A canary sings with Probuild, CIMIC, Deloitte and Chevron
Written by: Louisa L. on 1 April 2022
Above: "There is no money. Now seven months no salary," a former CIMIC worker tells Adele Ferguson (SMH)
The day after the ABC reported a humanitarian crisis facing former employees and subcontractors of Australian-based construction company CIMIC in the Middle East, Spirit of Eureka commented, “Probuild collapses and now CIMIC is exposed for leaving hundreds of ex-workers unpaid in Dubai labour camps for a year. They can’t leave and can’t afford to eat. And CIMIC’s share price didn’t drop the day after journalist Adele Ferguson released the story.
“Meanwhile, a week back, for the first time the ABCC issued compulsory attendance notices to NSW workers for a strike they won in the courts during protected action. ARE THEY KIDDING?”
The comment, now over a month old but still pertinent, introduced an article by a NSW construction worker, outlining two of the reasons for Probuild’s collapse – increasing monopoly and outsourcing of risk.
He said, “Probuild went into administration mainly because developers had not paid them for work done. The company is owed hundreds of millions of dollars.
“The problem is the law allows the person taking the least risk but receiving the most profit – the developer – to dodge any responsibilities.
“Covid lockdowns meant delays, but the developers basically said, ‘You have a contract and you haven’t met it. So what if you are nearly finished the buildings? We are not going to pay you.’ And it’s all legal.”
Specialist investor service, The Motley Fool said much the same about Probuild’s collapse, “Nicola Grayson, the CEO of the engineering industry lobby group, Consult Australia, says she fundamentally believes the system is broken. Cut-throat competition and poor risk distribution in the commercial building industry are making it increasingly difficult for construction companies to make money.”
Hooking small fish for capitalism
Most construction workers are employed by subcontractors or labour hire companies. This pattern is repeated across numerous industries, most notably food delivery.
Spirit of Eureka said subcontractors, many of them “Mum and Dad outfits”, carry the greatest risk in the building industry.
It also pointed out that the CFMEU, in NSW at least, used legal and illegal industrial action to protect most – but not all – entitlements of workers including those employed by subcontractors, because too many companies go broke leaving workers unpaid. This didn’t surface in capitalist media coverage.
US company Motley Fool says, “Our purpose is to make the world smarter, happier, and richer.”
It somewhat trivialised Adele Ferguson’s reporting, subtly questioning whether a “humanitarian crisis” existed after CIMIC’s departure from the Middle East.
The inverted commas in its headline inferred the crisis was not proven. It included CIMIC’s self-justifications.
The core business of the financial press is where to invest for profit.
Fool ended in bold with “Should you invest $1000 in CIMIC now?” No, but follow the link from the free article to Fool’s more profitable suggestions.
This bait ties small investors like workers and their allies to capitalism.
Same top-down relationship
Numerous financial articles state Hochtief, CIMIC’s controlling shareholder, is making a hostile bid for outright ownership. German-based Hochtief is majority owned by Spanish corporation ACS.
Like the mining industry, the big end of construction is overwhelmingly foreign controlled. But the stability of ownership is easily upset by the second-by-second ease with which massive amounts of capital can be shifted by big shareholders.
In Probuild’s case other companies will pick over the carcass, with the administrator the first to be paid.
Deloitte, one of the Big Four foreign-owned accounting giants regularly targeted by investigative journalist Michael West, is Probuild’s administrator. West exposes the dirty role these corporations in designing tax avoidance and a raft of other ways to increase company profits.
Deloitte was also the auditor when CIMIC was in a losing billion-dollar battle with resource giant US Chevron over its construction of a jetty for the Gorgon gas project off WA’s Pilbara coast.
CIMIC’s is the same top-down relationship faced by Probuild.
And what of Deloitte? The 2020 headline of the Financial Review’s Jenny Wiggins was spot on when she called CIMIC’s accounts “unreliable”, including Deloitte’s audit report. She stated Deloitte ‘green-lighted’ CIMIC’s dodgy accounts in 2018. She also pointed to the $1.8 billion write-off in the Middle East.
Human misery not their job
Wiggins didn’t mention the human misery CIMIC’s failure was causing. Sadly, that isn’t the primary job of financial newspapers. Fairfax reporter Adele Ferguson appears to have been tipped off by an unpaid Australian contractor.
It took till December 2021 for the Financial Review to publish Adele Ferguson’s first investigation.
CIMIC is now facing a lawsuit from investors, alleging it misled them about its liabilities.
Meanwhile Chevron’s website still brags to investors and potential investors about Gorgon’s 700 Australian contractors as if this was good for them and Australia. “Everything about Gorgon is massive,” it says.
Michael West states, “One of the world’s premier tax cheats, Chevron pays zero tax but still managed to siphon off a cool $920 million “return of capital” to its US parent – according to last year’s financial statements – besides ripping out $3 billion in finance charges to its associates offshore.”
ExxonMobil and Shell are Chevron’s major partners in Gorgon.
According to by Financial Times’ journalists Jamie Smyth and David Sheppard in July 2021, Japanese companies are among the top ten shareholders in Gorgon. Though their holdings are very small, they help ensure the cheap gas heads their way, while Australian prices go through the roof.
Follow the money
The London-based Financial Times is owned by a Japanese holding company, Nikkei. It also calculates the Nikkei 225 for the Tokyo Stock Exchange. (Wikipedia)
Most readers would know The Financial Review is now owned by Channel 9. By far the most profitable section of the former Fairfax stable is the Domain real estate sector. Honest reporting on construction as a whole becomes more and more difficult given this.
On March 30, a Sydney Morning Herald article about a huge development, the “beating heart” of Sydney’s Central Station, read like a developer’s press release. It didn’t mention the 40 storey towers which will dwarf what it twice calls an “unloved” heritage precinct. Heritage is this writer’s word. It doesn’t appear in the article.
Sydney’s former Herald architecture reporter was Elizabeth Farrelly. The title of her 2021 book ‘Killing Sydney’ says it all.
While most journalists aim to tell what they think is the truth, capitalist ideology stops them doing more than tinkering around its worst edges. Some spend their days in breakfast television infotainment. Others sell their souls to defend even the worst corporations. Most others are tightly constrained. Even an Adele
Ferguson would find herself out the door if she called capitalism out for what it is.
There is a big gap between what the media tells the general public and the reporting of specialist financial services and newspapers, which aim to keep the capitalist juggernaut smashing toward profit.
When the canary sings
As Lenin pointed out a century ago, crisis increases monopolisation. Giant corporations swallow even huge ones. Look to Probuild and CIMIC.
Right now, there are mind-boggling amounts of capital needing destinations where the highest possible profit can be made. Within seconds, even enormous corporations that fail in this fundamental capitalist compulsion can be shaken and even collapse as vast quantities of capital are removed.
This will have big impacts in a construction industry which has traditionally been the canary in the mine for capitalist busts. If that industry falls, others follow. It employs one in five Australian workers. While this writer has been astounded at the capacity of the construction boom to continue despite her predictions of its bust, things are shifting.
Few people have the money to buy homes or even find places to rent. Purchasing power of wages has plummeted, interest rates will rise along with prices. Investors aren’t filling the gap.
The CBDs of the two major cities and their satellites like Sydney’s Parramatta are awash with empty office space, with more in the pipeline.
When the canary sings and booms bust, brutal attacks on workers’ collective power are on the cards.
They must be educated for the bigger struggle to overcome capitalism, organised and mobilised for more than elections or bigger crumbs from the capitalist table. Make struggle a training ground.
For communists, it’s time to be active. It’s time to be bold.
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