to what was proposed by Minister [Greg] Pearce in 2013 and we know that was all because of the involvement of lobbyists back then."

'Lawyers are more than able to run their own case'

Barristers stand to lose a lot of work if the changes pass and insurers say law firms have donated to the Labor Party, which is opposing the changes.

Rob Whelan, the CEO of the Insurance Council of Australia, denied his organisation had better opportunities to put their case for reform of the CTP scheme.

"No, we don't have more access than lawyers, lawyers are more than able to run their own case, that's what they do for a living after all so I think that's not really a very accurate statement," he said.

The insurance industry says the proposed changes are supported by welfare groups and doctors.

The minister responsible for the reforms, Victor Dominello, said the changes were being made to reduce premiums for NSW motorists who pay the most in the country and tackle large profits made by insurers.

"So if we can remove the volatility then we can remove the insurer profits, and then we can have a serious reduction, far greater than $75, we're looking at maybe about $200," he said.

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