This is the fourth article in a series aiming to shine a light into the workings of the Tasmanian Forest Industry. Part 1 Paul Harriss: A Step Too Far? Part 2Contracts and Collusion: The Underbelly of Forestry Tasmania  Part 3 The Underbelly of Forestry Tasmania

Extract from a letter from FT to Gunns 9/Feb/2011

The key to unlocking the Giddings Government’s decision to allocate a substantial payment to Gunns from the Federal Government’s IGA funds in exchange for the handing back of the near- defunct Contracts 917 and 918 is a failure to fully and adequately discuss this complex and vital decision in Cabinet.

The Tasmanian Government Business Enterprise (GBE) Forestry Tasmania (FT) has two Shareholding Ministers: the Treasurer (Premier Lara Giddings) and the Portfolio Minister (Deputy Premier Bryan Green). These two act as, “The Shareholding Members”, on behalf of the shareholders - that is, the people of Tasmania - to ensure that ownership expectations of the GBE are being met via the receipt of Quarterly Performance reports and discussions with the FT Board.

Under “Continuous Disclosure” a Government Business has to immediately advise the two Shareholding Ministers in writing of any information that a reasonable person would expect may have a material effect on the value of the GBE.

The documentation concerning Gunns’ debts to FT in the period November 2010 - September 2011 - as provided to the Shareholding Ministers by FT -  should be tabled before Parliament at the request of the Liberal Party.

They must not be shredded.

I suggest that in this important and costly matter Cabinet played but a peripheral role in the allocation and disbursement of a very large sum of public money.

If Cabinet was involved it was not adequately informed as to the financial status of the recipient Gunns and the depth and extent of their financial problems. The actual dispute over contracts and money between Gunns and FT (thanks to the reporting requirements of the GBE, FT) was known only to two politicians:

Giddings and Green.

If these facts were known to the complete Cabinet, the two Green Cabinet Ministers would - or should have - resigned. This lack of knowledge within Cabinet of the true state of Gunns’ finances should be of great concern to the people of Tasmania.

I suggest that the Cabinet was informed that there was an Agreement with the Federal Government, worth nearly $277 million dollars to this State, signed off by everyone, “so please approve our allocations and expenditure. This State’s involvement is only $15 million and the Solicitor General and Treasury have approved the distribution of funds as both legal and equitable.”

With this payment to Gunns one could argue that Gunns was no longer broke. This Cabinet’s decision to gift money to a public company wiped an enormous $50 million dollars in debts from their bottom line.

Whether a Royal Commission will be able to extract evidence under oath over Cabinet discussions in July, August and September 2011 - to make an informed assessment of the detail behind the decision - only time will tell. For instance, did the involved Government departments view and comment on the Cabinet Papers, over the proposed disposal of the IGA funds?

The notion that there is a Board of Directors - the Tasmanian Cabinet - taking control and responsibility over the Executive on behalf of the State is a more a comforting thought than the reality.

Surely we, the public, have a right to know:

a) When and if Cabinet has given due and full consideration to a matter and when it has not;

b) When a Minister alone has made a decision;

c) Which matters require a decision by the whole Cabinet and which matters can be delegated to a single Minister; and

d) In particular, the right of the Premier to make decisions on behalf of the Government, without Cabinet approval. This should be clearly defined, and he/she should be obliged to tell the community when he/she is making decisions on behalf of the Government; and when it is the decision of Cabinet.

A Royal Commission into this possibly corrupt but certainly politically expedient deal should have the power to investigate the following within its Terms of Reference:

• The extent to which Cabinet was consulted prior to the $23 million dollar payment to Gunns?

• The increase in the originally agreed payment to Gunns of $11.5 millon to $23 million;  who authorised this increase; on what basis; and why $23 million?

• The extent to which the Cabinet was consulted over the payment of $11.5 million to Forestry Tasmania ... bearing in mind the Gunns debt to FT was over $26 million?

• Who made the decision to forgo the balance of the debt owed by Gunns to Forestry Tasmania of approximately another $15 million?

• How much of the original funds destined by the Federal Government for the Contractors was taken by the Tasmanian Government to pay Gunns. Who made that decision and when?

Tasmania - despite the efforts of (Former Premier Paul) Lennon - is not ruled by the directive of one. We are, and should be, governed by the collective decision-making of Cabinet. This lack of due process, be it over the distribution of the $277 million dollars in IGA funds, the Pulp Mill Permits, the removal of the Approval Process from RPDC to Parliament or the gifting of Logging Contracts to Gunns, should now be the subject of a Royal Commission.

There should be recommendations for a new and modern solution to the current lack of Cabinet control over the discussion and making of important decisions.

To be fair there is the possibility that a Minister is given approval by Cabinet to negotiate the terms of an Agreement with FT; then to seek approval of the deal when placed before Cabinet. Another variation could be that a deal has been made and agreed with outsiders then brought to Cabinet - with the only option of either rejection or approval. This could have been the case here if the Federal Government offered $277 million for a forest deal under the IGA. Under this scenario, the State Minister would then plead the case that Gunns, the Unions and the Contractors had agreed to the terms proposed - and the Federal Government would then sign the Agreement with the State.

The problem is that in the small introspective world that is Tasmania, both Minister Green and Gunns have form - and are not as a result readily trusted by thinking Tasmanians.

It must never be forgotten that the alarm bells did not ring over the Gunns’ payment, or if they did ring, they were neither heeded nor acted upon. The primary reason for the success of secrecy over process was that few in the Executive were actively involved. Had the whole Cabinet been involved - as it should have been - it would have been impossible with the Greens present for impropriety on this scale to have taken place.

That impropriety over due process was not exposed is due to the laws of defamation, which throughout the Pulp Mill saga were exploited by Gunns to the detriment of Tasmanians. Gunns -  described by the judge in the “Gunns 20 Case” as a “Vexatious Litigant” - used its then position of wealth, influence and power to bully its opponents into silence, a tactic that played a significant part in the failure by the public at large to call Gunns to account.

The process of Government in this State now requires that a Royal Commission be held. This would be the second involving persons and politicians associated with Gunns. This time no cash was offered by those in control of Gunns;  instead the company demanded and was given, government funds, discounts and favours by colluding politicians - thereby causing a substantial loss of revenue to Forestry Tasmania and to the resources of the State of Tasmania.

The following two extracts provide an insight into the tip of the iceberg that is the corruption of public officials by Gunns.

The letters from Gunns CEO (Greg L’Estrange) to Forestry Tasmania CEO (Bob Gordon) dated 27/Jan/2011 and then Gordon’s reply dated 9/Feb/2011 indicates the means.

First we have the CEO of Gunns stating that the price for the China Sales Contract was set by the Minister.  Then, due to disputes with FT over the price of the product, CEO L’Estrange seeks to involve both the past Minister and the current Minister for Forests, as well as their advisers. Gunns would only propose such an action if they expected to benefit by having the-then position of FT overturned.

Was the price higher via Gunns than direct from FT and was this caused by ministerial interference at the outset. Was a commission involved; if so to whom?

In the closing line L’Estrange says to FT, tell us and we will do it. This is a corporation saying to the Head of a GBE: We have the power to contact two Ministers for the purposes of having them attending a meeting to persuade FT that the price Gunns demanded should apply.

The tone of the letter indicates complete confidence that this will happen.

This would suggest that Gunns had a history of involving Ministers when they wanted to get their way. No other reason is apparent ...  unless FT was agreeing to the price and wanted the Minister involved; that, however, would be a conspiracy to involve the Minister in an illegal act.

Gunns letter also now tells us who organised Minister Green to call a meeting on 23 December 2010 between Gunns and FT;  The outcome of which delayed FT from exercising its rights, recovering its debts, removing Gunns from the forests, and avoiding the eventual loss of over $40 million dollars in public money.

Extract from 27 January 2011 letter Gunns to FT with redacted sections due to FOI confirming the above:


“The target price for China sales, initially ........... delivered and later reduced to ..... by agreement to recognise stock that needed to be sold to China was a firm commitment by Forestry Tasmania. That price was offered by the then Minister for Forests and accepted by Gunns. We could convene a meeting of the former Minister and the current Minister for Forests and their appropriate advisors to clarify their understanding and confirm what the intent of the offer of discounted price pulpwood for China actually was. Please advise if you wish for us to do that.”

Extract from a letter from FT to Gunns 9/Feb/2011 Frontispiece;


“China Sale matters…...You have inferred that the then Minister for Forests negotiated with Gunns Ltd for the sale of forest products by Forestry Tasmania under the China Sale Agreement. I do not accept this interpretation of events based on my own participation in the relevant negotiations. Even if such a negotiation by a Minister were to have taken place ,it would be irrelevant(and, possibly, illegal).”

The unnamed former Minister was David Llewellyn defeated in the 2010 election; the then current Minister was and still is Bryan Green.

The suggestion of Ministerial involvement was not denied by Gordon; “.....I do not accept this interpretation…...Even if such a negotiation had taken place….possibly illegal.”

It must be remembered that the Minister may only direct the Forestry Tasmania Board in matters of broad policy. If the direction hinders good corporate management and a dispute occurs then it may be referred to the Solicitor-General.

According to Gunns the two Ministers at some stage had played a part in the negotiations over the China Sale Contract.

Why would a Minister interfere between FT and the customer; it is not his place and it leads to the question, what is in it for him?

Was the Minister facilitating a deal, did FT agree and was the Premier consulted before and if the matter was put before Cabinet.

I suggest it is clear that the Tasmanian information gatekeepers The Mercury, The Examiner and ABC - throughout this tortuous saga - have played the part of foot-soldiers to the interests of Gunns and the Pulp Mill and have published as advised, or by press release, from the principals involved.

For this they now stand condemned.