iNO hears that after Sydney bankruptcy trustee Paul Leroy departed our shores last year – allegedly taking money that wasn’t his – it was more than expectant creditors whose world’s were rocked.
Our sources advise that anchors are dragging and the needle is all round the compass in the offices of the Australian Financial Security Authority (AFSA) thanks to the particularly political odour attaching to the allegedly purloined funds.
The money had been in Leroy’s control in his capacity as trustee in bankruptcy of the estate of Kathy Jackson, the former National Secretary of the Health Services Union (HSU).
Jackson, the corruption whistleblower who had the whistle blown on her own profligacy, declared bankruptcy after the Federal Court found she’d used union credit cards to pay for $300,000 in personal expenses.
Now no longer a bankrupt, Jackson maintains that she did nothing wrong and that all of the expenditure had been approved but the Minutes recording those approvals were in an exercise book disposed of accidentally.
Following the Federal Court’s judgment the Abbot Government’s Royal Commission into union corruption referred Jackson to the police and the HSU sued her for $2.4 million including interest.
Upon declaring bankruptcy for a second time Leroy was appointed trustee to her estate. When wealthy barrister David Rofe died and left Jackson $1.9 million the HSU anticipated a generous distribution from Leroy given how long it’s waited and how much money it’s spent trying to recover funds misappropriated by Jackson, former Labor MP Craig Thomson and former HSU national president Michael Williamson.
With hopes of a recovery dashed at least in the short term, the union has reportedly gone to the top, petitioning Federal Attorney General Mark Dreyfus to intervene. A spokesman confirmed the AG’s office had been briefed on the progress of AFSA’s investigation this week.
Whilst it’s unclear if Mark Dreyfus has the power to carpet bomb AFSA with auditors, he will almost certainly ensure the HSU’s lamentations are heard loud in clear in the office of Inspector General in Bankruptcy Tim Beresford.
In a statement issued late yesterday AFSA would confirm only that the IG had commenced an investigation on January 22, 2024, months after Leroy is believed to have left the country.
iNO understands however that investigators have identified a transfer of approximately $700,000 of the allegedly stolen funds into a bank account in Belgium operated by Leroy’s sister.
iNO asked AFSA when Leroy’s practice had last undergone an inspection in accordance with what’s outlined on its website at Monitoring and inspection of bankruptcy trustees and debt agreement administrators where AFSA discusses its practitioner monitoring processes.
iNO understands Leroy may have maintained the Jackson Estate No. 2 Account without assistance from his staff.
AFSA declined to comment about such work, which is undertaken by officers in AFSA’s Enforcement and Practitioner Surveillance division reporting directly to Beresford.
AFSA did not respond to a question about whether it will take the lead on the investigation or leave that to Fabian Micheletto and Michael Carrafa, the SV Partners pair appointed by the Federal Court to take over as trustees of the Jackson estates.
If AFSA leaves it to the trustees to investigate and refuses any subsequent funding application they might make, many will rightly wonder if the regulator’s most fervent wish is that this matter vanishes into thin air, just like Leroy.
Further reading:
More correctly Ms Jackson became bankrupt before the C=Federal Court found her liable. She had a second bankruptcy after the costs order was made by the Federal Court against her. The proceeding continued by leave after the first bankruptcy in her absence.