|According to the latest financial accounts, the Club’s total current assets now stand at $17,071,949 million. This is a drop of over $2.9 million in only one year. It’s really hard to keep up with the figures as the decline has been so rapid. This figure is presented as perfectly acceptable in the Club’s September Newsletter section ‘Financial Turnaround.’ This section is unsigned, so we don’t know whether it’s written by the new Treasurer, the new Accountants or Brian Shanahan. Note the last sentence here: |
“All this has to be seen in the context of the Club’s very significant cash reserves of approximately $17 million, and freedom from debt.”
Worrying when a loss of almost $3 million in one year is presented as quite acceptable.
But it gets worse still.
When capital assets are compared with 2015, it is desperately worrying. Up to now, those consulted on the topic of ‘where has the money gone?’, had generously assumed that the missing millions must have included between $2 and $3 million for the Capital Gains Tax on selling the property.
According to the Letter from the President 11/09/2019, when the Committee reviewed the “then Accountant’s recommendation of a Capital Gains Tax payment of $3 million”, they somehow decided that that they only needed to pay $2.5 million in CGT. There’s no explanation of how this was done, just the spin that they’ve saved $500,000!
There is another way to look at this. That’s another $2.5 million capital lost. In other words, since 2015, the Club has lost:$10.2 million + $2.5 million (CGT) = $12.7 million (total).
So if we accept the President’s previous assertion that he still has $17 million, once he’s paid the CGT, he will only have $14.5 million of the capital from the sale left. Seriously, is that going to be enough to fund the Club for the next two or three years and then refit a new premises in the CBD? Assuming that there are no more massive and mysterious losses.
Where IS the cash reserve?
While the Guardian kept an eye on things, the cash reserve was very firmly in the CBA; a triple A rated bank. At the last AGM, Michael O’Meara, the former head of the Club’s Audit Committee, revealed that the entire sum had been put into MEBank, admittedly union controlled but recently rated as the worst performing bank in Australia (https://www.afr.com/chanticleer/owners-of-australias-worst-performing-bank-show-faith-20160106-gm0k7k). O’Meara described the decision as ‘staggering’ and asked why it had been taken. The gum chewing Secretary – Conrad Corry – desperately offered that MEBank had not been beset with scandals like other banks. Brian could only offer that the decision had been taken ‘comfortably’. Another member asked what the interest rate was and the President said quite clearly and was heard by all present, that he didn’t know what it was ‘off the top of his head’.
Interest on the cash reserve is now the Club’s major source of income and the President doesn’t know the rate.
Members have got no idea how much the Club has spent, how much is left and what is going to be done with the residue. Without that information we have no Club.
Reprinted with permission from Dire Straits