The national poker machine party

There’s a rough justice really whenever the Anti Pokies Party Senator Nick Xenophon is responsible for thwarting the plans of the Rudd Labor Government for the Labor Party in Canberra is one of the nation’s big beneficiaries from poker machine revenue. Up until now the cash generated from the machines has gone into the coffers of the local Australian Capital Territory Branch but the prospect of a multi tens of million dollar jackpot has seen the Federal Labor authorities start muscling in.

The windfall pokies payout will come from taking advantage of a provision in the constitution of clubs trading as a company under a Canberra Labor Clubs banner that makes the Labor Party, rather than the individual club members who put their hard earned through the machines, the beneficiary of any profits that result from a sale. Last year directors of these Labor Clubs determined that the best interest of the company (effectively the local Labor Party branch) would be served by finding a buyer and the Party pocketing the lump sum.

Given the political difficulties for the ACT Labor Party of being the Government determining such matters as who can have poker machines and under what terms while being the Territory’s biggest poker machine operator there was an element of good sense in that decision. The election of Senator Xenophon to represent South Australia had just made it more so.

The Labor Club directors — a majority appointed by the ACT Labor Party Branch — went through the process of getting legal and financial advice and ended up negotiating seriously with the local territory division of the CFMEU trade union which too is a big clubs operator under the Canberra Tradies name. With the deal on the verge of being done something prompted the officers of the Federal Labor Party branch to stick their bib in. An interest in getting its own hands on the $25 million was clearly apparent but some of my informants say there was a great deal of resentment from the right wing members of the Federal Executive that the left leaning CFMEU would emerge as a winner from the deal as well.

Threats of federal intervention were made with real vigour when a figure was noted in some of the legal advice that the value of the clubs being sold was nearly $45 million rather than $25 million.

Now finding a market price for licensed clubs is no easy matter because the purchaser has to have some semblance of being a not-for-profit organisation. A shortage of potential buyers makes the market a relatively thin one as the Labor Clubs found. An added complication comes from the directors also having to deal with the interests of club members - as distinct from, and as well as, the beneficiaries of a sale.

The unsuccessful tender of the right wing National Union of Workers for around the same figure as offered by the CFMEU fell at that hurdle as the cash component was only some $10 million with the rest of the $20 million to be paid from future profits.

The whole sale process has now turned quite ugly with Federal Labor strong arming local ACT Labor into putting things on hold but the directors of the Canberra Labor Clubs refusing to do so. The directors have in their mind that the Australian Securities and Investment Commission expects them to act in the company’s best interests, even if this may not be in your own interests, and even though you may have set up the company just for personal or taxation reasons.”

The ACT branch’s administrative committee, with the support apparently of the Federal body, has now ordered the directors the Party has on the Club Board to change their mind when they meet again next week. If they refuse to do so they are threatened with the sack although that would involve ASIC in having to make some very interesting decisions about the obligations of directors and attempts by third parties to prevent those directors from acting in the best interest of their company.

I am sure that the lawyers are ready and waiting to see how much of the $25 or $50 or however many millions they can carve off before anyone else gets a dollar. And surely Senator Nick will soon decide that this is just the kind of Labor skulduggery that should see the light of an investigation by a Senate Committee.