Prime Minister Malcolm Turnbull and his family have retrieved some of their investment in a failed tech start-up as other wealthy and famous investors face losing $100 million, thanks to a deal struck with the company's former chairman, ex-NSW Premier Nick Greiner.
The former staff at PlayUp, a sports technology start-up, are owed at least $3.7 million with the company now in liquidation after former employees recently took winding-up action over wages and superannuation going unpaid in 2015 – at the same time a loan to Mr Turnbull and his son Alex Turnbull was being repaid with 12 per cent annual interest.
The Prime Minister's investment firm Turnbull & Partners was receiving repayments against a $US1 million ($1.3 million) debt from the parent company of sports technology firm PlayUp. The unusual agreement was struck at the suggestion of then PlayUp chairman Nick Greiner and his board after Mr Turnbull had attempted to sell shares in the company he bought in 2012 when opposition communications spokesman.
"In 2013 after becoming a minister Mr Turnbull sold a large number of his investments, as disclosed in his members interest register, with the objective of limiting his portfolio of financial equity assets as far as possible to offshore managed funds," a spokesman for the Prime Minister told The Australian Financial Review.
High powered board
The spokesman said Mr Greiner and the PlayUp board, which included billionaire Bruce Mathieson, ex-Telstra chairman Bob Mansfield, Asciano director Geoff Kleemann and Justin Ho of the controversial Ho family from Hong Kong, instead urged the then Communications Minister to convert shares in a company called Revo Nominees to a debt – which was later to be secured against all of PlayUp's assets as the company lurched into financial turmoil."The company for its own reasons decided to cause Revo Nominees to buy the shares, with payment to be made on the completion of its capital raising or in 12 months, whichever came earlier," a spokesman for Mr Turnbull said.
A large-scale capital raising never eventuated and the Turnbull family debt, including $300,000 owed to the Prime Minister's son Alex Turnbull, was secured in late 2014 against all PlayUp assets.
Repayments on the debt were made during the first half of 2015, when PlayUp staff were not being paid wages and superannuation. The remaining staff were made redundant last May.
Strained relations
Mr Greiner quit the PlayUp board in January 2015, and the Turnbull family are unimpressed with his conduct as PlayUp chairman. Relations between the two parties are said to be strained.
The terms of the debt securing and repayments were negotiated by the Prime Minister's son Alex Turnbull, a hedge fund manager in Singapore, although the majority of the debt remained in the name of the Prime Minister's investment fund Turnbull & Partners until after Mr Turnbull became Prime Minister last September.
PlayUp shareholders, among them some of Australia's biggest business and sporting names, have lost $100 million on their investment, which was placed in liquidation in January.
Several shareholders are also angry Mr Turnbull and his son were able to secure their debt ahead other secured creditors. Alex Turnbull has since moved to sell the debt on to Sydney investment firm Wizer Capital, which has appointed receiver Gavin Moss of Chifley Advisory to sell the remaining assets to fund the repayment of the debt.
Former PlayUp staff, meanwhile, have been forced to apply to the federal government's Fair Entitlements Guarantee (FEG) scheme to claim back unpaid wages, and the Australian Tax Office for superannuation contributions the company failed to make on their behalf.
Mr Mathieson and Mr Kleemann are among the dozens of former directors, employees and creditors claiming to be owed money, the ranks of which include former Australian test cricket captain Steve Waugh, who once helped promote PlayUp in India. He is said to be owed $134,000, according to a report released last week by liquidator Grant Thornton.