First time referrers and mystery Mandarin speakers

Mandarin

Mandarin-speaking staffer a boon for Grant Thornton’s Mike McCann.

The issue of referrals initiated in a foreign language piqued SiN’s interest as we leafed through the Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) sent to creditors of CRCG−Rimfire Ply Limited last week.

Grant Thornton’s Mike McCann and Said Jahani picked up the appointment as voluntary administrators (VAs) from Vincent Shi of Hanrick Curran, the company’s external accountants.

According to the DIRRI, an unidentified Grant Thornton (GTAL) staffer then spoke with the only director of CRCG-Rimfire based in Australia.

“A phone call subsequently occurred on 9 November 2017 between a GTAL employee (who is fluent in mandarin) and the only Company director currently located in Australia Mr Wentao Gao, who is also fluent in mandarin and has limited English,” the DIRRI states.

“In addition to the above, on 10 November 2017 the Grant Thornton Limited employee had a conversation with the directors of the Company (Mr Dapeng Zhao, Mr Zaiqiang Lin and Wentao Gao) and former director Mr Fangnan Li.

“The purpose of this conversation was to discuss the process of appointing us as Voluntary Administrators.”

According to the DIRRI this is the first insolvency matter referred to GTAL by Shi or Hanrick Curran.

Fair enough. But isn’t there a potential weakness in omitting the identity of the GTAL employee who engaged in the first communications with the directors? Shi’s Linked in profile identifies him as fluent in Mandarin and English and every player is identified except the Mandarin-speaking GTAL staffer who had the initial discussions with the Australian-based director.

Could McCann and Jahani swear they’re wholly acquainted with the contents of that conversation? Was it recorded and translated into something approximating the local vernacular?

The DIRRI also reveals that the company’s major shareholder, China Railway Constructions Group (CRCG) has provided an indemnity ” … in the amount of $300,000 in respect to any shortfall in assets to pay claims and expenses arising out of, in connection with or incidental to the Voluntary Administrators’ appointment and the external administration of the Company including liquidation”.

The indemnity is there, the DIRRI states, solely for the purpose of covering the VAs or, if appointed, liquidators’ remuneration and internal disbursements as approved by creditors or external disbursements which don’t require creditor approval.

“Nothing in the Deed of Indemnity will preclude the Administrators, if subsequently appointed Liquidators, to undertake their statutory duties including taking any actions or Liquidator recoveries, if any, against CRCG pursuant to the Corporations Act 2001 and any such recoveries from CRCG will not be effected by the indemnity or payment paid ……”

SiN wonders how McCaan – until earlier this year ARITA’s national president – reconciles accepting the indemnity with the ARITA position on such arrangements, as outlined at: The risk of indemnities from related parties.

With more Australian-incorporated entities operated by Mandarin and Cantonese speaking directors, staff of insolvency firms fluent in these languages have an enormous opportunity to pursue their self-interest at the expense of duty and disclosure. Name them so SiN won’t have to shame them.

About the Author

Peter Gosnell
Peter Gosnell
Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

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