The corporate watchdog was forced to dump its longstanding security contractor after learning the Australian Federal Police was investigating the company for suspected links to an outlaw motorcycle gang, illegal phoenixing, fraud offences and money laundering.
The Australian Securities and Investments Commission’s issues with its external security contractor have emerged after the security firm sued ASIC in the NSW Supreme Court, alleging its director was pressured by the watchdog into agreeing to tear up the contracts because of the investigation.
Premier mainly worked with ASIC but also performed vetting work for other government agencies. It provided more than 7,000 security clearances for the government.Credit:Darrian Traynor
The court this month dismissed the claim filed by Premier Protection Agency (Aust) against ASIC, finding that ASIC had not exerted any undue pressure during an allegedly heated phone call in 2016 when the regulator revealed it would be severing ties with Premier because of the AFP investigation.
The judgment provides the first glimpse into ASIC’s troubles with the security contractor it did business with for 17 years.
The court heard ASIC cancelled its contacts with Premier shortly after receiving a tip off from the AFP about its investigations and the raids on the homes of Premier director Rob Martorano and his business partner Steven Davies.
According to the judgment in the contract dispute, Premier provided building security services and vetted staff members and contractors for security clearances.
This included the scrutiny of the finances, family members, relationship history, travel history, and any personal, business, corporate and trust associations of a person under scrutiny. Premier mainly worked with ASIC but also performed vetting work for other government agencies. It provided more than 7,000 security clearances for the government.
A spokesman for the regulator said the regulator had launched a full review into Premier following the allegations. “ASIC reviewed all aspects of the matter and was satisfied no sensitive information was compromised and nor were any operational aspects,” the spokesman said.
According to the judgment in the civil dispute, ASIC scrapped the contracts with Premier after it received a letter from AFP commander Brett James.
“Investigations have identified that key staff in PPA (Premier Protection Agency) have links to members and/or former members of Outlaw Motorcycle Gangs (OMCG) and may be engaged in committing fraud to further their business interests,” James’ letter which was tendered as evidence in the contract dispute case says.
Premier Protection Agency lost its contract with ASIC following a tip off by the AFP.
“Investigations have identified that PPA appear to have liquidated and ‘phoenixed’ their company in 2014 after failing to pay a considerable debt to the Australian Tax Office (ATO) yet continued to maintain their business relationships with ASIC and AGSVA (The Australian Government Security Vetting Agency) without disclosing these facts to either agency,” James’ letter continues.
“Illegal phoenixing” occurs when a company’s director looks to avoid their business debts by setting up a new company to operate a business while the old business holds all the debts to creditors.
One of ASIC’s security staffers, Mahmoud (‘Michael’) Daher, was charged with several offences relating to illegal access to highly confidential databases in 2016 to see if any alerts had been placed on him, members of his family and associates in the tobacco trade.
The contract case heard Daher was suspected by the AFP of being linked to a group of people involved in illegal tobacco imports. Daher had worked with ASIC since 2006 and before that he had worked with Premier.
At least one other ASIC staffer was also suspected of receiving information that had been illegally obtained from the confidential databases, according to the judgment.
Daher plead guilty and received an 18-month sentence of full-time imprisonment with a recognisance release order after nine months. However, in 2019, the conviction was quashed.
The court heard ASIC cancelled its contacts with Premier shortly after receiving a tip off from the AFP about its investigations and the raids on the homes of Premier director Rob Martorano and his business partner Steven Davies.Credit:Alex Ellinghausen
The AFP also accused Premier of “illegal phoenixing” by setting up a new company to avoid a $1.2 million debt with the tax office. The court heard Premier had not been filing proper documents with the tax office about its business. The court also heard that Premier arranged for staff at ASIC to sign off on the new contracts with the new company while the original Premier entity was placed into liquidation.
Martorano, who was a director of both the old Premier entity and the new Premier entity, claimed that ASIC’s representatives had pressured him into agreeing to tear up the contracts after confronting him with serious allegations about his employees and against him.
“AFP officers made allegations to two of my staff members… that someone might be buried up [sic] the concrete in front of the office,” a file note written by Martorano after the phone call read. He said he was also threatened his company would receive a black mark and would be blocked from any further government work. ASIC denied these allegations.
Justice Michael Slattery found that while Martorano was stressed after the call and believed he had been threatened, it was highly unlikely that ASIC’s staff made any actual threats.
Slattery also highlighted in his judgment that the allegations against Martorano and Davies had only been made by the AFP and had not been tested.
“Mr Martorano, Mr Davies and (the new entity) Premier deny the allegations of criminal conduct and so far as the Court is aware they have not been tested in any criminal trial.“
Martorano did not respond to enquiries.
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