How Benny Elias put the bite on the Tigers
Date
June 30, 2012
Kelly Burke
Big-money deals spearheaded by a rugby league champion have left Balmain Leagues Club with mounting debts
Lobbying … Ben Elias promotes the development at a council meeting. Photo: Bob Pearce
HE IS the instantly recognisable face of the "Bring the Tigers Home" campaign and has been hailed as the saviour of the NRL team's struggling club.
But a series of deals with Ben Elias has plunged the Balmain Leagues Club into inextricable debt, after it handed all its assets to its former star Test hooker.
Mr Elias has been lobbying heavily for the controversial $300 million Rozelle Village development on the club's former site, which is now before the state government's independent Planning Assessment Commission. Despite strong opposition from residents who argue that three towers, one as high as 32 storeys, are a gross overdevelopment of the site, more than 7000 letters of support for the proposal have been sent to the commission. This has been largely due to the efforts of Mr Elias, who has been greeting fans at matches and urging them to sign his petition.
What Mr Elias has failed to tell fans is that he owns a 50 per cent stake in the company behind the development, and stands to make millions if it goes ahead. And that company, which bought the club's property for $1 plus the clearing of a $23.5 million debt, is earning hundreds of thousands of dollars from crippling fees charged on loans to the club, which is back in the red to the tune of almost $9 million.
A company solely owned by Mr Elias, Fordmont Pty Ltd, continues to hold half the shares of Rozelle Village, 16 months after he resigned as a director of Rozelle Village.
''Mind your own bloody business'', Mr Elias told the Herald when first asked about Fordmont's continued involvement in Rozelle Village two weeks ago. Earlier this week, he said: ''I have nothing to say to you about Rozelle Village.''
Late yesterday he responded to questions from the Herald with a statement saying he had disclosed his position to the club's board and members.
The president of the club, David Trodden, has declined to be interviewed by the Herald.
According to documents obtained by the Herald, while Mr Elias was still on the club's board in March 2009 his company Balmain Development signed a heads of agreement with Mr Trodden and the club's then chief executive, Tim Camiller, to take over the proposed redevelopment of the club. In contravention of the Registered Clubs Act, there was no public auction or open tender for the project.
At that time, Mr Elias's company was being financed by Harry Triguboff's former son-in-law, Alex Lankry. Mr Lankry has told the Herald he agreed to finance the redevelopment in partnership with Mr Elias, who had no capital, in return for a 70 per cent stake in Balmain Development. But after sinking more than $400,000 into the club, Mr Lankry said, he told Mr Elias he would provide no further funds because the share transfer hadn't happened.
While Mr Lankry sought legal advice over how to salvage his investment, Mr Elias sought capital elsewhere, from Kemmori ''Alex'' Yasumoto, a Japanese property developer who made his fortune erecting serviced apartment towers in Hong Kong. The Australian link was the Double Bay real estate agent Ian Wright. Together the two men own Pacific Link Investment, the company behind Pacific Balmain, which now jointly owns Rozelle Village Pty Ltd with Mr Elias's company, Fordmont.
Pacific Link had the capital-raising capacity, Mr Elias had the connections and trust of the club, vital for the redevelopment deal.
Just six days after resigning as a club director, Mr Elias signed a deal with Pacific Link under which he pocketed more than $600,000 for what had been previously spent on the stalled development, a sum Mr Lankry alleges included his money, which he is still trying to recoup.
Mr Elias's job, according to the agreement, would be to broker a deal with the club, which was now bleeding $100,000 a month through previous risky property acquisitions and declining patronage of its poker machines.
A week after the Pacific Link deal was signed, Balmain Development became Rozelle Village Pty Ltd, with Mr Elias and Mr Wright its sole directors.
By late May the club was on the verge of agreeing to hand its assets and debts to Rozelle Village, in return for a guaranteed new home in the redevelopment in the form of a 15-year lease and a 15-year option.
But by this stage Rozelle Village not only stood to make millions from the residential and commercial redevelopment of the club site. The company was negotiating with the state government, which had announced plans to build a $5.3 billion, seven-kilometre CBD Metro between Central and Rozelle.
Rozelle Village stood to make as much as $30 million over five years by leasing part of the development's underground space to the metro project. Mr Wright urged Mr Elias in an email to speed up the negotiations with the club. The deal was eventually endorsed at a members' meeting on August 26.
''Really there is no alternative,'' Mr Elias told the meeting. ''The only option if the proposal is voted down is to close the leagues club doors.''
The Daily Telegraph enthused: ''Balmain's favourite son Benny Elias has saved his greatest contribution to the club until his retirement.'' The paper quoted Mr Elias saying he was ''proud to be contributing to a project that was so close to his heart''.
One resident, Mark Wallis, recalls he was one of only a handful of members uncomfortable with the Elias alliance.
''I was shouted down and booed when I disagreed with what the board was telling us, then David Trodden snatched the microphone off me. The message the board was giving was that Benny was acting in the club's best interest and that of course we should trust him … we were told he was a white knight.''
Members were permitted to see a copy of the call option on display at the club but the board banned anyone from making copies and taking them away to read the fine print. Consequently, few of the members would have been aware that the deal with Rozelle Village would immediately plunge the club back into debt, despite handing over all its land to the company.
Under the terms of the agreement Rozelle Village would immediately lend the club $4.5 million over three years to continue operating, with interest charged at commercial rates. And there was another loan, not mentioned in the agreement put before the members on August 26, but approved by the club's board three months later. Mr Elias and Mr Wright would lend the club $3.1 million to help with moving costs when it made way for the redevelopment.
According to correspondence obtained by the Herald sent to Mr Trodden, and Mr Camiller by Rozelle Village's then project manager, Moss Akbarian, the loan was initially presented by Mr Elias and Mr Wright as a gesture of goodwill from Mr Yasumoto, with his philanthropic credentials fully cited and his passion to see the club and the community it served thrive.
However, the club learnt it was to be charged market rate interest plus 2 per cent on the loan. The club would also be obliged to pay Mr Elias and Mr Wright a $180,000 ''application fee'', plus an additional $230,000 ''administration fee'' every year for the duration of the loan. On top of that, the business partners would receive an additional $310,000 from the club, should it suddenly become miraculously flush with funds and pay the loan out early.
''These fees were introduced by Ben Elias on the basis that the relocation loan to the club was unsecured and the club should not get away with paying the normal interest rates,'' Mr Akbarian's letter of explanation to the club states.
The Herald understands there was discussion over reversing the loan fees, but it is unclear if this ever happened. If the terms of the relocation loan were adhered to, the club by now has paid Rozelle Village almost $1 million in administration fees alone, on a $3.1 million loan attracting commercial rates of interest.
From what can be gathered from the club's 2011 annual report, very little if any of the $4.1 million operating loan has been paid and the club has capitalised the loan's interest. As of last October, the club had unsecured non-current loans of more than $8.5 million owing to Rozelle Village and for 2011 incurred a $2.2 million loss.
On the surface, it appeared by then that Mr Elias had ceased his business relationship with Mr Wright and Mr Yasumoto, having resigned as a director of Rozelle Village in December 2010\. He appeared to be lobbying for the development on behalf of the club once more.
Last September Mr Elias refused to comment when asked if he was still involved in Rozelle Village, saying only that he was turning his business interests to a truck stop development in Toowoomba with his good mate Mick Doohan, the grand prix motorcycle champion.
But Mr Wright has told the Herald and The Australian Mr Elias was ''not involved at all'' in the Rozelle Village company.
As of close of business yesterday, Mr Elias's company Fordmont remained the 50 per cent owner of Rozelle Village.
In a statement received by the Herald late yesterday, Mr Trodden said all club-audited finances, including loans and repayments, had been documented and distributed to members in a transparent process. ''Ben Elias's relationship with Balmain Leagues is not a business one - he is one of our greatest players and most hardworking supporters,'' he said.
''I have been heartened by the continued support from the many thousands of fans and the community who have independently expressed their support for the development which will bring the Tigers home to Balmain.''
Mr Elias responded in writing late yesterday to a series of questions on his involvement with Rozelle Village: ''I am a former director but left this position over 12 months ago to pursue other activity.''
He had made a full disclosure ''of my former position'' to the club board and members at the meeting which overwhelmingly voted in favour of the redevelopment. Yet according to ASIC documents, Mr Elias did not stand down as a director of Rozelle Village until almost four months after that meeting.
''I am committed to seeing the Tigers return to Rozelle and openly encourage all fans to support the development,'' he said.
Apology to David Trodden
The article "How Benny Elias put the bite on the Tigers" (June 30, 2012) concerned the proposed development of the Balmain Leagues Club site. The then chairman of the club, David Trodden, has complained that the article criticised his management of the club’s affairs in relation to the proposed development. The Herald accepts that Mr Trodden acted properly and in the best interests of the club at all times, withdraws any suggestion to the contrary and apologises to Mr Trodden for any hurt and embarrassment caused by the article.
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