Australia giving Israel’s bomb-maker Elbit Systems a $917m defence deal is just the latest in a long and secretive history of military and aerospace activity. For the first time, Jommy Tee investigates Australian Zionist corporate connections with Israel which stretch to Australia’s most powerful lobbyist Mark Leibler.

Senior executives of peak the Zionist Federation of Australia (ZFA) and the Australia Israel Jewish Affairs Council (AIJAC), have been associated with companies that had business links with the Israeli military and aviation company, Israel Aerospace Industries (IAI) – formerly known as Israel Aircraft Industries.  

The previously undisclosed links, which stretch back as far as 1980, mean prominent Zionist lobbyists – including the doyen of the Australian Jewish community, Mark Leibler – were engaging with Australian and Israeli politicians and senior government officials, while at the same time companies they established, or were directors of, conducted business with the aviation, drone, military aircraft and weapons behemoth, IAI.  

Israel Aerospace Industries and its subsidiaries, won numerous lucrative Australian government defence contracts while the business relationships were in place. 

IAI sales to the ADF include: Electronic Warfare (EW) systems for AP-3C Orion aircraft, Maritime Patrol Radar for Orion aircraft, supply of the Heron UAV systems to the RAAF which were operational in Afghanistan for 5 years, ECM pods for FA/18 Classic Hornets, Wedgetail ESM and many others.

On behalf of IAI, the companies acted as sales, marketing and distribution representatives, political lobbyists, and as a corporate agent.

There is nothing illegal in any of the arrangements and there no suggestion that the companies and its executives or its employees were involved in any wrongdoing. 

However, it raises questions about potential conflict of interests and whether those interests were disclosed to relevant Australian federal and state government ministers and officials, and the Zionist organisations, over the decades.  

Any discussion regarding bilateral links between Australia and Israel involving technology, trade, defence and security potentially was a potential cross-over point.

The complex web of business arrangements can only be understood by detailing the intersection of Mark Leibler and his firm Arnold Bloch Leibler, and the Intercorp group of companies and the Lipshut family and their respective relationships with IAI.

In the beginning, there was 1980

A shelf company was formed in late June 1980. The company went by the innocuous name of Eastfleet Pty Ltd. The paperwork was lodged by law firm Arnold Bloch Leibler (ABL) and the directors of the company were three ABL solicitors, including Arnold Bloch and Mark Leibler. The secretary of the company was Mark Leibler.

Within a month, Eastfleet changed directors with Sonnie Lipshut (and another business partner) becoming the directors. The company’s name was changed to Intercorp (Australia) Pty Ltd.

Israel, Gaza and Australian politics: master lobbyist Mark Leibler reveals how power really works

Documents lodged by Intercorp (Australia) with the corporate regulator declare the company to be “Trustee – Import/Export Consultants”.

The company predominantly flew under the radar, aside from an occasional mention in the Australian jewish press where the company was described as an importer of high technology products from Israel.

On September 4, 1984, the company took onboard two additional directors – the respective spouses of the existing directors. The change saw Sonnie Lipshut’s spouse – Pearl Lipshut – becoming a director.

1984 – a new(ish) executive broom at the Zionist Federation of Australia

In April 1984, Mark Leibler was elected president of the ZFA, it followed a stint a vice-president of the organisation and as president of the State Zionist Council (SZC) Victoria.  

Joining Leibler at the ZFA, was Pearl Lipshut who took up the role of executive director.

It was no surprise that the president and executive director formed a strong team, as they had previously worked together at the State Zionist Council in identical roles. Pearl Lipshut was executive director of the SZC from 1977 to 1984 while Leibler was president between 1980 and 1984.

Mark Leibler at IAI visit. Source: SMH

Pearl Lipshut described it as:  “Working with Mark Leibler (then State Zionist Council president) meant keeping my mind switched on in top gear. It was a natural progression to go from there to the Federation when Mark became its president, as we agreed we worked well together.”

In an interview with the Australian Jewish News published on September 14, 1984 – ten days after she was appointed director of Intercorp (Australia) – she said her husband represented “several hi-tech Israeli companies in Australia”.  

There was no mention of her directorship in the company.

1985: the incredible flights of VH-JJA

Aside from manufacturing military aircraft, IAI also produced corporate jets including the Westwind 1124A. Historical aircraft society websites detail a Westwind, with the registration number VH-JJA, being registered to Pel-Air Aviation, a Sydney-based firm, in March 1984.

At the beginning of 1985 the plane made several flights to and from Papua New Guinea. Some of those flights came under the investigation of law enforcement officials and were the subject of a PNG Commission of Inquiry.

VH-JJA was chartered by Peter Johnstone with the intention of flying from Sydney to Bangkok return by January 30, 1985. Johnstone, living in Cronulla, and a man of little obvious wealth, hired the jet at the rate of $1500 an hour – at an all up cost of $52,000. 

Johnstone had links to various Sydney criminals, drug traffickers, corrupt NSW police and assorted con-men.

The Westwind jet, crewed by two pilots, left Sydney on 14 January and flew to Singapore via Darwin. The plane stopped in Darwin and picked up two sets of diving equipment and seven oxygen bottles.

The pilots met up with Johnstone, who had flown to Singapore the day before on a commercial flight. From there Johnstone again flew on ahead to Bangkok and where he again rendezvoused with the pilots of VH-JJA on January 18. The party of three spent 48 hours in Phuket, and picked up four Dutch people Johnstone had befriended in Bangkok. Johnstone picked up the tab for his 6 friends.  

The group then returned to Bangkok, where Johnstone met with a business acquaintance described by the PNG Inquiry chief as one of the world’s biggest drug exporters.

Business apparently went well and Johnstone instructed his Westwind crew to fly to Palau – a world class diving destination. VH-JJA departed Bangkok on January 25 and landed in Palau.

After four days of scuba diving, Johnstone then instructed the pilots to fly to Wewak in north PNG. Johnstone changed his mind en route and directed the pilots to instead fly to Port Moresby. From there, the plane was to fly to Sydney, but just before the plane was to depart Johnstone turned to his two pilots and said “Hey, I think I’ll get off here. I have some business to attend to….”. The jet departed Port Moresby, sans Johnstone, and landed in Sydney where there was a brief and cursory search of VH-JJA at Sydney airport. Nothing was found.

Johnstone having bailed from VH-JAA, spent the night in Port Moresby before returning to Sydney the next day on an Air Niugini flight.

The Commission of Inquiry found the likely purpose of Johnstone’s trip was to collect drugs in Thailand. He had been careful not to fly out of Australia, or back in, aboard the Westwind jet, knowing he was likely under police surveillance. 

As Pel-Air Aviation regularly flew in and out of PNG delivering freight a routine flight by the Westwind was unlikely to arouse much suspicion. The inquiry reported: “We think the purpose of the trip was to pick up drugs in Thailand … and we believe that he may have succeeded”.  The inquiry raised the possibility that the drugs could have been concealed in the diving tanks.

The drama for VH-JJA was not yet over, barely a month later it was embroiled in further drama.

The anonymity of Intercorp (Australia), and its business dealings shattered on the runway of Port Moresby on March 6, 1985. Sonnie Lipshut was returning from Papua New Guinea after meeting Prime Minister, Michael Somare.  

Hot-footing it

The trip turned out to be anything but an “under the radar” business trip.

Together with two other Australian businessmen – John Johnson and John Aston – Lipshut had flown to PNG to discuss a series of aviation deals with Prime Minister Michael Somare.

Johnson and Aston were connected to companies associated with Pel-Air Aviation who were seeking new air freight services.

As the three men were on the Pel-Air plane – an Israel Aircraft Industries Westwind jet with registration VH-JJA – a drug search was conducted, or attempted, depending on conflicting official reports.  

The attempted search by PNG police and customs, followed a tip-off from the Australian Federal Police. Official reports from the PNG National Drug Squad and Customs make for incredible reading.

PNG Police and Customs drug detection dogs gave positive signs when sniffing out a panel in the cabin of the plane and when sniffing out baggage but no drugs were found.

The passengers of VH-JJA rang Somare advising him the plane had been detained. Somare, together with his Foreign Affairs Minister, the Minister for Justice and several Prime Minister’s Department officials hot-footed it out to the airport, getting there after the search ended.

The official reports also detail how police were unable to search another Pel-Air plane which had left earlier in the day. The respective pilots of VH-JJA and the other Pel-Air had previously been seen leaving the airport and taking a rental car – rented in the name of one of the VH-JJA passengers.

The political heat was such that a commission of inquiry was established to investigate the business deals and the circumstances surrounding the search – and then later extended to include investigation of drug trafficking operations.

Source: SMH

The reporting of the allegations and the inquiry shone a light on Sonnie Lipshut and Intercorp (Australia). According to media reports, Johnson and Aston introduced Lipshut to the PNG Government. 

Intercorp intrigue

Lipshut was there in PNG to ink a deal for the PNG defence force to purchase three Israeli Arava planes. Intercorp Australia was the Pacific agent for Israel Aerospace Industries – the manufacturer of the Arava planes. 

This was the first public mention that Intercorp (Australia) was connected to IAI. 

The official report from the PNG police named Mr Sonnie Lipshut as being employed by Intercorp Australia.  

Lipshut’s name appears to have been formally revealed by the Australian press as being a passenger on the plane in September 1985 – some 6 months after the incident.

Somare was forced to make a statement to the PNG Parliament in June 1985 advising Intercorp acted as a sub-agent for Israeli Aircraft Industries.

The PNG Prime Minister added that the three Aravas were purchased because “IAI provided a package – and a contract – which we found acceptable and which our defence and other advisers [found] acceptable.

PNG “conned”

The Commission of Inquiry heard PNG had been “conned” in buying the three Arava military aircraft for $A14 million – had the PNG government bought the planes direct from IAI they would have saved $A1.3 million. Counsel assisting the Inquiry however said there was insufficient evidence to prove there had been irregular commissions paid. Nonetheless, the Inquiry found two Australian businessmen had split $235,000 for acting as go-betweens in the sale of the Israeli aircraft.

In the end the Inquiry cleared the parties of any impropriety associated with the aviation deals. the inquiry also criticised Somare for questionable decision-making for intervening in the drug search, however there was nothing untoward in his intervening in the search.

The Inquiry was unable to confirm or deny that planned heroin shipment landed in Australia

Shady back stories

There are however back stories to both John Johnson and John Aston concerning the company they kept and their business respective dealings.  

Before being associated with Pel-Air Aviation, Johnson was managing director of Jet Charter Airlines, which both traded under the name WIngs Australia and morphed into Wings Australia Pty Ltd – a company that was wound up in December 1984 owing more than $6 million. The assets of Wings Australia were sold to Peldale Pty Ltd – which then changed its name to Pel-Air Aviation.

Sydney accountant, Henry Victor, in 1981 set up a tax shelter to lease jet aircraft in association with Wings Australia. Wings Australia was part of a tax shelter involving leased jet aircraft created in 1981 by Sydney accountant, Henry Winter.

Aston’s chequered past, included adversely being named in the 1983 Stewart Royal Commission into drug trafficking. At the time he used his solicitor’s trust account to launder money from the notorious Nugan Hand bank and diverting money to members of the Mr Asia drug syndicate.  

Employees of Wings Australia and its Phoenix-like reincarnation, Pel-Air Aviation, had been on the radar of crime fighting authorities on suspicion of drug trafficking at the time.

The plane boss, the plane!

According to historical aircraft society websites, the Israel Aircraft Industries Westwind 1124A corporate jet was first registered on 28 March 1984 and given the registration number VH-JJA.

The aircraft’s operator/owner was listed as Wings Australia, although some aviation sites listed the owner as Pel-Air Aviation, the successor company to Wings Australia. But what became of the now infamous IAI Westwind corporate jet, officially registered as VH-JJA?

The plane’s registration was transferred back to the manufacturer Israel Aircraft Industries sometime in March 1985, the same month as the infamous PNG runway kerfuffle.

An updated listing of Australian civil aircraft register – sourced from material from the then Department of Aviation – lists IAI’s address as “c/- Arnold Bloch Leibler”.

One account suggests the plane while in Australia was only ever a demonstrator – the plane returned to Israel in September 1986.

April to May 1985 – Intercorp V2.0, V2.5 … bye bye Intercorp V1.0

Immediately after Intercorp (Australia), acting as a sub-agent for IAI, sold three IAI Aravas to the PNG defence forces, the brand expanded.

Two more companies were created. The first was set up on April 29, 1985, and simply called Intercorp Pty Ltd. The directors of the newly formed company were exactly the same as Intercorp Australia – namely Pearl and Sonnie Lipshut and two other business partners holding the directorships.

Pearl Lipshut. Source: SMH

The company in annual returns supplied to the corporate regulator listed itself as “Trustee – Commission Agents”.

A month later the paperwork for Astra Aviation was lodged. Astra Aviation was created to predominantly to sell IAI’s Astra executive jet into the Pacific region, Astra Aviation having acquired the rights to distribute the jet.  

Only Sonnie Lipshut and the same two other business partners were directors of Astra Aviation.

Press reports stated by acquiring the rights for Astra and Westwind planes it was the final piece of the jigsaw for Intercorp – now being the distributor of “the total range of IAI products”. The reports stated the Intercorp Group had been representing IAI since 1980 and “for marketing IAI aircraft to various governments and Defence departments”.

Corporate juggle demonstrator

Press reports stated that Astra Aviation had based a Westwind 2 demonstrator aircraft in Sydney to assist in marketing and establishing the plane’s identity in Australia. Full spare parts and maintenance support for the new arrangements were to be provided by Pel-Air.

A decade later, Astra Aviation would change its name to Intercorp Telecommunications. Arnold Bloch Leibler was not involved in establishing either Intercorp or Astra Aviation.

The upshot of the corporate structuring to act on behalf of IAI was Sonnie Lipshut being a director of all three companies with Pearl Lipshut being a director of two (Intercorp Australia and Intercorp). 

1985 was also the year that Intercorp (Australia) stopped trading. Documents subsequently lodged with the corporate regulator in 1989 – when the company was liquidated – claimed the company had stopped trading since 1985 and held no assets.  

For reasons unknown the company changed its name to Rampante Investments in July 1987.

The liquidation documents showed a liability to PNG Aviation Services and pending legal claim of $605,785, unspecified damages, and interest in respect of a breach of contract.  

PNG Aviation Services previously acted as the PNG agent for IAI. It was also the subject of the previously mentioned PNG inquiry with regard to its role in selling the government’s corporate jet. The Inquiry cleared PNG Aviation Services and the company and directors won a subsequent defamation case against Prime MInister Michael Somare when in parliament he alleged the company was criminal and negligent. The comments were subsequently reprinted in a government advertisement a few days later and hence the lawsuit.

1987: Tel Aviv time

As IAI was gaining a foothold into the Australian and Pacific market, Mark Leibler and Pearl Lipshut wearing their Zionist Federation of Australia hats were busily engaging with politicians of all persuasions in Australia and Israel – successfully pushing pro-Israel policies.

Leibler and his executive director, Pearl Lipshut, often attended high level meetings together, both in Australia and when travelling to Israel as part of Australian Zionist delegations to Israel.

One such trip saw a delegation, including Leibler and Pearl Lipshut, landing in Tel Aviv in mid-1987. Press accounts detail some of their journey, including a visit by Leibler to IAI.  

Leibler was a guest of Moshe Keret, the president of IAI – apparently “in appreciation of his efforts in assisting trade between Australia and Israel”.

The erstwhile president of the Zionist Federation of Australia, met with senior IAI marketing executives and toured the Bedek division of the company which refurbished aircraft worldwide and an inspection of an Air Force base. 

The head of the IAI, Moshe Keret presented Leibler with a wall clock inscribed “Mr Mark Leibler, A.O., on the occasion of your visit to Israel Aircraft Industries for all your endeavours”.

For context, Mark Leibler, through his law firm, Arnold Bloch Leibler (ABL), had in 1980 created the shell company that became the first Intercorp company – Intercorp (Australia) that was acting as distributor of IAI product into Australia. As aviation records also indicate ABL was the contact address for IAI’s registration (VH-JJA) of the Westwind plane that gained notoriety in PNG.

On the other hand, Pearl Lipshut, the executive director of the ZFA, was also a director of two of the three Intercorp companies representing IAI in Australia – while her husband was managing all three companies.

1988: ZFA director departs – Australia awards $50m contract to Israel Aerospace

The longstanding working relationship between Mark Leibler and Pearl Lipshut ended in July 1988. The presidential and executive director team had been together for 8 years, spanning two Zionists organisations – the State Zionist Council of Victoria and the Zionist Federation of Australia.

Pearl Lipshut flagged her departure in March and retired in July. During her professional career she made 20 visits to Israel. Mark Leibler was generous with his praise for his trusty lieutenant declaring she has been a magnificent asset to the Federation and much of what we (ZFA) succeeded in doing would not have been possible without her”.

Pearl Lipshut would still be involved with the ZFA for another four years, but in an honorary capacity, including responsibility for public relations.

The same month as Pearl Lipshut’s retirement, and a year after Mark Leibler’s visits to IAI, the state-owned Israeli company struck pay dirt and won a $50m Australian government contract to supply airborne refuelling systems to RAAF for its fleet of Boeing 707s.  

The deal was, at the time, the biggest ever contract for arms-related equipment from Israel.

It was also the “first major defence contract awarded to Israeli industry”.

The contract was awarded ‘despite a series of Australian diplomatic protests” to the Israel government over its treatment of Palestinians.  At the time Australia press reports listed IAI as being “publicly owned” when in reality the company was Israeli state owned.

The alleged “public ownership” of IAI was used by the Australian government as a justification in support of the IAI deal – claiming the offer came from “a company without direct links to the Israeli government, and was not tied to any other involvement with Israeli military technology”.

In fact IAI had since the 1960s made military technology – the Gabriel sea-to-sea missile (1964), created a subsidiary company, the defence electronics manufacturer Elta Electronics (1967), built the Nesher fighter aircraft (1970), built fighter bombers for the Israeli airforce (1975), and built the Scout unmanned aircraft (1979).

Enter Kim Beazley

Defence minister Kim “Bomber” Beazley was quoted as saying the Israelis had offered the best deal, beating the US multinational Boeing for the job. Boeing would have offered the advantage of “total familiarity with the conversion of its own aircraft design”.

Instead, the Israeli conversion by IAI’s Bedek Aviation Division – the very same division that Mark Leibler had visited a year earlier  – was going to carry out the work, involving the overseas purchase of the equipment with Australian content comprising installation and manufacturer of some parts via Hawker de Havilland.

According to one scribe, the inflight refuelling project was a “pet project” of the RAAF and Defence Minister Beazley.

The deal caused internal friction within ALP, especially from the left-wing of the party, in particular Canberra MP, John Langmore. The decision also caused diplomatic frisson, provoking a protest from the PLO representative in Australia, asking the Australian government not to sign the deal with IAI.  

Both the internal political and diplomatic tension held no sway and the deal proceeded.

1989: Intercorp V3.0 …. and another contract to IAI, Hawkey and Hawker

During May 1989, the law firm Arnold Bloch Leibler, established another shelf company – Elderton Pty Ltd, with Mark Leibler a director, as well as secretary of the company. 

On August 10, the corporate regulator was informed the company had changed its name to Intercorp Defence Industries Pty Ltd. The application for reserving the new name – Intercorp Defence Industries – was lodged with the regulator on 20 July and personally signed by Mark Leibler. 

The documentation lists the company (renamed from Elderton) as “defence technology suppliers and joint venturers”. Additionally, Intercorp Pty Ltd had provided consent to the proposed name of the newly formed company – no surprises there given the same directorship and ownership interests.

The day after Leibler signed the name reservation form, he vacated his directorship with Intercorp Defence Industries having Sonnie and Pearl Lipshut and their two business partners from the other Intercorp group of companies stepped into the directorship roles of the new company.

Roll forward a few months and In November, just ahead of the South Australian state election, Prime Minister Bob Hawke together with South Australian premier, John Bannon, attended the opening of the Australian Submarine Corporation’s construction site in Adelaide.  

As often happens the occasion was used to electioneer. Hawke announced the awarding of $90 million defence contract to a South Australian company, AWA Defence Industries. The contract was for the installation of new electronic equipment for the RAAF’s P3C Orion Maritime Patrol aircraft.

$40 million of the contract was to be spent in South Australia, “with much of the work being undertaken by AWA Defence Industries and Hawker de Havilland”.

In late November a report in the Israeli newspaper Ha’aretz surfaced with a story that Elta Electronics – an IAI subsidiary – had won a tender to supply $US60 million worth of electronic and other warfare systems to Australia. The report alluded to an agreement signed with an Australian commercial company to deliver the equipment.

Confirmation that IAI subsidiary, Elta Electronics, was the principal sub-contractor to AWA Defence Industries was revealed in an article RAAF News in February 1990. “Much of the Electronic Support Measures (ESMs) will come from the principal sub-contractor, ELTA, an Israeli company which is a world leader in this field”.

It was heady days for IAI and for all those involved.

1990s to 2007 – the Interregnum

As the focus of this story is the connection of individuals – while they were officials of Zionist organisations – and their involvement, or their companies involvement, with IAI, our story resumes apace from 2008 onwards.

The intervening years did contain some events which add context.

Intercorp (Australia) – the first company in the Intercorp stable and spawned from a Mark Leibler-established shelf company (Eastfleet) – was formally liquidated in 1990.  

Pearl Lipshut was director of the company from 1984 up until its liquidation, while at the same time being executive director of the Zionist Federation of Australia. Pearl Lipshut’s active involvement with Zionist organisations ended in approximately 1993.  

However, she remained a director of Intercorp Pty Ltd until 1996 concluding the last of her director’s role with any of the Intercorp-badged companies. Her sons, Garry and Daniel, then became directors of the company and remain so to the present.

The other business partners (who we have decided to not name) left Intercorp Pty Ltd in 2003. One of the partners remained onboard with Intercorp Defence Industries and Intercorp Telecommunications until 2007.

Leibler from ZFA to AIJAC

Meanwhile, Leibler moved from being President of the ZFA in 1994 to become National Chairman of the Australia Israel Jewish Affairs Council – a position he still holds today.

For its part, IAI – the Israeli military aviation equipment manufacturer – that was ably represented by in Australia and the Pacific by the Intercorp group of companies registered as a foreign company with the Australia corporate regulator in 1992.

The nominated corporate agents for the company were Israelis operating out of Canberra. Historical phone directories show that in at least the early 2000s Intercorp was listed in the Canberra phone directory at an address which was also the nominated address IAI had given to the corporate regulator.

Over this period, Intercorp continued to rep for IAI. IAI continued to sell either directly or indirectly (through subcontractor or joint venturer arrangements) into the Australian government defence market.  

The Lipshut family even established an annual bursary and scholarship in 2000 for the Australian Air Force, providing aviators below the rank of corporal to complete full-time studies with a view to commission.

And like sand through an hour glass, Mark Leibler continued to be perhaps Australia’s most effective lobbyists for Israel, gaining the confidence of many an Australian prime minister. All while advising some of the wealthiest members of Australia’s Zionist community such as Frank Lowy’s Westfield group on tax minimisation. 

One of the key initiatives the AIJAC introduced was the so-called Rambam fellowships. The program ran, and continues to run, sponsored trips for Australian politicians, journalists and senior political staffers – see our previous article.  

The caravan to Israel – journalist jaunts, political passengers, diplomatic dispatches and jobs lost

Coincidentally, the program was launched by former Defence minister, Kim Beazley in 2003, who while Defence Minister had awarded a $50 million contract to IAI back in 1988.

2008  – the political lobbyists

In 2008, the first genuine lobbyist register was introduced. Prior to that time, a weak and ineffectual register had been introduced by the Hawke government in 1983 – a register that was voluntary and not able to be accessed by the public. It was so ineffectual it was abolished in 1996 by the Howard government with nary any opposition.

The Lobbying Code of Conduct of 2008 established the rule of contact between lobbyist and government.  

On June 5, Intercorp Pty Ltd registered as a political lobbyist and advised that Israel Aerospace Industries was a client (NB: IAI changed its name in 2006 replacing the “Aircraft” with “Aerospace”). 

This was of no real surprise given that the business interests of Intercorp and IAI had been bound together since the early 1980s. Historical entries of the register show that IAI has been a continuous client of the registered political lobbyists since that time to the present.

The new joint venture …

In 2008, Intercorp formed an informal partnership with Melbourne-based advisory firm SLM to form SLM/Intercorp. When the partnership was formed, Intercorp was spruiked as a company with an “unparalleled track record of success”.  

Since 1980, the company managed the commercial and marketing needs of Israeli companies including, Israel Aerospace Industries and other defence companies: Rafel, ECI Telecom, and Israel Military Industries “concluding more than $750 million of business”.

No doubt a tidy bit of work and juicy earner for the company listed as a “Trustee – Commission Agent”.

The partnership between SLM and Intercorp petered out in approximately 2012.

Another big deal

Business got a whole lot better for IAI’s wholly owned subsidiary, Elta Systems, when it was awarded $80 million deal in June with the Australian Defence Force to supply radar jamming electronic countermeasure equipment for military aircraft.

The contract – the subject of several variations over the ensuing months (and not an uncommon thing in Defence procurements) within the space of a year – eventually settled at $200 million.

Arnold Bloch Leibler: agents for IAI (2010-2020)

Business was good for IAI and for whatever reasons they pulled out their local corporate agents at the beginning of 2010. Between 1992 and February 2010, IAI had four different local corporate agents all with ties to the company and all based in Canberra.

Things changed in February of 2010.

ABL, the law firm that bore its senior partner’s name took over the role of the local corporate agent for the Israeli state-owned military and aviation company. To be precise, ABL Fiduciary Corporation Pty was nominated as local agent with corporate regulator. The directors of ABL Fiduciary comprise the legal partners in ABL.

A local agent is liable for all acts and matters of the company and acts as the contact point in all matters pertaining to the corporate regulator.

The address of IAI for corporate regulatory purposes was given as Arnold Bloch Leibler (ABL). It is of course not the first time ABL had directly represented IAI – we go back to 1985 when ABL’s address was provided with regard to the registration of the infamous Israel Aircraft Industries’ VH-JJA Westwind corporate jet.

This arrangement does not appear to have been an interim measure until IAI sent across another representative from the company, seeing as ABL was appointed to the role for a whole decade (2010 – 2020).  

Mark Leibler and his firm’s direct involvement can be traced back to 1985, and indirectly through the creation of shelf companies for IAI’s Australian agents/import export consultants/marketing and distribution representatives/political lobbyists – the Intercorp group of companies.

A decade that many believe was a golden decade for Australia-Israel bi-lateral relations.

A golden decade of bilateral policy

The decade from 2010 witnessed much churn across the Australian political landscape. No less than five prime ministers and more than a dozen different defence ministers – the vast majority at some stage during their parliamentary careers having accepted sponsored travel from pro-Israel lobby groups such as the AIJAC.

When Australia-Israel relations are in play there is little doubt Mark Leibler, and the association he heads, the AIJAC, throw themselves into the policy fray both publicly and privately. The same could be said for the Zionist Federation, of which Jeremy Leibler – Mark’s son and also a partner in ABL – has been the chair since 2018.

Some of the policy initiatives that were orchestrated during the decade – the latter half of the decade in particular – cover aviation policy, defence policy, technology and innovation, cyber-security, and trade policy.

From 2016, Israel and Australia signed an Air Services agreement. In 2017, a technological innovation cooperation agreement was signed. This was soon followed by expanded cooperation on national security, defence and cyber security – including strategic talks between officials in 2018 and 2019.

Australia also opened an Australian trade and defence office in West Jerusalem with intention of facilitating trade, investment and defend industry partnerships. A memorandum of understanding on cyber security cooperation was also signed.

In 2019, a tax treaty to prevent double taxation and tax avoidance was signed.

During the decade, major Israeli military hardware companies, including IAI and Intercorp, participated in defence and aviation trade shows. Israeli weapons and military hardware companies were regular participants in the trade shows.

While the AIJAC and the ZFA were advocating for greater and improved relations between the two countries, often in areas which overlapped with business interests of Israeli military and defence companies, its most senior representative – through ABL – were acting for the state-owned IAI.

What of Intercorp during the decade?

Just before the decade commenced, Intercorp Telecommunications (previously Astra Aviation) was deregistered. In 2011, Intercorp Defence Industries (previously the ABL-established shelf company Elderton) was deregistered.

Another Intercorp branded company, Intercorp Technology, was established in 2012; the directors being the sons (Garry and Daniel) of Pearl and Sonnie Lipshut.

For its part, Intercorp Pty Ltd, the company established in 1985, went about its business of repping for IAI and being the registered political lobbyist for IAI. At the same time, according to Daniel Lipshut’s CV, while being the managing director of Intercorp, was over the period 2012 to July 2019 the “Managing Director – Australia” for IAI North America.

Intercorp also starting winning tenders with the Australian government in its own right including a $2 million military science and research contract. On the philanthropy front the Lipshut Family Bursary continued to be given out each year to a worthy Royal Australian Air Force recipient.

The Australian defence procurement system can be characterised by a revolving door of politicians, lobbyists, consultants, former political staffers, former senior military officers and bureaucrats.

The complex web of legitimate business and legal interactions between IAI, Intercorp and ABL demonstrates this.

However, the overlap between the Zionist representation role of the individuals concerned, the potential conflicts of interest between that role and the roles of the companies for which they acted, and how these were managed, and whether they were revealed to governments, suggests a more shadowy underbelly.

Client State: Australia the “51st state of the US” for deadly weapons production

This post was originally published on Michael West.

If you reckon Woolies and Coles, Energy Australia or AGL are the worst culprits on cost of living, think again. Prices expert Joel Gibson on the rapacious industry which has jacked up prices by 534%.

There’s a silent killer in Australian household budgets right now but it’s none of the bills that are getting all the attention. 

While supermarkets and energy retailers hog the headlines, Industry X is quietly dishing out the biggest price hikes  in 22 years, averaging around 15% and rising sometimes to over 50%.

Industry X is a duopoly with two businesses owning about 2 in 3 retail customers. Add in the 3rd and 4th largest market shareholders, and between them they have 84% of us on their books.

Here’s how 3 of the 4 biggest providers fared in recent results announcements:

• Provider A’s net profits in the relevant division were up 534% compared to 6 months ago. Prices were up 12-18% depending on the product category.
• Provider B’s net profit was down because of a $304million asset write-down but on a like-for-like basis, profit was up 85% and cash earnings up 76% over 6 months. Prices were up 12.5%, “the strongest in nine years”.
• Provider C’s annual net profit in Australia and the region was up 131%. Prices were up 12.5% too.

If you know which Industry I’m writing about, you probably read the business news, because none of these results made page one.

It’s general insurance – home and car insurance mostly – and Providers A, B and C are Suncorp (home of AAMI, GIO, Apia), IAG (home to NRMA, CGU, SGIO & RACV) and QBE. 

I’ve posted recently about the fact their profits are rising at the same time as their premiums and some of the stories I’ve heard in response would be hard to believe if I didn’t have the documents to prove them.

@joelmgibson

This is gobsmacking. Credit to Michelle Bowes @News.com.au for spotting it. #moneysaving #costofliving #longervideos #insurance #aami #gio #suncorp

♬ original sound – Joel Gibson

One car insurance customer was charged $545.55 by Bingle (part of Suncorp group) in 2022, only to be asked for $1225.38 upon renewal in December 2023. That’s a 125% increase despite no claims or changes to the cover.

Insurance premiums u. Bingle is Suncorp

A couple from St Helen’s Park, Sydney, had their home and contents insurance with Suncorp. In 2022 it was $1705. In 2023 it was $2975, a 74% increase. In 2024 it was $4064, a 36% increase. That would have been a 138% increase over two years with no major changes to the cover. When they complained, Suncorp reduced the quote to $3150, which was still $750 more than a competitor quote. They’re planning to switch.

General insurance premium rocket. Suncorp

Speaking of big stories that didn’t make it out of the business pages, the general insurance industry is also the subject of what I call “the biggest scandal you’ve probably never heard of”.

The biggest scandal you’ve never heard of

Last year ASIC fined NRMA a record $40 million for jacking up the base premiums of customers before applying so-called “loyalty discounts” so that they wouldn’t drop too far. It also took SGIO, SGIC and RACV to court for the same.

The watchdog also forced 11 insurers to refund $815 million in over-charged premiums to 5.6 million customers as a result of widespread pricing failures in the industry over the past decade or so. 

While there’s a parliamentary inquiry now underway into the insurance industry, it’s focussed on whether they paid claims in a timely fashion after the catastrophic east coast floods of recent years. Pricing is a footnote and over-charging doesn’t rate a mention. 

How do they get away with it?

I’ve been tracking the cost of living on a daily basis in Australia for 12 years and I’ve never understood why insurance companies are such a protected species. Their prices are a black box and they face very little scrutiny – two facts that may be connected.

While fuel retailers have to post their prices on 3-metre roadside signs and also now on government apps, supermarkets have to post unit prices on every shelf or website, and energy retailers must publish every publicly-available offer on a government website, insurance pricing is a private matter between customer and provider.

Because everyone’s premium rises on a different day of the year, there’s no spotlight in the way there is for health insurers (on April 1) or energy retailers (on July 1). 

Too complicated, you wouldn’t understand, just pay

And there isn’t even a comprehensive comparison website that carries most of the brands in the market because the big companies refuse to cooperate with comparison businesses, claiming insurance is too complicated to be compared on the basis of price.

Never mind that mobile and NBN plans, energy plans, credit cards and mortgages are all subject to comparison – insurance, they say, is different.

Never mind that some insurances ARE subjected to comparison on government websites, such as Compulsory Third Party insurance for NSW drivers, and that there’s been no downside for consumers. 

“We’re different”

Regular car and home insurance are different, according to those who sell most of it, and cannot be compared in the same way.

But maybe this year will be the year that the insurance industry is dragged kicking and screaming into the 21st century.

As Coles and Woolworths have learnt the hard way, you can only squeeze the lemon for so long before it leaves a bitter aftertaste. When customers cause a big enough fuss, reform becomes a vote-winner for populist politicians and you can find yourself fighting back a push for new red tape.

One of the fiercest critics of Coles and Woolies this year was former ACCC boss Allan Fels, in his price gouging report for the ACTU. While groceries got a lot of the headlines, Insurance was the 2nd most complained-about product in his review.

About a decade ago, Fels made enemies of the Big Insurance lobby in Australia when he was appointed as the NSW Emergency Services Levy Insurance Monitor, tasked with making sure insurance companies didn’t gouge customers when applying a tax to premiums.

Fels finds, falls

But Fels went off the reservation and started looking into insurance pricing, comparing 11 different brands and what they quoted for insurance on a hypothetical home and contents in various locations.

He found premiums sometimes differed by over $1000 and that the difference between prices for new customers and old, loyal customers differed by an average of 25% and sometimes as much as 34%. The industry lobbied the state government for him to be removed from the post.

Maybe he was a man before his time. Now there are now multiple overseas examples of insurance pricing reforms that consumers, pollies and shit-stirrers like me can point to as evidence that there’s nothing inherently unique about insurance and it should be subject to the same price scrutiny as other industries. 

Ban ‘price walking’

In the UK, for example, “price walking” has been banned since January 2022: car and home insurers cannot charge renewing customers more than they charge new customers.

In the months afterwards, renewal prices dropped but so did car insurance switching rates, down from 41% to 35%.

Finance guru Martin Lewis says the results were a mixed bag: “Some firms have simply boosted prices for all … The ‘same price for both’ rule is channel specific [so an online customer can still pay more than a phone customer] … [and] Many firms own more than one brand. They may aim to win new business via new brands, leaving existing brands at higher prices”. But it’s a start. 

The next big opportunity for consumers will be the consumer data right, a new secure way to share your data with other providers and comparison services so they can help you shop around. It is due to be extended to insurance in 2024 or 2025 but the industry is already pushing back.

Insurance pricing reform is now happening in other (more) advanced economies because the cost of living has made it unstoppable. Why not here?

I’ve started a petition at change.org calling for Australian governments to stop insurance companies from over-charging Australians. You can sign it here.

Independent beer-makers captive to liquor majors, supermarket duopoly

This post was originally published on Michael West.

Sydney University has stonewalled claims of failing to police serious conflicts of interest in its academic research which may have benefited Big Sugar and Big Pharma companies such as Novo Nordisk. Who knew what and when, asks Andrew Gardiner.

The veil of secrecy around Jennie Brand-Miller – star nutrition academic and for years the face of low glycemic index (‘low GI’) diets – has been lifted, and it’s far from flattering. After months of obstruction, MWM can now confirm that ‘GI Jennie,’ as she’s affectionately known, has been married to John Miller (for decades until 2013, the medical director at Novo Nordisk Pharmaceuticals Australasia) from the late 1980s through to at least 2017.

Why does this matter? Economist and bane of Big Pharma and Sydney University, Rory Robertson, believes GI Jennie – who popularised sugary, high-carb (“low GI”) diets as somehow lowering blood sugar – helped cause a “public health disaster” of high blood sugar, obesity and rampant type two diabetes (T2D) among Australians, in turn generating a market for Novo Nordisk, the leading seller of insulin used to treat T2D.

Robertson insists that dozens of Brand-Miller’s ‘peer-reviewed’ published papers are based on erroneous and/or misconstrued data and that other, more credible studies associate sugary, high-carb diets with high blood sugar, obesity and T2D, stating that:

it has been known at the highest level of medical science and by competent GPs for a century that no-sugar, low-carbohydrate diets “reverse” or “fix” T2D.

A conflict of interest?

The central point of this investigation is not that Brand-Miller acted in bad faith but that her employer Sydney University, despite being notified many times by Robertson, failed to ensure that the academic complied with university policy on disclosing conflicts of interest, namely her close, very close association with a company which derived financial benefits from selling diabetes medication.

Brand-Miller did not declare what was a serious conflict of interest over the 2011 paper at the centre of this controversy, The Australian Paradox, despite enjoying what Robertson calls “a major multi-decade boost to her household income from her life/financial partner (John Miller’s) high-level employment driving Novo Nordisk’s diabetes drug sales.”

MWM is not suggesting the Millers have acted unethically or allowed any personal relationship to affect their professional work, but it should be noted that Novo Nordisk, the 23rd most valuable company in the world with a profit of $US22.24B for the year ending March 2023, appears not to have been displeased with the scholarly work.

For his part, John Miller also failed to openly acknowledge his marriage to Brand-Miller – despite clear conflict of interest implications – when it was his turn to write a UNSW PhD dissertation at UNSW in 1989. Miller was already working for Novo Nordisk’s predecessor at the time, and his PhD was co-supervised by a Dr J C Brand.

That’s right, readers: in a triumph of arms-length academic integrity, John Miller’s supervisor was none other than his spouse, Jennie Brand-Miller. MWM confirmed the pair’s collaboration and marriage via documents helpfully available online (the latter has since mysteriously vanished from the University of Sydney’s website).

“Amazingly, John Miller acquired a UNSW PhD and ‘expert’ status under the (hidden) ‘supervision’ of his own wife while embedded in the Human Nutrition Unit at the University of Sydney, with the Unit’s taxpayer-funded facilities gifted to him by his wife’s boss, Stewart Truswell – notably, the main scientific author for decades of our influential Australian Dietary Guidelines – all while Miller was employed by CSL-Novo, soon to be Novo Nordisk Australasia,” Robertson told MWM.

Robertson says the Millers’ union has long been ‘common knowledge’ around the corridors of Sydney University’s Human Nutrition Unit and the Charles Perkins (medical research) Centre (the latter subsumed the former from 2012), yet the university appears to have given Brand-Miller what he calls:

a decades-long free pass to hide her links to Novo Nordisk and its predecessors, allowing her to carefully exclude it from conflict-of-interest disclosures she published in hundreds of formal diet-and-health papers, in clear violation of university policy.

“The global nutrition, scientific and medical communities are still haplessly unaware that Brand-Miller’s sugary ‘low-GI’ diet research was conducted under the cloud of the Novo Nordisk conflict,” he added.

A (sugar) scandal in the making?

With their marriage confirmed, we can sum up what appears to be a hitherto insoluble headache for public health, government waste and academic integrity. Jennie Brand-Miller: (a) popularised sugary, high-carb “low GI” diets, (b) wrongly, in the eyes of many, exonerated sugar as a key driver of Australia’s diabetes/obesity epidemic, and (c) may have derived a financial benefit as she and her husband made money from the latter’s work in a company which sells the (insulin) T2D drug treatment.

This could turn out to be a massive scandal … if anyone will listen, says Robertson.

He wants a new, independent inquiry into Sydney University academics’ links to Novo Nordisk, claiming they’re a party to years of scientific malpractice that significantly benefits Big Pharma and the sugar industry. He persists in the face of what seems like systematic stonewalling from the University, which MWM also experienced when researching this story.

Confronted with documents confirming the Millers’ marriage and financial relationship, the university’s media office had a one-line response: “I’ve checked, and our statement from last year stands,” media manager Rachel Fergus wrote. That earlier statement, sent to MWM last July, was that “for over a decade (Robertson) has made … public claims about a number of our researchers and their scientific work (and) any matters have been appropriately, repeatedly and thoroughly examined … with no evidence of any misconduct found”.

Perhaps the lack of action by the university is where the misconduct lies. Is it not the responsibility of esteemed public institutions to ensure their researchers adhere to ethical and compliance guidelines?

Sydney University ‘examination’

One wonders how Sydney University can claim it “thoroughly examined” the matter when startling documentary evidence of massive conflicts was right under its proverbial nose. Earlier recommendations following a 2014 inquiry by Professor Robert Clark – that Brand-Miller’s Australian Paradox be “sent to the shredder” and replaced by a new paper prepared for publication, “in consultation with the Faculty, that specifically addresses and clarifies the key factual issues examined in this Inquiry” – were not meaningfully addressed. And there was little media attention.

Neither Brand-Miller nor her bosses ever appeared to do what Clark recommended: “The new paper should be written in a constructive matter that respects issues relating to the data in the Australian Paradox paper raised by the Complainant”

Robertson says the stonewalling of MWM and other media over the past decade is part of a strategy to “starve the issue of oxygen” and keep it away from the pages and bulletins of our fourth estate. The strategy has worked: after two brief flurries of interest from mainstream outlets years ago, media interest has dropped off a cliff, with the exception of MWM.

‘Former fattie’ Rory Robertson ups the ante on Sydney Uni’s connections with Big Sugar, Big Pharma

Even the modest feat of confirming the Millers’ union was like navigating a maze for MWM, and little wonder. The promotion of what some see as disastrous nutritional advice has spawned a multi-million dollar industry in academia, government and the private sector.

“Over the past decade, three successive (Sydney University) vice-chancellors have accepted research grants of around $400 million per annum from Canberra – much of it funding studies which asked the wrong nutritional and health questions,” Robertson told MWM.

That’s a lot of money that would dry up if the truth were widely known.

Robertson said Brand-Miller’s co-dependent ties with senior faculty members at the university’s Charles Perkins Medical Research Centre further drove this circling of the Camperdown wagons. “When she thrived, they thrived; it’s a cabal dating back to the 1980s,” he told MWM.

Media ambivalence on what could turn out to be a massive scandal is a complicated subject to explain, although it can be noted that the university is a large-scale advertiser on commercial outlets and that Mark Scott, once the ABC’s managing director/editor-in-chief but now the Vice Chancellor of Sydney University, briefly helped along media interest in Robertson’s quest in 2016.

Moreover, Big Sugar – from cereals to soft drink and sweets manufacturers – are among the biggest advertisers in commercial media. Robertson also points out significant commercial conflicts of interest on the part of at least one leading health and medical journalist.

At the end of the day, what Robertson calls the “sheer scale of this scandal” and the involvement – wittingly or not – of “heavy hitters” at the university and beyond may be forestalling the “critical mass” required for it to get the full forensic treatment. Faced with such seemingly immovable obstacles, others might toss in the towel, but Robertson is nothing if not determined.

“Why do I persist?” Robertson said, “I suspect it’s because my mother and her two sisters, and my own sister, were all country nurses, and I grew up in remote locations, often with Indigenous kids (who now) bear the brunt of this T2D plague – the amputations, the people going blind.“

It may be the biggest scandal in Australian medical history. People don’t need Novo Nordisk’s insulin; they just need a low carb diet.

Vindication: dietitians cut ties with sugar lobby

This post was originally published on Michael West.

Visiting the local pub or bottle shop may create an impression of beer drinkers spoilt for choice. But the variety of offerings is increasingly controlled by the duelling duopolies of producers and retailers drunk on their market power. It’s Coles and Woolworths again. And it’s prices. Zacharias Szumer investigates.

As inquiries run by both the Senate and the competition watchdog are putting their magnifying glasses on the power of Australia’s supermarket duopoly, MWM is taking a closer look at Australia’s liquor market.

Kicking things off, this correspondent recently got on the beers. Which is to say: he spoke with people in Australia’s independent brewing industry to understand how massive duopolies are taking a huge gulp of the profits at all stages of the supply chain.

But let’s have a few at the pub first. Even here at our friendly local, it might be hard to escape the influence of a major duopoly: Carlton & United Breweries (CUB) and Lion. According to the managing director of Coopers, CUB’s got about 50 per cent of the market and Lion about 30. Both are owned by Japanese companies: respectively, Asahi and Kirin. Coopers is a distant third.

A bevvy of nefarious tactics

Brewers often have contracts with pubs to get their beer on tap. The two companies have managed to “lock at least 85 percent of beer taps in the country,” according to a recent budget submission by the Independent Brewers Association (IBA).

They also use various nefarious techniques to limit choice and sales on the taps they don’t directly contract – or at least that’s what your correspondent has heard.

For example, if one of the big players has an India Pale Ale (IPA), they will seek contract terms that ensure it’s the only IPA on tap.

Sometimes it’s just “knowing that a brand is strong and excluding it,” an industry insider, who asked not to be named, told MWM.

SOURCE: Independent Brewers Association 2024-25 Budget Submission.

Financial rebates offered to pubs for selling a certain quantity of beer from the big suppliers also create an incentive structure that “throttle[s] the sales of the independent beer”, the insider said.

To hit the rebate target, pubs will price independent beers ‘artificially higher’ or order fewer kegs, so they just happen to run out at 9 pm on a Friday night, pushing customers to order beers owned by the duopoly.

While not going into detail, Kylie Lethbridge, CEO of the IBA, said the peak body had been hearing from its members about various “exclusionary practices.”

“That is definitely very much what we have been told and what we’re being told more and more lately,” Lethbridge said about financial rebates leading to underhand tactics.

The big two in booze retail

After a pint or two at the pub, we head to the bottle shop, where another two players have dominant slices of the market.

On one hand is Coles, which owns Liquorland, Vintage Cellars and First Choice. On the other, Endeavour, which was spun-off by Woolworths in 2021, and owns Dan Murphy’s, BWS and the delivery service Jimmy Brings.

While the demerger may have helped cleanse the Fresh Food People’s hands of vice, Woolies has stayed in the cut, remaining Endeavour’s fourth-largest shareholder with a roughly 9 per cent stake.

Together Endeavour and Coles account for around 55 per cent of the market. If you throw in the other two major retailers – Aldi and Metcash (which owns IGA Liquor, The Bottle-O, Thirsty Camel, Porters and Cellarbrations) – the four companies’ share is over 70 per cent.

.Because of the power they have” the big retailers “can dictate price.

Kylie Lethbridge, CEO of IBA.

Source: Woolworths/Endeavour 2021 demerger booklet.

Both Endeavour and Coles have come under scrutiny in recent years for their expansion of home-brand alcohol products branded as boutique or independently produced.

While a recent Four Corners episode focused on misleadingly marketed boutique wine, the beer industry has also seen a proliferation of “pseudo-craft beers”, as the IBA’s budget submission calls them.

At Coles-owned outlets you might have seen brands such as Tinnes, while at BWS or Dan Murphy’s you’ll encounter Zytho or the interestingly named Crony pale ale.

The insider told MWM that the big two will essentially seek to replicate an independent product that’s already on the market, both in recipe and branding, but sell it at a cheaper price.

They also keep any details about being a ‘home brand’ of sorts hush-hush. It’s not illegal, just a little bit naughty.

What about the liquor! | The West Report

Plans for independent brews get shelved

Endeavour puts out most of their ‘private label’ booze through a subsidiary called ‘Pinnacle Drinks’. In 2023, Pinnacle launched 550 new products. The year before, it was 479.

It’s an “incredible number”, IBA board member Richard Adamson told parliament last year, and it’s created a struggle for independent brewers to get their products on shelves. He added:

Anecdotally, we’re seeing that one in five to one in four shelf spaces for beer is now one of their private-label brands, so we are getting squeezed out of the major retailers’ shelf space at the same time,

Appearing the day before Adamson, Coopers’ managing director told parliament that, in opposition to the big two, independent retailers were more likely to let “consumer preference dictate what is on the shelves.”

Two examples of retailer-owned private label brands: Endeavour/Pinnacle’s Big Things Brewing Co. ginger beer and Liquorland’s Smithy’s.

Because private-label brands have the financial might of major corporations behind them, they can also dish out far more dosh on marketing and promotions.

For instance, the Coles-owned Tinnies beer brand recently signed a lucrative sponsorship deal with Cricket Australia.

Both Coles and Endeavour-owned brands also have free access to detailed sales data from their parent companies, while independent brewers might have to shell out roughly $150,000 for subscription services to access this data, the insider said, although such services only provide “what the retailers are willing to share.”

Competition canned

Perhaps by now, we’re sick of all these big players throwing their weight around. So, let’s head to our local craft beer brewery.

But here, too, before the beer even leaves the factory floor, independents face another duopoly, as only two companies in Australia make printed aluminium cans: Visy and Orora.

These two “behemoths”, as the insider called them, also dominate the cardboard production that encases slabs and six-packs.

Orora is owned by the Japanese giant Nippon. While Visy is owned by the family of Australia’s third-richest man Anthony Pratt, who regularly donates massive sums of money to both political parties.

There’ve been “numerous cases” where the big two have “post-contract, changed terms or changed pricing on people. It’s been pretty difficult,” the insider said.

IBA’s Lethbridge also explained how some of these contract changes make it particularly hard for small brewers.

Peter Dutton’s angry crusades. You never know what you’re gonna get.

This post was originally published on Michael West.

Getting control of an ASX company is the holy grail for an entrepreneur; it means deep pools of other people’s capital to capitalise upon. So it is that colourful tech venturer, Giuseppe Porcelli of Lakeba Group is having his second tilt at The Boards. Michael West reports.

Will colourful Manly entrepreneur Giuseppe Porcelli of Lakeba Group fame finally get to control a public company listed on the ASX through the back-door?

Porcelli is no stranger to creative accounting. He somehow managed to convert a simple offshore software development business generating very little cash into an investment behemoth with “revenues” of $100m. That is if you believe the “independent valuations” that he is yet to disclose to anyone, even shareholders.

Many even doubt that investing in businesses you control actually qualifies for this special accounting categorisation as an investment company.  After being questioned at Lakeba’s AGM in 2022 the original auditor, ASK Accounting, saw discretion as the better part of valour and soon resigned. This left the door open for PKF, a mid-tier accounting firm, to be appointed as the new auditor. The result? A dramatic revaluation of Lakeba’s investments. Downwards, of course.

CaddyShack, CEO of the year antics and turkey sandwiches: Lakeba back in the revenue bunker

This gives some insight into Porcelli’s apparent need to be seen as a big immigrant success story at any cost. He craves publicity as much as others crave tiramisu. His ultimate goal seems to be to head up a company listed on a public stock exchange, any public stock exchange, regardless of whether that is the best option for shareholders.

Some years ago, Porcelli stage-managed an attempt by Lakeba, his then relatively unknown private business, to take control of Mobecom Ltd (now Gratifii Ltd), a flailing public company in the loyalty program business. His cunning plan was to sell Mobecom one of Lakeba’s early stage ventures called Paid by Coins and build some tech in exchange for a LOT of Mobecom shares.

An extraordinary number given the very early stage of Paid by Coins and its relatively minuscule revenues. So extraordinary, that the deal was eventually unwound completely as being contrary to the best interests of Mobecom shareholders. This was in no small part due to the concerns of the then incoming Mobecom CEO, Iain Dunstan, who clearly did not see the same value in Paid by Coins as was claimed by Porcelli and the previous CEO of Mobecom that was replaced by Dunstan. Deal dead. Strike 1.

Smooth Talker: Lakeba entrepreneur Giuseppe Porcelli takes tech punters for a rude ride

Interestingly, even though this crafty deal was unwound before it was fully consummated, Porcelli still claims it as an exit on his Lakeba website in an apparent attempt to show a semblance of success in his 10-year old “venture creation” business. In line with its tag line, Lakeba has done plenty of “Conceiving”, a bunch of “Creating” but not so much “Commercialising”.

The reality, according to several long suffering shareholders, is that there has been no return whatsoever on their investment despite regular promises from Porcelli that “this will be our year”. Promises that are now as thin as the finest Italian prosciutto. It seems that the hefty revenues previously claimed by Lakeba as the result of startlingly opaque increases in valuations of its ventures has not converted to any actual returns. Like oral contracts, paper returns aren’t worth the paper they are written on.

AFR and The Oz are onside

The Mobecom fiasco has also led to some good old-fashioned litigation by several shareholders of Lakeba who claim they were misled regarding Lakeba’s revenues when investing back in 2019. Apart from the distraction and expense of litigation, a successful outcome for the shareholders could lead to others making similar claims against Lakeba.

In any case, following the Mobecom “deal”, Porcelli tried a new tack. Build a digital bank by acquiring a tiny credit union that already had the banking licences required. A new Lakeba venture, Ezi Financial Services Pty Ltd, was set up and capital raised at a lofty valuation to build the tech and buy the licence.

Other more qualified organisations with much deeper pockets had also tried to launch a digital bank and failed, but Porcelli pitched that he had the secret sauce that could pull off this minor miracle.

Unfortunately for the investors, the deal with Maleny Credit Union also fell apart relatively quickly despite the loud trumpeting of Lakeba’s supposed ability to build the underlying technology required to turn a quaint one-branch credit union into a world-class digital bank. The result? The Maleny Board lost faith in Porcelli’s abilities and pulled the pin. Strike 2.

Go forward a few years and here we are again. A recent announcement from another public company, Domacom Ltd, indicates that they are in discussions with Lakeba to acquire Bricklet, another one of its controlled ventures. Bricklet has promised to change the property market by letting people buy fractions of properties, wineries, farms, anything, but it seems the market is still somewhat dubious about it all.

Like the old timeshare model, it’s easy to buy but hard to sell when you want to cash out. Not to say the fractional model doesn’t have a place, just that it has proven hard to convince people it is the best place to park their hard-earned dollars.

Domacom is in the same market, and looking at its share price it seems to be having a similar problem getting punters to buy into the concept. It has a current market cap of just $4.8m with a share price that has dropped dropped 83% in the last year to just 0.011c. So who is saving who? Or are they both clinging to a one-man life-raft?

So what’s the proposed deal? Well it looks like Bricklet will lend a chunk of cash to Domacom to solve its current cashflow problems, then invest in Domacom following which Domacom will “consider” buying Bricklet.

Given the very early stage of this deal, details are scant. However, you can bet London to a Brick(let) that the acquisition will be via a share swap so that control of Domacom will shift to Lakeba. That’s the Porcelli Way. It is looking unlikely to be a cash acquisition given Domacom is proposing to borrow money from Bricklet to pay its debts. It’s looking more like a cheap back-door listing just like the failed attempt on Mobecom.

Whether this deal goes ahead depends on double due diligence. First, Bricklet has to check out Domacom before lending it money, and then Domacom has to check out Bricklet to see if it wants to buy it. We await the result with bated breath, as do the Lakeba shareholders who are no doubt hoping for some sort of liquidity event after all this time.

AI is the latest, AFR on board

Bricklet has had its own share of problems. A recent attempt to partner up with a business packaging up farms for sale as “bricklets” on the Bricklet platform. “We had the product and just needed a platform to manage the process” said Brian Sher of The Family Farm.

“Bricklet seemed like the answer but our legal advice was that it was probably operating as an unregistered MIS. Even worse, we think their legal documentation made the model totally unworkable for farms, so we pulled out of the deal”.

Sher had other concerns about the way Bricklet was being managed. “We got charged all sorts of fees, including stamp duty, even though they were not properly disclosed. We totally lost faith in the platform and its management.“

Will the due diligence of Bricklet’s business yield a positive outcome? Let’s hope Domacom’s advisors  don’t subscribe to MWM and find out about all the other dodgy dealings at Bricklet that have been reported to us (). If so, it may be strike 3 for Porcelli… Watch this space.

Ocean view, or really a carpark view? ASX property float a tough sell

This post was originally published on Michael West.

Digital disruption has come to the disability and aged care sectors, with mixed reviews. The digital economy and its effect on itinerant ‘gig workers’ now reaches well beyond rideshare and home delivery services. Zacharias Szumer investigates.

Perhaps evincing a masochistic taste in literature, this correspondent recently decided to sink his teeth into the gig worker reforms subsection of the Senate inquiry report into Labor’s Closing Loopholes bill.

While certainly not a page-turner, the section was somewhat enlivened by a detectable level of vitriol directed towards a company called Mable.

Mable, which acts as an intermediary between care workers and their clients, incurred the committee’s wrath for insisting that it wasn’t a gig economy platform at all and thus shouldn’t be regulated alongside Uber, DoorDash and co.

While the aforementioned rideshare and food delivery platforms engaged with the process in a “constructive” manner, the report’s authors wrote, Mable had deployed “spurious arguments” to request it be wholly carved out of the reforms.

While it seems that Mable’s efforts weren’t totally successful, and the Fair Work Commission may still be able to impose minimum standards upon its workforce, some experts say cross-bench amendments to the bill have made it significantly harder (more on that later).

Clear as mud: gig workers’ rights versus Uber, Deliveroo, Ola and Menulog fight for flexibility

Horizontal marketplace or digital platform?

Mable was launched in 2014 with a mission to “unlock productivity gains” in Australia’s aged care and disability sectors. It says it now has over 17,000 independent contractors and 22,000 clients on its platform.

On Mable, approved aged care and disability clients and workers connect via self-made profiles. In addition to hosting this digital marketplace, Mable also provides insurance and helps process invoices, among other services.

Unlike a service such as Uber, where the company offers a job at a certain price and a worker can either take it or leave it, Mable contractors and clients quote their own price. Although, as in any market, there’s no guarantee they’ll get it.

Mable contractors are also paid per hour rather than per job.

Because of these differences, Mable insisted to the Senate that it isn’t part “of the ‘gig economy’ or in any way similar to platforms in rideshare and food delivery”.

Leaving aside the precise delineations of the ‘gig economy’, in one sense, Mable is applying a well-established gig platform business model; for the last decade, it has steadily run at a loss, aiming for expansion and market share over profitability.

Uber, by comparison, was launched in 2009 and only became profitable in 2023.

To stay afloat prior to profitability, such companies rely on large injections of investor finance. For instance, Mable received $100 million from one of the world’s largest private equity firms in 2021.

Flexible contractors or overstretched digital serfs?

Mable’s Closing Loopholes inquiry submission cited a company-commissioned YouGov survey that found “91 per cent of digital platform service providers rated their experience as ‘very good’ or ‘good’”.

“Support providers on Mable rate their overall experience, satisfaction with hourly rate and whether they feel trusted, significantly higher than support workers employed by traditional providers,” the submission said.

A Mable spokesperson told MWM that the company was clearly providing a desirable work opportunity as its growth was occurring at a time when “there are thousands of direct employment opportunities available in the care and support sector”.

Several Mable contractors who appeared alongside the Health Services Union (HSU) at an October Closing Loopholes inquiry hearing painted a less rosy picture.

One said that “Mable doesn’t check on the wellbeing of workers or provide them with feedback” and that the “occupational health and safety standards for workers were not up to the standard.” One commented that:

There’s so much pressure to do unpaid work … You’re always under pressure, and you don’t have full control over your work.

The HSU told the Senate that digital platform care workers earned “on average anywhere from 5 per cent to 55 per cent less than already low-paid comparable workers when platform fees and superannuation are taken into account.”

The Senate report found that Mable “does enable workers to earn below the minimum award wage,” but Mable says its workers “earn more on average” than their counterparts in traditional employer-employee relationships and other digital platforms.

Internet vox pops and Mable PR

Seeking to cast a net beyond official statements and union-facilitated witnesses, MWM sought feedback about Mable on several disability and aged care-related issues on internet forums, posting in several private Facebook groups and making this Reddit post.

Responses were mixed.

Mable “encourages workers to bid to the bottom to get work, which after fees often result in getting paid less than formal employment,” said one worker, while another said they were “very happy with Mable.”.

One support worker, who has now moved on to direct employment, described Mable as “a great stepping stone,” while another said the platform takes “a pretty unreasonable cut, but you can bump your rate up to cover it”.

FYI: Mable takes a 10 per cent commission from the worker and a 7.95 per cent service fee from clients. E.g. If a contractor requests $50 per hour, they’ll get $45, while Mable will get $5 plus around $4 from the client.

Some workers complained that payment was slow, while others said they’d had “minimal problems with payments.”

While most comments and private messages received were critical of Mable, the disgruntled are perhaps more likely to leave reviews than those who were content.

Shortly after posting on Reddit, MWM was contacted by Mable’s PR rep to arrange for him to hear several worker and client testimonials – all of which were, unsurprisingly, quite positive.

Jacob Darkin, who is both a support worker and NDIS client, told MWM that his experience using the platform was overwhelmingly positive, saying that Mable offered a safe way to connect with highly skilled workers.

“I think if they just keep listening to what people want – whether it’s support workers or people with disabilities – and try to make improvements so we benefit, then I think they’ll be a provider for a long time,” he said.

While Darkin is a paid member of Mable’s Independent Disability Advisory Committee, he said he was offering his comments voluntarily.

Two other support workers, one of whom is also a member of Mable’s advisory committee, also shared positive testimony about working via Mable, highlighting their preference for platform flexibility, in terms of setting one’s own wages and hours.

A loophole for Mable?

While Closing Loopholes finally passed in early February, cross-bench senators David Pocock and Jacqui Lambie secured amendments that may hinder Mable from being captured by the gig work reforms.

“It is important that the reforms only capture those they intend to,” Pocock wrote in the senate inquiry report, but Labor’s draft bill went “far beyond the scope of capturing the gig platform courier drivers and would impact sectors like personal and aged-care providers.”

Thanks to Pocock’s amendments, contractors on platforms like Mable will now need to satisfy at least two, rather than just one, criteria to be considered “employee-like” by the Fair Work Commission. The Mable spokesperson told MWM that

Mable is particularly grateful to Senators David Pocock and Jacqui Lambie for their advocacy and support.

In response to questions from MWM, Pocock said he had met several times with Mable and similar providers during the legislative process but stressed that his amendments were not sought on their behalf, saying that the changes were “requested by every peak employer body”, including the Australian Chamber of Commerce and Industry, the Australian Industry Group and the Business Council of Australia.

He also said the amendments were not intended to get “personal and aged-care providers excluded” and stressed that there was still enough regulatory wiggle room for the government to ensure companies like Mable were covered if it so desired.

The HSU, Labor sources and Mable itself also told MWM that, in their opinion, Pocock’s amendments didn’t clearly let platforms like Mable off the regulatory hook.

HSU acting national secretary Tim Jacobson told MWM that Mable workers clearly “experience low bargaining power and are subject to significant amounts of control in the way they perform their work,” which are two of the required criteria.

However, Dr Fiona Macdonald, industrial and social policy director at the Centre for Future Work, said it was

difficult to see how care and support workers engaged by individual consumers” would satisfy the increased requirements,

“A worker could be considered to have some authority over the performance of their work and to have some bargaining power in relation to the services contract, as this contract would be between the individual worker and an individual consumer,” she said.

As a result, the amended “legislation may fail to provide protections for the most vulnerable workers using gig care and support platforms”, said McDonald, who authored a 2023 report arguing that the “gigification” of care work undermined workforce sustainability and gender equality.

Uber and Google – how PwC got them to dud Australia of billions

This post was originally published on Michael West.

Australia’s leading business lobby, Business Council of Australia, glosses over its tax avoiding members while cashing taxpayer cheques. Zacharias Szumer delves into the latest donation disclosures from the AEC.

It’s getting to be a bit of a slog trawling through the Australian Electoral Commission’s (AEC) annual disclosures – the not-so-user-friendly trove of data that gives only a partial glimpse into the money funding political parties, independents and politically engaged organisations.

The AEC’s 2022-23 disclosures, released on February 1, largely revealed the usual players – the main shifts in recent years being the increasingly large sums being thrown to groups such as Climate 200 and Advance.

While sliding into spreadsheet-induced torpor in search of an original angle, your correspondent had a look at two of Australia’s most powerful private-sector lobby groups: the Business Council of Australia (BCA) and the Australian Chamber of Commerce and Industry (ACCI).

The BCA and ACCI are both networking and lobbying outfits, although the BCA is a tad more elite. While the ACCI represents businesses of all shapes and sizes, the BCA’s membership is restricted to Australia’s largest companies – or, more specifically, their CEOs.

For the AEC’s purposes, however, both are – or at least have previously been (more on that later) – classified as ‘significant third parties’. This means they spend enough money trying to influence elections that they must disclose details of any payments made to them above the AEC threshold – currently around $15,000.

Biggest political donors revealed amid calls for reform

DFAT grants over $1.5M to BCA

Most of the BCA’s sources of funding were from the usual suspects – AGL, Amazon, Atlassian, and AstraZeneca (all before we get to the second letter of the alphabet).

As one would expect, these are the companies that pay the BCA to lobby for lowered company tax rates and against increased transparency rules that would stymie multinational tax evasion.

Nonetheless, the BCA is happy to receive public money for its own multinational networking services – as revealed by several payments from the Department of Foreign Affairs (DFAT).

In 2022-23, DFAT made two payments totalling $220,000 to the BCA to provide services and support for the Australia-India CEO Forum.

Those payments were part of a $1.34 million grant DFAT awarded to the BCA to strengthen the Australia-India business relationship “by supporting the Business Champions and revitalised CEO Forum to regularly meet, to identify opportunities and address challenges in the economic relationship.”

The department paid out another $75,000 to the BCA to support a similar initiative between Australia and New Zealand – part of a grant worth a total of $325,000.

As a member-funded lobby group for Australia’s most powerful corporations, one could ask whether the BCA should be receiving any public money at all, let alone over $1.5 million, to help facilitate international corporate networking.

But we’ll leave those judgements to those more qualified to make them.

Capitulation Complete: Government caves in to multinational tax avoiders

The ACCI has bowed out of electoral politics

When it came to the ACCI’s financial benefactors, however, MWM was unable to see anything at all; while the ACCI declared over $6 million in receipts, it didn’t provide any detail about any of those transactions. 

Similarly, in the 2021-22 financial year, the ACCI declared $7,456,323 in total receipts but didn’t provide info on any of that either. 

That stands in contrast to the details they published in the two years prior: 2019-20 and 2020-21. 

This disclosure discrepancy has seemingly arisen because the ACCI has exited electoral politics, declaring $0 in ‘electoral expenditure’ since 2020-2021. It thus no longer qualifies as a significant third party – although the AEC’s website still lists it as one. 

In contrast, the ACCI declared a cumulative $52,084 in ‘electoral expenditure’ in the 2019-2021 period. 

Readers may wonder how such a body, which regularly and loudly lobbies government and the public, didn’t spend any money on shaping electoral preferences.  

The answer is that, for the AEC’s purposes, ‘electoral expenditure’ means money spent for the “dominant purpose of influencing the way electors vote in a federal election” – a definition narrow enough to exclude advocating for certain policies that just happen to be more closely aligned with one side of politics. 

MWM hasn’t seen any indication that the ACCI clearly sought to sway voters in the 2022-23 period, but if any readers have info, we’d be more than happy to receive it.

The BCA, fake pub-tests and the impending propaganda blitz

This post was originally published on Michael West.

Pilots at Qantas’ Perth-based subsidiary Network Aviation went on strike for 24 hours Thursday, causing disruptions for thousands of passengers, with more union action planned for next week. Just one of the many issues for new CEO Vanessa Hudson to sort out. Michael Sainsbury reports.

Despite all the promises by CEO Vanessa Hudson of change, the evidence so far is rather more of the same. That includes predecessor Alan Joyce’s predilection for outsourcing all the hard bits, including the hard decisions.

Hudson has so far farmed out the company’s image management to Boston Consulting Group (BCG), operations planning to McKinsey & Co, and now its industrial relations to the Fair Work Commission.

An increasingly bitter relationship between the pilots of the company’s Perth-based Network Aviation and the Australian Federation of Air Pilots (AFAP), which covers about 90% of the 250 pilots in the group, saw them strike yesterday. Qantas cancelled 35 regional flights stranding paying passengers and fly-in-fly-out workers.

More Qantas Group flight pain, pilots fight on over pay

Pilots at Network Aviation (NA) have voted down three attempts at a new Enterprise Bargaining Agreement. NA pilots are the worst paid in the Qantas group; at present, 70% of NA pilots are paid below award levels, according to the union. Qantas’ says they want a 50% pay rise, but that would only take them up to award levels.

After the last rejection, Qantas went to the Fair Work Commission (FWC) seeking a finding of ‘Intractable Bargaining‘, a last resort Industrial Relations tool to break the impasse of stalled negotiations. If successful, this would see the FWC settle the dispute. NA pilots voted Thursday to continue rolling strikes, and another two-day action planned for next week was announced by AFAP on Friday..

“In terms of conditions, all we want is what every other pilot in the group has,“ a union rep told MWM.  However,

the even bigger problem is that we cannot attract pilots with any experience to the group, and many of our experienced pilots are leaving for much better paid work overseas.

Enter the consultants

And so to McKinsey’s mission which is – and this is not a typo – to ‘make the planes run on time’. An airline’s central task is to supply excellently maintained aircraft to fly their passengers to their destination on time. So, why was Hudson hired if she could not perform this core business task?

Qantas insiders have told MWM the answer is really simple, a simple combination of having enough pilots, engineers and a fleet of aircraft that is big enough, young enough and available.

Hudson’s problem is that she has none of these, so ‘fixing’ the problem will take many years.

McKinsey is the second set of consultants Hudson has called in, with BCG being brought in as soon as she took the top job to help ‘repair the company’s image with passengers’. So far, this appears to have amounted to more Grange wine in the Sydney First Class lounge, as per Qantas Facebook groups, and a slight improvement in on-time performance for the mainline flights (not Jetstar), yet this still sits below pre-COVID levels.

Source: Bureau of Transport and Infrastructure Economics.

The problem is that the airline has changed its core business from providing logistics to financial engineering. It doesn’t help that she has created an executive team of which barely 10% has long-term operational experience.

Pilots on the run

It’s not just Network Aviation that is screaming for pilots, it’s the entire group. To add insult to injury, Emirates, Cathay Pacific and Japan’s ANA are all running targeted recruitment of Australian pilots at present; multiple pilot sources toll MWM.

The larger problem is a global shortage of pilots. The total number of active commercial airline pilots was 351,000 in 2023, according to CAE, a leading supplier of flight training services. In June 2023, the group projected a need for 252,000 new commercial pilots by 2032 – a number that sits in the middle of forecasts for aircraft demand by major aircraft makers Boeing and Airbus.

Insiders also said that Qantas disguised its lack of pilots with its pre-Christmas announcement it was “taking some flights out of our schedules” during December and January.

A thin and ageing fleet

Qantas is also running out of planes due to the under-investment during Alan Joyce’s tenure, and it is now cutting back on a range of international services. This week, an internal note from Nick Bull, head of the international cabin crew, said that the regularity of flights from Sydney to New York, Johannesburg, Dallas, Los Angeles and Santiago would be cut. The spin from Qantas was, as usual, ‘supply chain issues’, ‘supplier delays’, and a lack of maintenance workforce. The last, at least, is true, but self-inflicted.

As for the planes, one A380 is in Abu Dhabi, having its heavy check. “They have found cracks in the wings which is no surprise,’ one engineer told MWM. “This means it has been delayed two months, which in turn has delayed another A380’s heavy check and yet another A380’s landing gear change.”

The landing gear is going to run out of cycles very soon, so it will need to be parked until its maintenance slot becomes available later in the year.

The company’s 25 A330s have an average age of 16.6 years, with Qantas ranked 126 of 149 airlines running these planes in terms of age. “They are very delicate and seem to have a high rate of delays and reschedules to do maintenance problems,” the engineer said. Qantas sources say its A330s have an on-time record of only 35% compared to 100% for its leased Finnair plane that flies from Singapore to Sydney, with another Finnair on the Sydney-Bangkok route next month.

Maintenance woes – and price gouging

“There is higher aircraft utilisation, no spare aircraft as well as more and more aircraft having work that must be done that’s been put off,” the engineer said. “You can only defer things for so long, so ground time delays are inevitable. Overtime is offered every day, but it seems people are getting over doing the extra time. There is a continual line of job ads with no decent candidates left to employ. We have taken back some engineers who took redundancy packages, which is good.”

We still have a spare parts shortage, as we only seem to buy large and expensive items when needed. This leads to long delays whilst the part is sourced from overseas.

And by the bye, just this week, former Australian Consumer and Competition chief Alan Fels accused Qantas of “price gouging” in his landmark report on Australian corporate market power for the Australian Council of Trade Unions.

The duopoly in the aviation sector in Australia is dominated by Qantas, and there is price gouging by Qantas,

Fels said, also finding that Qantas prices have contributed to inflation during 2022.

But none of that is likely to stop Hudson and her team from snaring their bonuses this year. The ghost of Alan still looms large…

New Qantas chief Vanessa Hudson confronts a turbulent ride from shareholders at AGM

This post was originally published on Michael West.

This post was originally published on Michael West.

This post was originally published on Michael West.