Watchdog keeps tabs on failed training firm companies
The Australian Securities and Investments Commission is monitoring companies linked to the former director of a failed Coast-based training firm which pocketed almost $80 million in government funding before its collapse.
The advice was given to Fairfax MP Ted O'Brien, who had sought further information from the regulator about its treatment of SmartCity Vocational College, its administrative arm SC Admin and director James "Jim" Spong.
"While ASIC has effectively closed the matter of SmartCity, it has not closed the book on Mr Spong," Mr O'Brien said.
Maroochydore-based SC Admin Pty Ltd folded in December, 2016, leaving more than 300 staff jobless around the country and was wound up with debts of $2.6 million to staff for annual leave and entitlements.
SmartCity Vocational College had $2.2 million cash at bank when its admin arm folded, but staff were still forced to rely on the Federal Government's Fair Entitlements Guarantee scheme to cover their entitlements owed.
SmartCity was paid $1.12 million in 2013 by the Federal Government in VET FEE-HELP student loan payments.
That income shot up dramatically in the next two years.
SmartCity earned $38.8 million in 2014 and $40.7 million in 2015 in public funding through the system, but its admin arm collapsed with less than $250 cash in the bank.
Australian Securities and Investments Commission documents showed Jim Spong had been a director of SC Admin Pty Ltd, Smart City Vocational College Pty Ltd, SC Operations (Aust) Pty Ltd and a recent director of Cooloola Training and Counselling Service Pty Ltd and Career Pathways Network Pty Ltd.
The documents showed there was strike-off action in progress against SC Operations while liquidators had been appointed by Federal Court winding up order to Smart City Vocational College.
Documents showed SC Admin had been deregistered, after liquidators were appointed by way of a creditors' voluntary winding up order, while Cooloola Training and Counselling was under external administration, by way of court winding up order from the Supreme Court of Victoria.
The documents showed Career Pathways Network had been deregistered, following strike off action in 2017, after liquidators had also been appointed through a creditors' voluntary winding up order.
Australian Financial Security Authority documents showed Mr Spong was an undischarged bankrupt, having been declared bankrupt on July 10, 2018.
"ASIC continues to monitor former directors who have track records like Mr Spong, to identify any systemic patterns of behaviour that require further actions to address," Mr O'Brien said.
"I expect this will be no different in the case of Mr Spong."
The Daily understands ASIC is working with the Department of Education, Skills and Employment to monitor information relating to SmartCity Vocational College and Cooloola Training and Counselling Service Pty Ltd, to identify any future issues that may require regulatory actions.
"It's really important that we crack down on any shifting of liability from employers to the taxpayer, where there is corporate misuse of the Fair Entitlements Guarantee," Mr O'Brien said.
"Anyone who seems to have misused the scheme, or treated either employees, customers or creditors unfairly, should undergo investigation and that's what's happened in this (matter)."
Mr O'Brien said he wasn't pleased with the treatment of employees and students under SmartCity, nor the use of taxpayer funds to bail out the entitlement debts, but he noted the Fair Entitlements Guarantee scheme had played an important role as safety net for those affected.
He said it was ultimately up to ASIC whether there should be further consideration of the matters, and the regulator had reached the conclusion that Mr Spong's bankruptcy and subsequent disqualification from running companies, was enough at this stage.
During a public examination into SC Admin, Mr Spong rejected claims the company had been insolvent, or simply refused to pay entitlements.
"We had 3000 students and they were our number one priority, and so the way forward that we thought would be best for the students would be to do a teach-out and to keep as much of the college functioning," Mr Spong said.
"Because if we had have done that (paid the money to SC Admin) then we would have had to shut the whole thing down.
"SmartCity couldn't do a teach-out for our students and keep the campus open and pay all the staff. So there was a decision to be made.
"The decision was company policy and that is to take care of our students.
"We spoke to staff members and they were in agreement that they wanted the students to be looked after as paramount."
The Daily has attempted to contact Mr Spong for comment.