Staff sacked without entitlements, directors paid $9m

EXCLUSIVE: A SUNSHINE Coast-based national training college chain directed by businessman James 'Jim' Spong gave almost $9 million in bonuses to Spong family members and business associates just 18 months before hundreds of staff were sacked.

Financial documents show SmartCity Vocational College paid almost $7.5 million to shareholders - mostly companies owned or directed by Spong family members or associates - while more than $1.4 million was distributed to trusts in the 2014-15 financial year.

Only 18 months later more than 300 college staff employed by the Spong training empire's administration company SC Admin Pty Ltd were sacked, just days before Christmas.

Dan Bowman was a Maroochydore-based staffer sacked. The father-of-five said he was still owed about $3000, money that would be a huge help during what was a testing time financially for his young family, describing his sacking as a "kick in the guts".

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He said he wished staff had been told the truth, amid rumblings about the company's future.

"It would've been better if we got told," Mr Bowman said.

"That was probably the hardest part (not being told the truth)."

SC Admin was wound up on December 16, 2016 with just $223 in the bank, owing up to $2.6 million to staff in annual leave and other entitlements and almost $1.9 million to the Australian Taxation Office.

Liquidator reports show Mr Spong and company accountants had met with liquidators in the six months prior, concerned about the financial stability of SmartCity and some of its associated companies and they were exploring insolvency options.

On November 3 Mr Spong registered a new company, SC Operations (Aust) Pty Ltd, with the Australian Securities and Investments Commission.

RELATED: Hundreds jobless as admin firm folds days before Christmas

A week later and liquidators got the order to wind up SC Admin.

The Daily can reveal SmartCity was paid $1.12 million in 2013 by the Federal Government in VET FEE-HELP student loan payments.

That income shot up dramatically in the next two years.

SmartCity earned $38.8 million in 2014 and $40.7 million in 2015 in public funding through the system.

SmartCity's Facebook page advised campuses around the country would close for about a month over Christmas after SC Admin's collapse, while sources say Mr Spong and family involved in the company jetted to Bali for a three-week break.

RELATED: National college chain to be de-registered

To-date liquidators had found no evidence of insolvent trading or phoenixing while investigating SC Admin, but the Daily understands about $300,000 worth of vehicles were transferred by SC Admin to SmartCity the day before the Admin arm collapsed.

SmartCity's Facebook page advised on January 27 that campuses had reopened, albeit with far less campuses nationwide than before SC Admin's collapse, with senior executives maintaining this week that it was "business as usual".

But the federal regulator, the Australian Skills Quality Authority, has confirmed it will de-register SmartCity, effective as of March 6, because SmartCity didn't have enough "appropriately qualified trainers and assessors", resources or training and assessment strategies to service the students enrolled.

RELATED: Collapsed Coast company could owe up to $5 million

That decision has been appealed by the college and a stay of decision has been sought, but if the appeal is unsuccessful it will lose its status as a registered training organisation and be unable to deliver nationally-recognised courses.

De-registration would also render SmartCity unable to enrol students for VET Student Loans, the new system which replaced VET FEE-HELP on January 1 this year, leaving it unable to deliver nationally-recognised diploma, advanced diploma, cert III, IV, graduate certificate and graduate diploma courses.

Australian Securities and Investments Commission documents show the shareholders of SmartCity Vocational College were companies linked mostly to members of the Spong family, like Jim's wife Lynette, director of Prime Slots Pty Ltd or Jim's son Glenn, CEO of SmartCity and director of Smart City Reserves Pty Ltd.

Other shareholders of SmartCity are listed as South African Clifford Whittaker and Bradley and Caley Ashpole.

RELATED: Solvency concerns raised six months before liquidation

A notice to students on SmartCity's website on Thursday from CEO Glenn Spong said changes to the system this year had caused a reshuffle of the business and one thing they "didn't do very well" was to communicate with governing bodies about their "structural changes", referring to the closure of SC Admin.

"We have been working very hard to ensure these changes have as little impact on your studies as possible, but would definitely do a few things differently if we had the chance to start over," Mr Spong's statement reads.

"We are excited that we are coming through the other end of this difficult transition."

SmartCity's website shows it is now open in locations at Armadale (WA), Bundaberg, Cairns, Caloundra, Elizabeth (SA), Fairfield (NSW), Gympie, Hervey Bay, Hobart, Inala, Ipswich, Launceston, Maroochydore, North Lakes, Rockhampton, Toowoomba and Townsville.

Glenn and Jim Spong did not comment.