Member for Burleigh Michael Hart has accused JM Kelly of phoenixing its businesses to avoid debt.
Member for Burleigh Michael Hart has accused JM Kelly of phoenixing its businesses to avoid debt. Allan Reinikka ROK020817apowerpr

JM KELLY SCANDAL: The failed builder and its links to Labor

EXPLOSIVE allegations have been raised under privilege in State Parliament about a failed central Queensland building company and its links to the Palaszczuk Government.

Eight of the 10 powerful JM Kelly Group companies went into liquidation last week with two others - JM Kelly Builders and Kawana Kitchens in administration.

JM Kelly Builders became the group's principal construction company in 2016 after the collapse of JM Kelly Project Builders with government departments transferring 21 contracts from one to the other.

The move caused deep anger among subcontractors left owed millions of dollars for work done on those projects, money they claim they were initially led to believe would be paid by JM Kelly Builders.

Member for Burleigh Michael Hart on Tuesday attacked the company's relationship with the government, the influence of former Bligh Labor Minister for Housing and Public Works and current Queensland Building and Construction Commission board member Rob Schwarten, and cited recent articles in the Sunshine Coast Daily.

"This Rockhampton company recently entered voluntary administration with government contracts on foot, leaving major projects incomplete and subcontractors owed significant moneys," Mr Hart told Parliament.

"The former building company known as JM Kelly (Project Builders) had previously been placed into liquidation on 20 June 2016, leaving a trail of debt in its wake. JM Kelly Builders then simply took up where the previous company left off.

"It is particularly worrying that, despite the troubling track record, the questions about the suitability of JM Kelly executives to be involved in the running of this company, the legitimate concerns raised about financial capacity and a lack of transparency regarding its licensing arrangements, guess what?

"Under this Labor administration, government contracts continued to be handed to JM Kelly Builders."

Mr Hart accused JM Kelly of phoenixing its businesses to avoid debt, something he said both the QBCC and the government had vowed to address.

"As I said, JM Kelly (Building Projects) sic (Project Builders) changed to JM Kelly Builders.

"If that is not phoenixing, I am not sure what is. For the benefit of members, I point out that phoenixing is the term used for a company with a similar name or similar directors emerges from a company that may have been liquidated to avoid paying its debts.

"Although the investigation needs to take place, I submit that a much bigger and murkier story needs to be scrutinised fully, and that is the collapse of JM Kelly Builders and why this Labor government did nothing while the company ripped off small subcontractors and suppliers.

"In fact, in 2016, the government seems to have supported the phoenixing of JM Kelly and allowed 21 contracts that it had with JM Kelly to be transferred to a related company, JM Kelly Builders, via a deed of novation signed by David Sullivan on behalf of the department of education and training.

"I table an article from last week's Sunshine Coast Daily that covers that event really well. Members may well ask why the Department of Education allowed this to happen. I decided to do some investigation.

"Members can imagine my surprise when a reliable source on the ground in central Queensland informed me that the previous Labor minister, Rob Schwarten, had approached the LNP while we were in government saying, 'We have to give JM Kelly some hospital work. They only make money from hospital work.'

"No luck there so I kept digging. There are also rumours around Rockhampton that JM Kelly built faults into government projects in order to ensure future work referrals.

"Surely that cannot be true. Perhaps that needs investigating.

"Could it really have something to do with the member for Keppel's mentor, the former minister for housing, Rob Schwarten?

"Surely not, although he is apparently best mates with John Murphy, the group director of JM Kelly.

"Interestingly, Rob Schwarten worked on the member for Cooper's (Kate Jones) campaign in Ashgrove.

"The member for Cooper was a media adviser in Rob Schwarten's office before entering parliament. She was also the minister for education in 2016.

"That is a coincidence, is it not? Could that be it? Of course, let us not forget Rob Schwarten is on the board of the Queensland Building and Construction Commission. Is it making sense?

"But wait, there is more! The new member for Rockhampton was the former regional director in central Queensland for Housing and Public Works.

"Another coincidence. Perhaps he could be helpful on the background of JM Kelly, their activities and what he knows about the deed of novation signed by the Department of Education and if he discussed this with the Department of Education before it was signed.

"Maybe it has something to do with the member for Keppel who is now assistant Minister for Education."