The comments come after an InDaily investigation revealed the director of a string of failed SA home builders was accused in Parliament of corporate misbehaviour as early as 2002.
A major investigation by InDaily published this week revealed that Angela Thomas was accused of being a “phoenix developer” nearly two decades ago. She was the director of three construction companies that fell into liquidation over the past year, leaving a devastating trail of unpaid debts across South Australia.
She first led a company in the mid-1980s and has built an array of corporate entities with Stephen Thomas, believed to be her husband, since.
Angela Thomas’s companies Liberty Homes Australia, Panoramic Homes SA and Omega Homes SA fell into liquidation within a period of eight months, owing hundreds of thousands of dollars to dozens of local tradespeople.
Under Australian federal law, corporate regulator ASIC can ban a person from future directorships if they lead more than one company that falls into liquidation within seven years.
“(Monday’s) InDaily article lifted the lid on the behaviour of a serial offender who has escaped proper punishment for years,” Master Builders SA chief executive Ian Markos said in a statement.
“Master Builders SA is deeply concerned that so many small local subcontractors are owed money. The flow on effect goes right through the industry.
“Phoenix developers are a blight on the industry and must be stamped out using the full force of the law.”
He said there was “an expectation that ASIC, which exists to enforce company laws to protect Australian consumers, investors and creditors, would thoroughly investigate an insolvency”.
“As revealed by InDaily on Monday, Angela Thomas was the director of three companies that fell into liquidation within just eight months.
“It is completely unacceptable this was allowed to happen.”
Business SA CEO Nigel McBride said the situation seems “incomprehensible” to small businesspeople and employees who fall victim to “serial offenders”.
“It does seem extraordinary that directors can continue to re-appear in situations that warrant investigation by regulators,” McBride told InDaily.
“It seems incomprehensible to the businesses who have been let down … that regulators wouldn’t prohibit serial offenders.
“The public would assume that those directors would be investigated and prohibited.”
Markos added that builders that fail to pay subcontractors give the construction industry a bad name.
“Every person in our industry deserves to be paid on time and in full for the work they were hired to do,” he said.
“(Builders who fail to pay) hurt the vast majority of builders who do the right thing, and quite frankly we are sick to death of them giving the industry a bad name.
“Sunlight, as they say, is the best disinfectant.”
He said Master Builders SA supported expanding the powers of the Commissioner of Taxation “to name and shame individuals and entities engaging in phoenixing”.
“The Commissioner should have the power to apply to ASIC to have disqualification orders drawn up for directors who engaged in phoenix activity or other breaches of directors’ duties.
“Master Builders SA also supports the establishment of a national Director Identification Number (DIN) regime so rogue company directors are easier to track.”
SA Small Business Commissioner John Chapman told InDaily subcontractors can take steps to protect themselves from unreliable contractors by doing extra due diligence before accepting jobs.
“All businesses who are dealing with other businesses should actually understand who they are dealing with,” he said.
“A lot of small businesses should be putting a lot more time into (due diligence).”
He suggested “word of mouth” in the construction industry was often an effective way to find out whether or not a particular business is reliable, or pays on time, and that small businesses should also consider taking out insurance to safeguard them in the event of another company failing.
He said phoenixing, when the director of a company tries to avoid paying its creditors, often by moving assets into a second company before the first company is liquidated, “does seem to happen on a regular basis”.
“Quite honestly, ASIC and others need to get on with it,” he said.
InDaily also revealed this week that state corporate regulator, Consumer and Business Services, is investigating Liberty Homes and “its related entities”.
According to a fact sheet on ASIC’s website, the corporate regulator relies on liquidators to inform it of illegal phoenix activity.
“While ASIC does not take action in every instance of alleged misconduct, we will take action where it will likely result in greater market impact and benefit the public more broadly,” the document reads.
“ASIC will generally only take action when evidence shows that directors intentionally misused company assets, or acted in a way that is contrary to the company’s best interests.”
In early January, then-newly appointed ASIC Commissioner Sean Hughes told the Australian Financial Review that under his leadership, the regulator would change in order to combat a perception that it is a soft regulator.
“The mantra at ASIC I can tell you going forward will be ‘why not litigate’?” the paper quoted Hughes as saying.
“It is inevitable there will be more litigation and people out there in the market will have to be prepared for a much firmer, much stronger regulator, who is far less likely to compromise and we are likely to be seeing (corporations) in the court.
“We are going to have to be bolder and stronger in our approach to law enforcement.
“The approach we will take to resolving disputes will inevitably entail the likelihood that we will take court action, so people shouldn’t be looking on ASIC anymore as some sort of soft option to push a problem out of the way.”
ASIC declined to comment on InDaily’s investigation when we contacted the regulator prior to its publication and again yesterday.
Angela Thomas has not responded to repeated requests for comment.
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