Minister called in police to investigate failed builder
A NUMBER of government departments continued to contract failed central Queensland business JM Kelly Builders, even after Housing and Public Works had stopped dealing with them because they were deemed too high risk.
JM Kelly Builders, which was placed in administration a week ago with debts of $18.8 million, was contracted to the Department of Education on the Eimeo school project in Mackay and by the Department of Health for works at Bowen and Proserpine hospitals.
It also won a $10 million contract with Rockhampton City Council for the Kershaw Gardens redevelopment.
Subcontractors now facing crippling debt of their own due to the lines of credit they used to supply materials and labour for the infrastructure projects, as unsecured creditors hold little hope they would see any return from any eventual liquidation of the company.
Housing and Public Works Minister Mick de Brenni said the departments of health and education were proceeding with their own major projects, with lower value works including maintenance being handled by his department.
Both had been made aware of Housing and Public Works' position in relation to JM Kelly Builders.
The revelations come as the Minister confirmed he had personally referred to the Police Minister allegations JM Kelly Project Builders general manager John Murphy had falsified statutory declarations in 2016.
The allegations, made by a contract supervisor about Mr Murphy's behaviour in correspondence copied to the departments of education and public works were revealed by the Sunshine Coast Daily immediately after JM Kelly Builders went into administration.
Education Minister Grace Grace said she was advised that "at the time of tender release and contract award for the construction project at Eimeo State School, the department was not aware of any concerns or issues with the performance of JM Kelly Builders".
"Since the department received advice that JM Kelly was being placed in administration, it has formally terminated the building contract with JM Kelly Builders for the project at Eimeo Road State School," she said.
"The department has engaged Building and Asset Services (BAS), a business unit of the Department of Housing and Public Works, to manage the completion of the project at Eimeo Road State School. Our aim is to give the local contractors previously employed on the project by JM Kelly Builders an opportunity to continue with the work at Eimeo Road State School, should they wish to do so."
Ms Grace failed to address questions about whether her department had an obligation to pay subcontractors for work done and materials supplied to its infrastructure projects.
Mr de Brenni said if there were any other suspected breaches of legislation relating to any matter including misleading or falsified financial statements, they would also be referred for appropriate action.
"I'm sure everyone in the community would expect someone who owns and runs a major business to tell the truth," Mr de Brenni said.
"Providing a false statutory declaration is obviously very serious and that is a matter for police. Anyone who signs a false stat dec weakens confidence in the system."
He said the Queensland Building and Construction Commission had confirmed to him it would take action under new legislation to exclude John Murphy from the industry for his role as JM Kelly Builders' director.
Previous attempts by the QBCC to exclude Mr Murphy as a person of influence for his former role as general manager of the failed JM Kelly Project Builders were thwarted by a successful QCAT appeal.
Mr de Brenni said that the appeal to QCAT by Mr Murphy had been successful but did not reflect either his or community expectations.
Changes introduced by the LNP during the Newman term allowed a number of government departments to undertake their own infrastructure projects.
Mr de Brenni said the changes removed transport, health and education from public works leaving them unsupported by an expert whole-of-government building advisor.
"Since I've been Minister I've been rebuilding the public works agency to ensure good practice," he said.
"It's easy to break things up and a lot harder to put them back together."
Under the Palaszczuk government, Housing and Public Works has regained control of infrastructure construction like stadiums.
Mr de Brenni said he had created new laws to strengthen legislation around Security of Payment and excluded persons to end the type of bankruptcies affecting the construction industry.
He expected to receive in the near future a report on the first phase of Project Bank Accounts on government projects valued between $1 million and $10 million.
Mr de Brenni said he expected it would give the green light to bring the Project Bank Accounts into the private sector.
"We need Project Bank Accounts there to ensure if a builder goes down, the money owed to subbies will still be there and it will go to those who do the work," he said.
A Queensland Health spokesperson said JM Kelly were awarded the tender for Bowen and Proserpine Hospital upgrades in May 2016 before they went into liquidation.
However the department didn't specify the JM Kelly Group company involved.
All attempts by the Sunshine Coast Daily to contact John Murphy have failed.