The Politicians Four Broken Promises of Settlement
The first Broken Promise
On the morning of the second of November 1993 I was busy preparing breakfast for the family when I received a phone call from the Canberra Office of Ms Phillipa Smith, the Commonwealth Ombudsman. During the previous month Ms Smith had been conducting an investigation into our case. It was a very warm Tuesday morning and this was a very welcome phone call. Ms Smith explained there had been a breakthrough in our case due to the recent investigations by AUSTEL and Coopers & Lybrand. Furthermore she explained that she had been informed by the joint Ministers for Communications, Senator Bob Collins and David Beddall MP that the Government and the Opposition Spokesperson on Communications, Senator Richard Alston had expressed serious concerns with the publication of the damming findings by AUSTEL on 9 June 1993 and subsequently Coopers & Lybrand the day before being 1 November 1993. Ms Smith indicated that as a result of her discussions I would be contacted by the Minister in the very near future.
So it happened that on 10 November 1993 I received a letter from the Minister. The Minister’s letter signalled a significant breakthrough with his admission he accepted we had suffered personal and financial distress as a result of the dispute over inadequate phone services. Subsequently on 18 November 1993 I received a call from Senator Bob Collins. Senator Collins indicated that he was concerned that the Commonwealth Ombudsman was supporting the proposed Senate Inquiry into Telstra. Furthermore he said he had been advised that our case had exposed the serious problems with the fault ridden Fortitude Valley Exchange and network. He went on to discuss our complaints concerning the fact that we believed our phone conversations were bugged by Telstra and our Restaurant phone lines had been deliberately sabotaged.
During the discussion Minister Collins asked me if I would in exchange for a fast settlement of our Telstra Claims agree to withdraw my support for the proposed Senate Inquiry into Telstra. In response I enquired as to the meaning of what he meant by fast. He indicated that he had discussed this with the Opposition Spokesperson on Communications Senator Richard Alston and if I agreed to withdraw my support for the Senate Inquiry we would be settled within six months or sooner.
I advised my family of the promise of a fast settlement and in a return phone call to the Minister I indicated that, yes I would only agree to withdraw my support if the settlement was guaranteed to occur within six months. Senator Collins said yes he would guarantee that the settlement would occur within six months and in saying this he assured me that he had the support of the Opposition Spokesperson on Communications, Senator Richard Alston. I indicated that in the circumstances I would accept the agreement on the understanding that the stated terms and conditions were honoured. Senator Collins sounded very relieved and confided in me that the Government did not want a Senate Inquiry because it would expose the faults and problems in Telstra’s network infrastructure.
The Minister went on to explain that the Government’s dividend from Telstra for the financial year, being 1993/4 was expected to be in excess of two thousand million dollars. I will never forget his words of comfort as we finalised the agreement “Ann trust me I am from the Government, we own Telstra”
In agreeing to the fast settlement commitment the Minister, Senator Alston and Senator Boswell acknowledged that the promise of a fast settlement was to allow for the reinstatement of our business, home and superannuation which had been lost during the decade long Telstra dispute.
Given the Government’s intimate knowledge of our desperate circumstances by November 1993, we accepted the personal assurance provided by both Senator Alston and Senator Boswell that we would soon have our home and superannuation reinstated was particularly important to us as we trusted both Senators.
Senator Ron Boswell was from Brisbane and Senator Richard Alston was from Victoria. Senator Alston assured me that as he was the Opposition Spokesperson on Communications I was in safe hands and could accept his promises without question.
On sealing the agreement I immediately notified the other Senate Committee Senators that I was withdrawing my support for the Senate Inquiry into Telstra. I explained that I had accepted the Government’s express promise of settlement by April 1994.
An hour later, in a follow up phone call it was indicated that I was required to fly down to Melbourne that same morning to a meeting which had been arranged at the headquarters of AUSTEL to discuss the settlement arrangements. I was informed that an Airline ticket was waiting at Brisbane Airport for me. At the same time I received a phone call from Senator Boswell indicating that he and Senator Alston would in endorsing the agreement personally ensure that the settlement would be honoured by April 1994 or sooner and possibly within three months.
We were so relieved and excited, it had been a long difficult ten years for all of us. On arriving at the offices of AUSTEL in Melbourne a few hours later I was to discover that the loss assessment agreement they wanted me to sign did not reflect the Ministers promises. Accordingly without further delay I immediately left the offices, went to the Melbourne Airport and flew back to Brisbane. On arriving back at the Theatre I was informed that I was to immediately phone the Chairman of AUSTEL Mr Robin Davey in Melbourne.
So it was that during the ensuing phone conversation with Mr Davey, he informed me that since my unexpected departure from his office the agreement had been changed to reflect the promise made by the Senators. He said there was another ticket waiting at Brisbane Airport and I was to return immediately to Melbourne.
That afternoon I flew back to Melbourne. During the late afternoon meeting at the offices of AUSTEL I agreed to the terms and conditions on the understanding that we would receive the settlement of our Telstra claims for Roseville Restaurant and the Tivoli Theatre by April 1994.
Now, I admit to being a bit of a Pollyanna, but in saying this I had no reason to doubt their word, I wholeheartedly believed in our Democratic system and the word of the Government Ministers and Senators. This was especially so because at the time, it was acknowledged that the settlement was now more urgent that urgent as Harry Garms had suffered a nervous breakdown during the decade long dispute and we had lost our business, home and superannuation. I had kept my side of the agreement by immediately withdrawing my support for the Senate Inquiry. We had a family celebration dinner the next evening, there was now so much to look forward to. We could at long last have our own home again and importantly our superannuation and income because it was known that Harry would never work again.
We were totally reliant on the Government’s promise that settlement would occur by April 1994. Accordingly we notified our Bank. The next day Senator Boswell spoke to the Bank Manager who on his assurance approved bridging finance to allow us to survive and continue with the renovations on our home at 53 King Arthur Terrace Tennyson in anticipation of the promised settlement in early 1994.
What happened next was not only unfair, it was Alas! a cruel betrayal of our trust.
A month after agreeing to accept the Politicians promises, on 21 December 1993 we received a letter from the Manager of Consumer Affairs at AUSTEL, Mr John McMahon. Mr McMahan had been conducting an investigation into our complaints that Telstra was bugging our phone conversations and as well as deliberately sabotaging our Restaurant phone booking lines.
In his letter Mr McMahon advised that he had uncovered evidence to support our complaint that Telstra had been bugging our phone conversations for over three years. He explained that he had uncovered the existence of a secret Telstra Report dated April 1993. He said the Report had been prepared by Telstra for their Lawyers Freehills, as a defence against our claims. Mr McMahon subsequently said that he had received instructions that under no circumstances was he permitted to provide a copy of the report to us.
In late December Senator Collins phoned me to apologise for his failure to act on my complaints concerning the bugging of our conversations. A new Minister for Communications was appointed on 30 December 1993. The new Minister, Michael Lee MP I was informed was a hard liner and a Lawyer who would be better suited to handle the now explosive political dilemma.
As a result of my protestations and those of AUSTEL combined with extensive media coverage the Minister had no choice than to call in the Australian Federal Police to investigate. This of course led to the Political cover-up and a raid by the Australian Federal Police on the Offices of Telstra’s Lawyers and Accountants Freehills and Deloitte in Melbourne. This took place on 21 April 1994. The concealment of the evidence of bugging and the profound invasion of our privacy did not stop there.
At a meeting with the Australian Federal Police in May 1994 I was informed that they had also received instructions that the Reports were not to be disclosed to us. This resulted in the Reports being concealed from us despite an FOI request, a Senate Order on 22 March 1995 and the Senate Working Party investigation from 1997 to 1999. A complete copy of the Report containing the evidence of the “bugging” and admissions by Telstra that they had found evidence of “deliberate phone line sabotage” was finally obtained under FOI from the Australian Federal Police in September 2000. As indicated the AFP charged me $15,950.00 to process the FOI Request!
At the same time the Australian Federal Police commenced their investigation this being in January 1994, I received a letter from the new Telecommunications Industry Ombudsman, Mr Warwick Smith, the former Liberal Member for Bass. The letter was disturbing in that Mr Smith was insisting that we approve the appointment of Helen Coonan’s husband, the former Supreme Court Judge, the Hon Andrew Rogers QC as the fast track loss assessor.
To say we were shocked by this latest political maneuver was an understatement. We refused to agree to the appointment. In a letter to Mr Smith I indicated that the Politicians had expressly promised that the loss assessment of our claims would be strictly non legalistic and more importantly concluded by April 1994. The rejection of the preferred appointment was not well received! There is no doubt that from January 1994 the obvious political bias intensified as a direct result of our refusal to agree to the appointment of the Hon Andrew Rogers QC.
In February 1994 when I enquired as to the progress of the agreement for settlement I was informed by AUSTEL and Members of Parliament that the Government was concerned that a loss assessment of our claims would expose the Government to risk. This it was said was because it could be successfully argued by a loss assessor that there was a case for mandatory discovery of the Secret Report and documents relating to the Network Infrastructure problems and the bugging and sabotage issues.
When no response was received by 11 March 1994 in a letter to the new Minister for Communications, the Hon Michael Lee MP, I reiterated the specific nature of the Politicians promise of settlement within six months and the damage and loss we would sustain if the Government failed to honour the promise.
Minister Lee failed to respond and in frustration I forwarded a copy to Senator Alston and Senator Boswell. On 16 March 1994 Minister Lee contacted me to indicate that I had no choice other than to agree to enter a new process called the Fast Track Arbitration Procedure which he promised would be settled within six months. I refused and Minister Lee issued an ultimatum, sign Mrs Garms or we will walk away and you will get nothing. I forwarded a copy of the letter and my objection to the Arbitration process to Senator Alston and Senator Boswell to no avail. On 21 April 1994 when there was no hope of settlement we were forced under duress to sign the Fast Track Arbitration Procedure.
One month later, in May 1994 it was therefore with interest that I listened to the investigating officers from the Australian Federal Police explain why the cover-up had occurred. It soon became clear to me from their comments and others in the Parliament as to the Political motive behind the back-flip on the promise of settlement by April 1994. It was indicated that pressure had been asserted on all involved to cover-up the illegal activities occurring at the Fortitude Valley Exchange. The cartoon depicts the profound invasion of privacy and “Bugging” activities at the Fortitude Valley Exchange.
The Telstra Officer who prepared the secret Report was Mr Grahame Powles, Customer Services Manager. The Report was based on the content of the matters discussed in our business and personal conversations. Mr Powles who was also involved in the covert tape recording of our conversations issued a direction to Telstra Officers that they must not disclose to me the fact that they were bugging our conversations. In fact it is reported in the press that during the Minister, Michael Lee’s first Briefing on the matter which followed a private dinner in Sydney with Telstra CEO Frank Blount he was informed of the above covert “Bugging” operation, the Report goes on to say that during the briefing, Lee was informed that Telecom had actually tapped the conversations of some customers and had made hundreds of hours of recordings that it had not previously admitted to possessing. This is what Mr Lee told Mr Blount had been documented in Mr Powles files: “The fact is we are bugging Mrs Garms line and she does not know about it yet and we would like to keep it that way as long as possible”
One month later, in May 1994, the Australian Federal Police Officers explained that they had issued a Search Warrant No 971/94 21 on Mr Peter Crofts of Deloitte and Freehills on 21 April 1994, three items were seized in the raid. The first item the AFP informed me was the secret Telstra report containing evidence of Bugging and phone hacking.
The Australian Federal Police at a subsequent meeting informed me that they had uncovered further evidence which they could not disclose but there was no doubt that the damaging nature of the evidence had led to the cancellation of our settlement because of risk to the Government.
So it was that this evidence and the other two items obtained during the raid on Freehills and Deloitte were never disclosed. It was devastating to us, here we were involved in an Australian Federal Police investigation, our settlement was blatantly cancelled and as a direct result we were unable to reinstate our business, home and superannuation. The damage we sustained was extraordinary, we had borrowed money from our Bank to continue to build our home, not only were we not able to finish the home we were unable to repay the Bank.
The truth of the matter is that in April 1994 instead of receiving the promised settlement we were forced screaming and kicking into the unfair over-legalistic arbitration process by the new Minister which was once again promised to be settled within six months. More importantly the evidence collected by the Australian Federal Police, and which was concealed by the Politicians related to the matters the subject of the Arbitration Procedure.
We were soon to discover that we had been conned by the Politicians once again. The alleged fast track arbitration turned out to be no more than a sham process which went on and on for two and a half years, still with no business home or superannuation. This was followed by a Supreme Court Appeal against the Arbitrator’s Award and a Senate Working Party process. As so aptly described by the Police as a process “You were never meant to win”.
It was now over three years from the date the Government promised our settlement would take place and almost three years since the Australian Federal Police had provided to the Government a Brief of Evidence on the bugging (phone hacking) and phone line sabotage. A copy of the Secret Telstra Report which the AFP had obtained during the raid on Freehills and Deloitte was included in the AFP Brief of Evidence. The Australian Federal Police informed me that the evidence they had collected supported our case and indeed our complaints, but despite the ongoing investigations the Government failed to disclose it.
It was significant that on 26 June 1995 the Commonwealth Ombudsman after a lengthy investigation concluded that Telstra’s Accountants, Deloitte and Lawyers Freehills relied on fabricated information during settlement processes.
This led to the misrepresentation of the evidence of the Fortitude Valley Exchange problems and upgrade, the bugging of our business and personal conversations and the phone line sabotage of our Restaurant Booking lines by the Arbitrator, the Politicians and the Director of Public Prosecutions and once again some handsomely paid Lawyers who were most eager to be the beneficiaries of the very lucrative Government retainers. I soon learned during these highly legalistic and dare I say sham processes, that no matter what the truth of the matter is, if fees of over $2million dollars are earned by each consultant it seems to dull the senses.
I was informed by the Police that the DPP has a history of bending to the wishes of the Politicians and those directly involved in contentious political issues. I might say here that this is not my assumption but reliable advice provided by those actually involved. The breaches of our privacty and bugging of our conversations, commonly referred to as phone hacking comprises a very intersting analysis of the evidence as described in Chapter 10, Yes Prime Minister.
Sadly, by June 1997 St George Bank lost patience and demanded that we sell the Tivoli freehold. We had no choice than comply with their formal Demand, after all they had been so patient. So it was that in September 1997 we sold the freehold and leased back the business.
Meanwhile on 24 June 1997 at the same time St George Bank threatened to foreclose on our mortgage I was invited back to Canberra to appear before the Senate Legislation Committee as a witness. As you can imagine by this juncture all we wanted was for the Politicians to honour their promises. We had been reduced to a desperate situation, with Harry’s mental problems now so evident, his phobic reactions so difficult to deal with and with every broken promise I became more and more a victim of domestic physiological abuse. The frustration of not being able to resolve the situation was almost too difficult to cope with. I was desperate for a fair outcome to relieve the pressure by enabling us to resume our lives and restore some form of normality by once again having a home, income and Superannuation.
I arrived in Canberra early on 24 June 1997, it was a Wednesday. The Senate hearing had been set down for 10am. After the hearing the Senators expressed their concern at the damage we had sustained over the three years since settlement had been promised. As a result I was invited to appear again as a witness on 23 September 1997. At the conclusion of the Hearing the Senators advised me that they were going to convene a Senate Working Party to investigate our matters. Interestingly, during the Senate Debate it was revealed that $24million had been spent to date on Professional Consultants to defend our claims. That same afternoon I was asked to examine the Terms of Reference (TOR) for the Senate Working Party (SWP) process. The Schedule for the Terms of Reference included the contentious matter of my Supreme Court Appeal. “Appeal proceedings regarding the award in the arbitration of the dispute between Telstra and Mrs Garms.”
I examined the Terms of Reference, made a few changes and signed off on them. I was informed that the process would be finalized within three months, this being December 1997. A month later, on 24 October 1997, the Senate Committee Office and the Deputy Chair Senator Schacht advised me that the Senate Working Party Terms of Reference (TOR) had been watered down because the Liberal Senators had received legal advice that the agreed TOR would affect the T2 Sale. The following Cartoon depicts these events.
Consequently, the terms of reference were unworkable and unfair and the Senate Working Party process dragged on and on and on, it did not conclude in December 1997 as promised but was extended to March 1999. It was now five years since the Politicians had promised that our home and superannuation would be reinstated within six months or sooner.
The second Broken Promise
In the face of the personal and financial crisis that had engulfed us during the long five years that had passed since the first promise of settlement within six months, a crisis which appeared insoluble, a ray of hope appeared through the final recommendation of the Senate Working Party which was wrapped up on 6 March 1999. That very same day the Commonwealth Ombudsman endorsed the Senate Working Party’s Report recommendation that our claims were to be settled immediately through an independent claims assessment process. Accordingly, I was delighted to be informed by the Senate Office that the Chair, Senator Alan Eggleston had arranged to present his Senate Working Party Report during a Senate Hearing set down for 11 March 1999.
It was a Wednesday. I arrived in Canberra on the morning of 10 March 1999 for the Senate hearing. Senator Eggleston had arranged to meet me at his favourite meeting place, Ossies Coffee Shop in Parliament House to brief me on his Report. The coffee was always good at Ossies. His news was very pleasing after a long eighteen months during which I had represented five other cases at the request of the Senate. The Senate Working Party process was gruelling, the workload was horrendous, and virtually thousands of pages of erroneous submissions were received from Telstra. In all the process cost me $187,000.00. It also involved travelling to meetings convened monthly in the Commonwealth’ Ombudsman’s Office in Melbourne, in conjunction with three further appearances as a witness before the Senate Committee in Canberra.
The daily workload over the previous twenty months in my role as the representative for five (5) simular cases was not only costly but also very time consuming. Hardly a day went by when the Commonwealth Ombudsman’s Director of Investigations, Mr John Wynack and I would discuss Telstra’s responses and the Senate’s Directions. On an almost daily basis we would exchange notes and answer correspondence in response to Telstra’s very legalistic and mostly irrelevant submissions numbering over two thousand pages in all. It did not take me long to understand how to counteract their strategy. All I had to do was find the one sentence in each lengthy submission that was relevant.
At this point in time being March 1999, the Minister for Communications in the Howard Government was Senator Richard Alston, the same Senator Alston who had back-flipped on the first promise five years earlier. As noted previously each broken promise is directly connected to the T1, the T2 and the T3 share offer due diligence processes.
In early March 1999, I personally provided Senator Alston with important, relevant evidence obtained through the Senate Working Party Process, the Commonwealth Ombudsman’s investigations and advice provided by the Victoria Police Major Fraud Group Barrister, Mr Neil Jepson. Two important pieces of evidence had emerged. One, Mr Wynack had conducted an Audit of Telstra’s Arbitration files in my presence at the Melbourne Office of Holding Redlich, Telstra’s Lawyers. The Audit was in relation to my submission to the Arbitrator, Supreme Court, Prime Minister Howard and Senator Alston that documents had disappeared from the Telstra Viewing Room during discovery.
The results of the Audit found six files missing and two completely empty, which was contrary to Telstra’s submissions to the Arbitrator and Supreme Court. As a result Mr Wynack advised Senator Alston that the Affidavits sworn by Telstra’s Mr Rod Kearney, Manager FOI and Mr Ted Benjamin as submitted in the Supreme Court Appeal contained false evidence. In conducting the audit Mr Wynack had examined the Supreme Court Transcript and confirmed that Justice Harper accepted the affidavit material as truthful. Secondly Senator Alston was informed that Mr Jepson from the Victoria Police had contacted the Australian Federal Police in regard to the missing files relating to the sabotage of our lines. On 10 March 1999 I advised Senator Alston that Mr Jepson was informed by the Australian Federal Police that the allegedly missing evidence had actually been provided to the Politicians in the Interim Brief of Evidence on 14 July 1994, five years earlier. The truth of the matter is that the Politicians had been in possession of the evidence for over five years whilst we all searched high and low for the missing evidence it was within arms length in Parliament House.
In my submission of 10 March 1999 Senator Alston was provided with the relevant page from the Arbitrator’s Award. In particular I brought to Senator Alston’s attention Clause 6 C:
“Award Clause 6 (c): “The Resource Unit comments in the conclusion to the technical report that “deliberate interference cannot be ruled out as a possible major cause of the fault reports”. The fact is that there is no evidence to support a conclusion that there was deliberate interference and whilst a finding on this specific issue is not critical to my award, I should emphasise that I have discounted entirely the prospect of deliberate interference or “sabotage” in reaching my final conclusions.”
The Australian Federal Police evidence in the power, control and possession of the Politicians from July 1994 contradicted the Arbitrator’s Award. In September 2000 I finally obtained a copy of the Brief of Evidence under FOI from the Australian Federal Police. The Brief was dated twenty -five months prior to the Award: “Tivoli Restaurant Mrs Ann Garms- Telecom found evidence to indicate that the service was tampered with but it did not identify a suspect”
On 10 March 1999, I immediately informed Senator Alston and asked him to locate the evidence. Senator Alston did not respond to my request.
Just prior to this on 8 March 1999, I met with the Senators to report on the finalisation of my role in the Senate working Party process. During the meeting the Senators informed me that the Senate Legislation Committee had that same day approved the Share Offer due diligence process for the T2 sale. In the ensuing conversation we discussed the fact that the independent claim assessment process which had been agreed by all, mirrored that which had been adopted by the Senate in the now famous Paramount Midford Shirt Case and Customs. This particular case involving Customs was so aptly handled by Senator Bronwyn Bishop, the current Speaker of the House of Representatives. I expressed my appreciation to Senator Eggleston and anxiously awaited the Senate Debate which was scheduled for the following day. I phoned my family and St George Bank to tell them the good news.
After this long difficult period, we were all delighted to receive the good news. Senator Eggleston informed me that he had formally accepted the Senate Working Party recommendation for “An independent Assessment of the Claim” which I was aware had been endorsed by the Commonwealth Ombudsman four days earlier.
We were so relieved, surely the Government would not let us down again and surely in all honesty they could not possibly renege on the promise for the second time. That evening my family had a special celebration, finally we were going to have our home, superannuation and business reinstated! Our Bank agreed to extend our loan, having regard for the Senate Working Party recommendation and Senator Boswell’s personal confirmation provided to our Bank Manager.
We were to discover that without our knowledge Senator Alston on the evening of 10 March 1999, the day before the Senate Working Party Report was to be debated in the Senate, contacted each of the Senators and arranged for the endorsed recommendation for an independent assessment of our claims to be cancelled.
So as it happened that same evening in Canberra Senator Alston instructed Senator Eggleston to delete the recommendation and insert the alternate wording that we were to reach a negotiated agreement with Telstra. Not only was it an impossible task for us to negotiate with Telstra, it represented a betrayal of our trust for the second time and our god given right to a fair and proper independent claim assessment process, but it was to get worse, if that was at all possible.
Totally oblivious of the deletion of the agreed Senate Working Party recommendation the next morning I arrived at the Senate at 9.30 am in anticipation. Several of the now familiar Senators who had steadfastly debated our matter over the previous eighteen months were filing into the Chamber to hear the long awaited Senate Working Party Report. What we were to discover next was profoundly disturbing and personally devastating. As Senator Eggleston read his report it became clear that the agreed recommendation for an independent assessment of our claims had been changed to read “In the Committees view Telstra should now seek to reach a negotiated agreement with the parties” It would be an understatement to say we were furious and felt betrayed by the unfair treatment, this was gut wrenching news, but it did not stop there. Although I knew by this latest betrayal of our trust that there were real political forces bearing down on us I was still entirely unaware of the extent of the betrayal.
As we sat in the Senate Chamber Gallery on that fateful day of 11 March 1999 the Senators from all parties accused Telstra of misleading and deceptive conduct. The 11 March 1999 Hansard is an interesting read. On that fateful day Senator Alston and Senator Boswell in the ensuing Senate debate admitted that their promise of settlement had not been honoured, this is an extract of what they had to say in the Senate: Senate Hansard: “Senator Alston. Senator Carr reminded me of what we set out to achieve back in 1993…We both took the view that this was to be a fast track procedure. If, by that, we fondly thought it would all be disposed of within three months, then clearly we have been sadly disappointed”
As I sat in the Senate on 11 March 1999 listening to the damming findings I was fuelled by the mistaken idea that the Government would after such startling admissions somehow regret their past actions and develop a sense of justice and fairness which would lead to the reinstatement of the agreed independent claim assessment process, and the reinstatement of our home and superannuation. It became apparent that Senator Boswell was completely unaware that Senator Alston had cancelled the agreed independent assessment process when he wrote his Speech the night before.
This is an extract from Senator Boswell’s speech in the Senate on 11 March 1999:
“When a Senate inquiry was mooted in 1993 Telecom quickly agreed to a fast-tracked settlement procedure signed … at the instigation of Senator Alston, me and the then Labor government. I support the findings of this report and urge a final solution now—by means of an independent assessment. To meet the commitment given by the Labor Government, Senator Alston, myself and the TIO at the beginning of their arbitration—of fairness and justice —instead these brave small business people have had their lives, businesses, peace of mind and assets destroyed by the many times proven misconduct of Telstra.
The atmosphere in the Senate Chamber was electrifying as I thought to myself, Senator Alston is disappointed that the promised settlement did not occur five years earlier, that is an understatement, how would these Politicians like it, if we robbed them of their right to an income, their home and their much anticipated superannuation.
At the conclusion of the debate I returned to Senator Eggleston’s office to enquire as to why the agreed settlement recommendation had been changed. Senator Eggleston’s Parliamentary Office staff member informed me in his presence that the Minister, Senator Alston in conjunction with his Chief of Staff, Mr Paul Fletcher had changed the recommendation the night before. Senator Eggleston profoundly castigated his young Parliamentary Office Staff member for telling us, she burst into tears and left the office. From my ensuing conversation with Senator Eggleston it turned out that Senator Alston after receiving a copy of Senator Eggleston’s Report the previous night had personally contacted each Committee Senator to inform them that the agreed process should be cancelled because we did not have the evidence and furthermore an independent claim assessment had the potential to damage the T2 sale process.
As it so happened with the Howard Government’s cancellation of the independent claim assessment process we were left without any process whatsoever to reach a proper structured assessment of our claims. By 25 March 1999, I was at a complete loss to know what to do, how could we possibly make the Politicians honour their promise, we were destitute, no business, home or superannuation.
Senator Boswell had steadfastly kept up his campaign with Senator Alston insisting the Government honour the promise for an independent assessment of our claims, but as he said all seemed in vain, the Prime Minister would have none of it. It became increasingly apparent from his comments that the prospect of the foreshadowed billion dollar windfall from the T2 sale had engulfed any reasonable approach to the establishment of a proper and fair process for settlement.
Can you imagine for one minute the degree of self belief and perseverance it required to keep going, to continue to put on a brave face at this time? St George Bank was by now becoming increasingly impatient.
Inevitably there was not much more I could possibly do to reassure the Bank that the Government would somehow honour their promise of an independent assessment of our claims. It was obvious that Senator Alston was concerned that the Prime Minister did not want an independent claim assessment because it would pose a risk to the T2 sale due diligence process as it went forward. The Politicians reasons for the second broken promise related to the risk to the Government by the exposure of the evidence that the Arbitration was a sham process and the Supreme Court Judgment had been exposed to contain serious flaws.
Just as an example, it was said that there was no sabotage, no major upgrade there was no missing documents. All of these factors had been proven to be profoundly wrong during the Senate Working Party process. Furthermore John Kingston of Ernst & Young had in support of his contention that the arbitration was a complete sham had provided compelling evidence to the Prime Minister and Senator Alston. For example the proposition was accepted by the Arbitrator that we had overspent on the refurbishment of the Tivoli and were therefore short of working capital. John Kingston provided supporting evidence that this was no more than a blatant and profoundly dishonest attempt to devalue the viability and real estate value of the Tivoli freehold premises to somehow discredit us. John Kingston provided evidence that we were not short of working capital. There was no shortage of funds, in fact we had originally budgeted to lease equipment in the amount of $489,504.00 but this approach was found to be entirely unnecessary. The equipment earmarked for leasing was instead paid for out of available funds and instead the lease component was limited to the Cash Register equipment, in total the lease was for the amount of $42,300.00. As further proof that there was no shortage of funds, sure we had to borrow some additional funds until the proceeds of the sale of Roseville came through in March 1990 as is normal business practice. John Kingston detailed these matters superbly in his reply to the Arbitrator, a robust reply supported by factual evidence to which he received no response. He also confirmed that we had increased our advertising budget in the first year from the original budget of $20,000 to $150,000 to cover extensive television advertising in an attempt to overcome the telephone problems. John Kingston’s reports on these matters can be found at Tab 22.
The Prime Minister and Senator Alston were kept fully informed of the cover-up of the blatant misrepresentations and deception, including the finding by the Arbitrator that there was no evidence of sabotage. On the following page I have prepared a table indicating the Arbitrator’s fabrication of the wording of George Close our Technical Consultants Report to remove the reference to the Fortitude Valley major exchange and network upgrade. A copy indicating the fabrication was provided to the Prime Minister and Senator Alston to establish the extent of the cover-up of the major upgrade of the Fortitude Valley Exchange by Telstra, the Arbitrator, Justice Harper and the Department of Communications General Counsel. Talk about Ground Hog day!
In 2001 Mr Neil Jepson, the Barrister with the Major Fraud Group, Victoria Police contacted me to inform me that during his investigations he had uncovered evidence that Senator Eggleston after reading his Report in the Senate had hand deleted the negotiated provision from the Report prior to tabling it in the Senate. On conveying this information Mr Jepson enquired if I would come down to Melbourne as he wanted to speak with me personally. On that cold Melbourne day in September 2001, uneasiness spread over me as I met with Mr Jepson at the offices of the Major Fraud Group in St Kilda Road Melbourne. I was right to feel uneasy because the investigation was in danger of being shut down. The Cartoon depicts the scene at the offices of the Victoria Police.
As I left his office Mr Jepson provided me with a copy of the tabled Senate Report. This is an extract identifying the alteration made by Senator Eggleston on 11 March 1999:
The survival money Direction
Back to the Senate in Canberra, March 1999. Following Senator Alston’s cancellation of the independent claim assessment process we were in a complete state of despair and at a loss to know what to do next. The five cases I had represented in the Senate Working Party during the previous two years were in constant contact with me, they were in danger of taking their own lives. Our personal situation at home was also perilous.
The days passed in March with no hope of overcoming the dilemma that faced us. By 26 March 1999, when there had been no breakthrough, Senator Boswell informed me that Senator Alston was totally inflexible to any suggestion that he honour his promise. At this point we had now been homeless for nine years. Embarrassingly, by March 1999 we had been reduced to living at the Tivoli and indeed sleeping on the couches in the Tivoli Bar. What on earth was I to do, god help me I kept thinking. I decided the only course of action was to return to Canberra, the scene of the crime. I pawned my engagement ring to fund an air fare back to Canberra and provide one of the cases who had three small children with food and a rent payment. The cheapest air fare in 1999 was $920.00. Senator Boswell in response to my request for a meeting had arranged to meet with me in his Canberra office at 10am on 30 March 1999. I was accompanied by Barry O’Sullivan and the Endeavour Charitable Foundation who I had personally assisted and represented during the previous eight years of their phone problems through the Fortitude Valley Exchange.
As a background to this, the Endeavour Foundation contacted me in 1991 after the Channel 9 expose. The Foundation explained that they had experienced exactly the same phone problems receiving phone calls through the Fortitude Valley Exchange and indeed their records show that their organization incurred $4.06million dollars in direct costs associated with internal changes designed to reduce their telephone dependency. The Foundations statement further exposed the fact that they supported almost 4,000 intellectually disabled clients that rely on the service delivery provided by 1,500 Foundation staff and 2,000 volunteers. The annual operating budget for the Foundation was in excess of $70 million dollars. A workable telephone service was essential to their survival financially. From 1990 to 1994, the Endeavour Foundation Lottery operations were largely telephone dependent. Each year they conducted 10 lotteries in million dollar homes. The gross annual income from lotteries being $18 million dollars. Their statement provided to Senator Alston on 30 March 1990 also stated at paragraph 10 “Telstra continued to tell them that they did not have a problem and they constantly blamed the faults on hardware. Furthermore, Telstra advised the Foundation that they were the only service connected to Fortitude Valley Exchange experiencing these problems”
When we all arrived at the Senate Offices on 30 March 1999, Senator Boswell had just returned from a meeting with Senator Alston. With a glazed look in his eyes he delivered the bad news. He informed us that Senator Alston would not reinstate the promised independent claim assessment process under any circumstances. Senator Boswell called me into his office and said you can only have what is referred to as a survival money only payment, write down what you owe add on a few dollars that is all I can do for you, I cannot deliver you justice.
In response to my vigorous objections he explained that the Prime Minister, the Hon John Howard MP was concerned that an independent assessor would produce a damming report and award substantial compensation which would have to be disclosed during the T2 due diligence process. He went into a long explanation about how the Government was reliant on the proceeds of the Telstra sale because they had an unfunded Public Service superannuation debt of almost a billion dollars.
To say we were devastated was an understatement. I strongly objected and said what about our superannuation? The following cartoon depicts the events in Canberra on 30 March 1999.
By this stage, March 1999, the promised date for settlement was five years overdue. We had been renting a home for seven years having lost our home at 79 King Arthur Terrace and all our Superannuation Investment properties during the decade long dispute. Sadly, on 30 March 1999 we were not aware of the circumstances that led to the back flip by Senator Boswell when he gave in to the political pressure. The circumstances of the betrayal were disturbing to say the least. In the afternoon of 30 March 1999 on his return from a meeting with Senator Alston, Senator Boswell asked me to immediately phone our Accountant at Ernst & Young, Mr John Kingston. I was to enquire if he could prepare a survival money figure as quickly as possible.
Senator Boswell had a long conversation with John Kingston, that same afternoon in a letter to Senator Boswell he raised serious objections concerning the unethical manner in which the Government was directing a survival money payment:
“In anticipation of the foreshadowed settlement I have in the last month conducted an exhaustive audit of the Garms loss and damage. In my opinion the compensation payable to Harry and Ann Garms would exceed $19.2 million when calculated by a competent loss assessor such as GAB Robbins. From your comments I understand that the Government is only prepared to sanction a payment which you refer to as survival money.
This I understand is to cover losses incurred from April 1994, being the Government’s promised contractual date for settlement. This matter cannot be settled in the proposed manner by the Government.
This proposal is unacceptable and represents a most unethical and disturbing situation, notwithstanding having regard for your instructions I have calculated the loss and damage incurred since 1994 as upwards of $13.869 million excluding the Telstra claim. The losses have been incurred as a direct result of the consequences of not receiving the settlement by April 1994.
Given your time constraints and immediate requirement to report these losses to the Minister Senator Alston, we have not included an amount for pain and suffering, the claim for Roseville Restaurant (unable to be prosecuted due to the Government’s failure to honour their contractual commitment) and/or an allowance for Ann Garms time incurred during the Senate Working Party process, nor medical expenses and interest on the delayed settlement including legal fees unnecessarily incurred during the Supreme Court Appeal.
The above calculations are additional and do not include any amounts previously received by Harry and Ann Garms as a result of the 1993 payment, the GAB Robins assessment of costs arising out of defective administration of FOI applications dated 7 April 1998, and the TIO award for partial costs of professional fees. In short there is no double dipping in claiming the amounts noted herein. In short there is no double dipping in claiming the amounts noted herein.
It should be acknowledged that previous settlement processes were fundamentally flawed, with unfair, narrow terms of reference which did not afford our clients the right to a fair, ethical and just assessment. Simply put, they amounted to no more than a superficial ‘bandaid’ The costs awarded did not cover the damage, losses and extraneous costs incurred due to the Keating Government’s failure to honour their advice and commitment of settlement by April 1994, not including the claim against Telstra.
In June 1995 the Commonwealth Ombudsman concluded that Freehill Hollingdale & Page and Duesburys (Deloittes) relied on fabricated information when arriving at their July 1993 assessment. Austel in September 1993 concluded that the conduct was unacceptable and this led to the intervention and admissions of liability by Ministers Collins and Beddall in November 1993 and the Government’s warrant of compensation by April 1994. As indicated by you this morning both Harry and Ann Garms have over the last five years been simply worn out and are incapable at this point in time of defending themselves. As you acknowledged Harry Garms has suffered serious mental health problems from the time of the sabotage of their business telephone lines by persons within Telstra and subsequently due to the failure of the Government to honour its commitment.
Please advise if any further clarification and supporting financial documentation is required, I will be available to meet with the Minister in Canberra if necessary.”
On that fateful day, 30 March 1999 Senator Boswell on his return from another meeting with Senator Alston requested that I personally deliver a copy of the letter from Ernst & Young to Senator Alston’s Ministerial Office.
Later that day around 5pm I was informed that the survival money amount of $13.869 million as calculated by Ernst & Young, was cut in half and a further $1million deducted to compensate the Endeavour Foundation. All of this ultimately resulted in a payment of $5.8 million which left us with a debt of almost $1.5 million, with no compensation for the loss of our home superannuation or business. In essence we were $1.5million worse off than we were in November 1993 when the Government promised settlement of the Telstra claim within six months or sooner. As requested by Senator Boswell I phoned each of the cases to obtain the survival money figure they had calculated. Most of the cases claim period extended to ten years and beyond.
Ross Plowman of the Bentinck Private Hotel, Woodend Country Victoria sought advice from his accountant, he informed me the figure was $2.975 million. Ralph and Sue Bova of Ralphies Pizza at Morrabin Victoria advised that their calculation was $2.650 million. Graham Schorer of Golden Messenger Service Melbourne declined demanding that the agreed independent claim assessment process be honoured by Senator Alston.
The Endeavour Foundation provided a Statement which at paragraph 35 showed the calculation to be $8.3 million dollars. The Foundation had incurred costs of $244,000 in preparing their claim. John Kingston, Ernst & Young calculated our survival money figure at $13.869 million. I added them all up and came up with the figure of just over $28 Million. I advised Senator Boswell and Barry O’Sullivan of the amount. Ron took me into this private office and informed me that there was no avenue to pay the amounts claimed, in reality there was only $10million available to settle all the cases, any higher amount would have to be disclosed to the T2 due diligence brokers, J B Ware and others. Senator Boswell then discussed this with Barry O’Sullivan. The fateful events occurring in the Senate Offices on 30 and 31 March 1999 as noted in Barry O’Sullivan’s Statement went like this.
“Ann says, and this is in her discussion with me, that after you and Ron had had a chat about a figure of $20 million, you and he went away and when you came back, you said they wouldn’t pay more than $10 million – that was the figure.
No, Dayle, no. The numbers come from them. The numbers come from them. There were all sorts of wild conversations. Remember that there were nearly $30 million or $30 million worth of claims on Telstra’s table, and so that all sorts of ‘what do you think, do you think we can get $30 million’ . . . My view, to the extent it was, the 2 things that I influenced, I think, largely was:
The first was the strategy of them all cooling. . and I tried the best I could to keep some distance from that process. They were encouraged to go and ring their accountants and their husbands and fucking cousins and the lawyers that they did have for those who did, and go through this process – find out what you would be prepared to settle for. And it was all pulling and throwing – do you think I will get $30 million? What answer do I have to that – not when your arse points to the ground – I don’t think you will get $30 million. Ultimately, the formula was for them to do just what Ron had indicated, and they were the numbers that came back.”
On 30 March 1999 the figure of $30million was calculated by me in Senator Boswell’s Office having regard for his the survival money figures provided by the other parties. The final notations and calculations were subsequently developed over the next week. This is my final calculation to accommodate Senator Boswell’s direction in regard to the global figure of $10million which he said was on the table.
I had informed my Accountant Mr John Kingston of Ernst & Young late on 31 March 1999 of the extremely difficult position we had been placed in by the unfairness of the manner in which the Government had dictated the survival money payments.
Our desperate position which the Government had brought about by 30 March 1999 is best described by reference to the complete version of the Statement provided by Barry O’Sullivan in 2001 when he recounted the momentous events of that fateful Tuesday in Canberra. A complete copy can be found at Tab 11.
Barry O’Sullivan “Ann was instructed by Boswell that he couldn’t help her achieve justice, but all he could do was keep her alive, and keep her away from the dark and dampened environment of bankruptcy… if I can give you an analogy, she had her back right against a brick wall. To me, at least, her mental state was worn out. She was totally threadbare, with respect to the claim against Telstra. The whole shooting match had gone on for 14 odd years. And it’s a bit like being in the desert and you are fucking dying of thirst, and you have a glass in your hand….I tell them about Harry Garms sitting there fucking dribbling down his chin, about how Ann Garms cries and vomits … Look, these people are fucked.
You are going to have deaths on your hands.. the next step had this not come off, they would have just went out and thrown a rope over the tree. They were fucked and finished, they didn’t have many choices… I often used to say about the minister (Alston), that when he was in opposition, he had the will but not the way, and when he got into government, he had the way but not the will.
What was happening in and about the place where the fundamental principle of the settlement was that these people were all dead in the water. There was just nowhere left to go. You know, the paintings off the Garms walls were gone in hock. If I had got the $6 million, I would have gone to Sydney airport and gone to fucking Brazil and we wouldn’t be having this conversation.. And in fact, I talked to her about whether it was proper or improper, about finding mechanisms to get this money into entities that might. . you know, trusts and superannuation funds and other companies and . . hide it, move it, do what you’ve got to do. . and she wouldn’t entertain that because a lot of her debt was at personal levels, people who had supported her all the way through, and she was just going to step up to the plate. She had no wild expectations. . and then of course the Tivoli thing struck her. It was just like a skin cancer at that time and now it is a melanoma. I mean, I think if that had not struck, there is some prospect that you wouldn’t be dealing with Ann Garms today. I think whatever it absorbed almost got her along. and there was nothing about her life from when she got up to brush her teeth in the morning until she wiped her arse at 10 o’clock at night, that Telstra wasn’t factored into for a decade.”
Of course, what we didn’t know on that fateful day was the high level political drama being played out in the Canberra Office of the Prime Minister and the Minister for Communications Senator Richard Alston. We now know that Senator Boswell’s capitulation on 30th March 1999 occurred as a result of the offer of a Political Promotion made by the Prime Minister, the Hon John Howard MP. Mr Howard offered Senator Boswell a financially rewarding promotion to the position of Parliamentary Secretary to the Minister for Transport, The Hon John Anderson MP in exchange for his agreement to inform us that the Government would not honour the promise of an independent claim assessment process and deliver the bad news that we would only receive a survival money payment.
Where there previously had been an agreement for a proper independent and fair claim assessment process for settlement, now there was nothing, absolutely nothing! We were forced under duress into a position where we simply had no choice.
The realisation of the economic and personal consequences engulfed me, I became violently ill in Senator Boswells Office. Some of the Tivoli staff and my family were waiting for me when I returned to the Tivoli from Canberra that same evening. So many lives and jobs were dependent on me. How could I phone them from Canberra and tell them we had been betrayed by the Government, so much was riding on a fair and proper outcome, to put it into perspective, our business, home and superannuation and 50 jobs. Over the years we had employed over eight hundred (800) staff, with the result that around three hundred and fifty (350) of those job prospects had been placed at risk or were lost.
So it was that on my return to the Tivoli on 30 March 1999, the staff were devastated that the Government could act in such an unfair manner. During the discussion that followed as I explained to them that I was powerless to do anything about it, the stress of the realization of the extent of the Government’s betrayal was so devastating I started to be violently ill and a doctor had to be called to the Tivoli to administer medical assistance. Following the first promise of settlement by April 1994, in December 1993 we arranged a loan and recommenced building our home at 53 King Arthur Terrace Tennyson, at the time we had no reason to doubt that the settlement would not take place by April 1994. It is therefore not surprising that given the Government’s failure to honour the promise by March 1999 our bank loan had doubled. But it was even worse than that, we were forced to borrow money at extremely high interest rates, because quite honestly no one, not even the Bank Manager (who had been burnt three times already) trusted the Government to deliver on their promises. Our half built home which had now stood uncompleted for almost six years, had deteriorated in the weather and had to be demolished. As well as the deterioration of the timber structure and floors, concrete rot had set in.
The unfinished home was worth $950,000 in 1999 and in today’s money on the river the home would have been worth $2.5 million. We had been forced to pay over $85,000 in rent during the six years our home had stood half completed.
This all occurred in full view of the Government, when the solution was simple, all the Government had to do was apologize and arrange appropriate restitution through the honest independent loss assessment process they had promised five years earlier. By the Politicians own admissions they considered an independent loss assessors report would be a risk during the T2 sale offer process. The removal of a proper process and the payment of survival money was the last straw. I was eventually forced to flee our home, the ongoing stressful situation where every promise was broken, became a real life nightmare. Harry could not cope with the repeated acts of betrayal over so many years and his mental health problems became unbearable to live with. In his words, the Government destroyed his life and worse still they blatantly stole by their actions everything he had ever worked so hard for.
The humiliating devastation of the second broken promise and the survival money actions broke his heart, he is now suffering terminal cancer with no income, no superannuation and an old house falling down around his ears. Additionally he could not cope with the incredible damages sustained by the conduct of Warwick Parer in his role as Mortgagee in possession of the Tivoli in conjunction with Telstra and the Government’s Accountant’s Deloitte in their role as Administrators.
As Kerry Herron identifies in his statement dated 1 November 2007: “I have examined the Valuation Report of the Tivoli Cabaret and Bar, 52 Costin Street Fortitude Valley prepared by Herron Todd White for sale purposes on behalf of Deloitte Touché Tohmatsu on 5 May 1998.
The instructions were provided by Messrs RJ Duff and JL Gregg, Deloitte administrators appointed to the Foundation Group of Companies to assess the market value of the Tivoli property.
I have observed that the Valuation Report contains several factual errors.
It appears that HTW were not the only ones misled. In a letter dated 25 January 2000 from Bronwyn Jury of Deacon Graham & James, representing I. & L. Securities, to consultant Michael O’Rourke of O’Rourke Hospitality Management it is apparent that he too was misled.
The inaccuracy caused the HTW valuation to be flawed as only the shell of the Tivoli building was the subject of the valuation. A further comment I would like to make concerns the statement under 1.4 Synopsis, paragraph 3 and paragraph 5, that the property was to be re-launched in mid 1997and that this did not occur. I understand that the finalisation of the Telstra dispute did not occur in November 1997 as indicated to Mr. and Mrs. Garms by the Senate Committee. Finalisation was delayed until March 1999 at which time the Senate found that Telstra had acted in a misleading and deceptive manner and had deliberately delayed resolution until March 1999. The prepaid rent period as noted in the HTW Valuation Report expired in March 1999″
Although the 10 April 1997 Herron Todd White Valuation Report, two Contracts of Sale and the Registered Lease were correct in that the Plant & Equipment, air-conditioning, fit out etc. as listed in Annexure “B” was the property of the Lessor, the proposition that Harry and Ann Garms had assigned all the items in Annexure “B” to them, the lessee was relied on in expert witness reports and submissions before the Supreme Court until 2001 to effectively reduce the value of the Tivoli by only valuing the shell of the Tivoli building, by which time we were forced to agree to our insurance company’s lawyers Thynne & Mcartney request that we contribute $80,000 to the payment by the insurance company of $800,000 to I & L Securities (Warwick Parer). I am informed that the current owners of the Tivoli, Dromahair have since 1999 relied on the factually flawed Valuations and Consultants Reports in their court action against Harry and Ann Garms.”
The sting on Herron Todd White by Warwick Parer personally cost Kerry Herron $80,000 with his insurance Company shelling out $720, 000 and my family $868.000 in legal fees. The complete Statement provided by Kerry Herron makes for interesting reading at Tab 11. This is our family in happier times. Richard, Harry, myself and Christopher.
As indicated in Chapter one, since the survival money debacle and my attempts to restore my family’s life, home, superannuation and welfare, the Government has in response to my submissions acted in an entirely unacceptable manner, with the highest degree of truth being in the response that as the conduct engaged in relates to that of Members of Parliament and Senators, and not Public Servants our claims do not comply with the guidelines covering claims administered by the Department of Finance.
It was admitted to me in Canberra at the time of the survival money payment in March 1999 that the Government was determined to obtain a premium price for T2 and nothing was going to stand in the way of that, I am sure you will agree they achieved their objective with a premium price of $7.40 for T2 in 1999.
Telstra was privatised in three different stages, informally known as “T1” in 1997 for $3.30. “T2” in 1999 for $7.40 and “T3” in 2006 for $3.60. The Australian Government sold the first of its shares in Telstra T1 in 1997 for A$14 billion and publicly listed the company on the Australian Stock Exchange.
As noted in Chapter 1, the article in the AGE published by Annabel Crabb occurred the same time the Department of Communications Legal Counsel provided Legal Advice to Senator Alston. The true facts of the matter are that on 7 November 2002 Senator Alston had requested Legal Advice from Mr Don Marcus, Legal Counsel for the Department of Communications. The legal advice was requested to provide a basis for Senator Alston’s response to the Channel 9 Sunday program expose of the cover-up of the major upgrade of the Fortitude Valley Exchange network. In preparing the advice Don Marcus relied on the Harper Judgment. The Table under the heading the Survival Money Payment identifies the fabrication of the wording of the George Close Technical Report by the Arbitrator in his Award, a fabrication which removed all reference to the major upgrade of the Fortitude Valley Exchange, a fabrication which was repeated in the Harper Judgment and as such relied on and repeated in the Marcus Legal Advice.
What was so distinctly different about our case, compared to many others before the Senate was the fact that we were very hard working family who had over the previous 39 years worked extremely hard to build up our nest egg for our Superannuation as described in Chapters 2, 4 and 8.
Today the total sum of the homes and Superannuation investment properties we lost during the ten year dispute has been calculated by Trivetts as $36.4 million, based on RP Data and actual sales, excluding The Old Courthouse Restaurant and Petrie Mansions.
Four months after the Government’s survival money direction Telstra and indeed the Government’s Lawyers Freehills requested an indemnity from our Bank, St George Bank in regard to the handling of our matter. St George Bank received the following demand on 16 August 1999 from Freehill Hollingdale & Page on behalf of Telstra:
“Our client Telstra Corporation requires written confirmation that your client releases and forever discharges our client from any cause of action, proceeding or claim for any damage, loss, liability, account, demand or payment of any damage, loss, liability, account, demand or payment of any nature whatsoever which may arise out of or be in any way connected with the proceeding or the facts or matters referred to in or which are subject of the proceeding.”
Importantly St George Bank advised me that they refused point blank to provide the requested release to effectively discharge Telstra from any cause of action or claim etc. I subsequently received copies of the relevant letters exchanged between the Lawyers for both sides.
The third Broken Promise
The circumstances of the third broken promise emerged from the politically courageous attempts by Senator Barnaby Joyce. These brave actions were embarked upon to afford us the opportunity to reinstate our home and superannuation in 2005. In July 2005 Senator Joyce contacted me and arranged to meet up to discuss his strong objections to the T3 sale. During the meeting we discussed our desperate situation emanating from the initial broken promise of settlement by April 1994, specifically in regard to the loss of our home and superannuation and the survival money only debacle. Following this meeting, on the morning of 14 September 2005
Senator Joyce phoned to say that he had extracted a promise from Senator Helen Coonan in exchange for his vote for T3 and he would let me know the outcome. To say we were very appreciative of Senator Joyce’s kindness and heartfelt personal consideration of our difficult position is an understatement. On the afternoon of 14 September 2005 Senator Barnaby Joyce phoned to say he had just voted for the full sale of Telstra on the understanding that Senator Coonan would arrange for the appointment of an independent assessor to assess our outstanding claims and legal issues, in particular in regard to the loss of our home and superannuation. The news was wonderful, music to our downtrodden souls. We were, to put it mildly ecstatic, over the moon as they say in the classics.
I subsequently received a letter of confirmation from Senator Joyce dated 15 September 2005. In part he said “I would like you to understand that I could only have achieved this positive outcome on your behalf if I voted for the Telstra privatization legislation”
You would not be surprised to learn that as soon as Senator Joyce voted for the T3 full privatization legislation, the Government reneged on the promise. In response to our complaints we were informed that it is John Howard’s way or no way at all, and once again the promised independent claim assessment process was cancelled. The Public Servants from the Department of Communications had a field day. They treated us with disdain and utter contempt. To put it quite bluntly they lied repeatedly about the nature and intent of the settlement process agreed between Senator Coonan and Senator Joyce. We had no joy whatsoever, only the expenditure of unnecessary professional fees and costs. Interestingly some five years later, on 20 October 2010 I received in the mail some documents as a result of a Decision handed down by the Administrative Appeals Tribunal in July 2010.
The documents were internal working papers generated by the Department of Communications in regard to the Department’s actions in dealing with the implementation of the promise made by Senator Coonan to Senator Joyce on 14 September 2005. The documents of significant interest are described in Chapter fourteen, Yes Minister – Yes Prime Minister The T3 Deal – Senator Barnaby Joyce. What we found particularly disturbing in the circumstances was a Department of Communication Ministerial Minute dated 16 November 2005. This particular Minute was generated two months after the deal was done and the promise conveyed to us. The Ministerial Briefing exposed the real reason the promise was broken for the third time, which was by now eleven years since the first promise and six years after the survival money debacle. The Minute was prepared for Senator Coonan. The Minute described the risk to the Government if the promise of an independent claim assessment was honoured and substantial compensation awarded during the T3 sale process.
This is an extract from the Department of Communications, Ministerial Minute 16 November 2005
“Senator Barnaby Joyce – The Independent Claim Assessment Process: Previous briefing (M2005/1466) detailed the significant risks to the Commonwealth. By constraining the scope of assessment to focus on due process rather than the merits of the claims, it is possible to limit the assessment. There are a number of significant risks to the Commonwealth from the proposed process. 3. There is a further risk that the independent assessor may make recommendations that, if accepted by Telstra, may result in substantial amounts of compensation to claimants and weaken Telstra’s financial position.”
I have prepared the following trail of correspondence between Senator Joyce and Senator Coonan to identify the conduct engaged in to avoid honouring the third promise:
29 November 2005 letter Senator Joyce to Senator Coonan “Re Compensatory Commitments: I would greatly appreciate an update on progress, especially with regards to the appointment of a loss assessor, details of those you are considering or have appointed to the role and confirmation of the framework upon which the assessments will be conducted”.
Public Official – Department of Communications
Admission that the process implemented was not the agreed process
7 February 2006 Department of Communications Official Simon Bryant -Brief to Minister Coonan re the 8th February 2006 meeting with Senator Joyce: “We recommend that you agree that the terms of reference are narrower than initially proposed but stress the legal and financial risks to the Commonwealth from any wider assessment”.
3 March 2006 letter Senator Joyce to Ann Garms, “The Department of Communications cannot be considered independent…I will write to the Minister and reiterate my extreme concern that she has not honored her commitment: the Department is not independent”.
Public Officials – Department of Communications
15 March 2006 “Executive Steering Group – Independent Assessment of Claims against Telstra” Minutes Meeting 15 March 2006: Actions Arising “the focus of the assessment being on due process rather than examination of the merits of any party’s claims”
24 July 2006 Senator Joyce letter to Senator Coonan “The commitment appears to have morphed from an assessment of claims to an assessment of process. The assessment cannot be quarantined to process – it offers no hope. I have made a warrant to the claimants based upon the original commitment and, whilst I appreciate the sensitivities and difficult nature of honoring the obligations it entails, it is against the commitment we are both measured.”
Lawyer – Department of Communications
4 September 2006 DCITA Senior Lawyer, Kirsten Miller in response to a complaint about the misrepresentations made by the Department in regard to the agreed process. “This assessment was the process agreed to by the Minister for Communications, IT and the Arts with Senator Barnaby Joyce and was not a commercial loss assessment.”
16 November 2006 letter Senator Joyce to Minister Coonan’s assertions. “The agreement of 13 September 2005 is the only way a satisfactory resolution can be achieved, and, I realize that my only influence is that of persuading you and I must endeavour to keep the door open on this issue.”
27 November 2009 Ms Elizabeth O’Shea Assistant Secretary Parliamentary Support DCITA to Ann Garms “The Department considers its staff fulfilled their responsibility to provide the then Minister with appropriate advice in relation to the arrangements with Senator Joyce”.
In the 2012 review of the CDDA Claim conducted under the instructions of Senator Stephen Conroy by the AGS and Blake Dawson, Senator Joyce’s letter dated 16 November 2006 was omitted to avoid admitting that Senator Joyce steadfastly rejected Senator Coonan’s back-flip on the deal. This is reflected in Senator Conroy’s Decision letter dated 23 August 2012 mistakenly relied on by the current Prime Minister the Hon Tony Abbott in his December 2013 response.
I appreciate that you will find this extraordinary to say the least, what I found particularly disturbing was the complete lack of integrity in the process and total absence of any consideration for the damage and losses we suffered as a result.
In January 2011 I received further documents though the Administrative Appeals Decision. These were also from the Department of Communications. As I flicked through the pages, a wave of anger invaded my entire body. It soon became evident that the Government’s betrayal for the third time of an independent claim assessment to reinstate our home and superannuation was a deliberate action, profoundly dishonest and biased.
The background to the current claim came about as a result of receiving the previously concealed evidence of bugging and sabotage combined with the documents obtained through the Administrative Appeals Tribunal. Having regard to the exposure of the betrayal as noted in the Department of Communication documents and the correspondence exchanged between Senator Joyce and Minister Coonan a close friend and a Member of Parliament after reading through the documents suggested that I lodge a Claim against the Government under the CDDA Scheme which is a Department of Finance Scheme for Compensation for Detriment caused by Defective Administration. The CDDA Claim was prepared and lodged accordingly on 28 October 2010. The Minister Senator Conroy in a decision letter almost two (2) years later, dated 23 August 2012 said two things, firstly, that our claim in regard to the “survival money only directive” could not be considered because the CDDA Scheme is only concerned with the conduct of Officials, not Politicians.
Secondly, Senator Conroy said that our claim in regard to the Government’s failure to honour the promise made to Senator Joyce could not be assessed under the CDDA Scheme because he alleged the Public Servants were simply performing their duty under the Public Service Act in recommending to Minister Coonan that it was advisable for her to limit the intended independent assessment of the claims to be instituted by her substantially, to matters of process. All I could think of when considering Minister Conroy’s laughable Decision letter was that I wished I was powerful enough to wear Red Underpants on my head and in that way I may get a fair go.
That wasn’t to be unfortunately, there can be no doubt that having regard for the factually incorrect reasons proffered by AGS and Blake Dawson that his decision and the advice he had received was intellectually dishonest. Senator Conroy’s assertion that he would appoint an independent claim reviewer was just a flight of fancy! There is no doubt he betrayed our trust by appointing one of the owners of Blake Dawson. The substantial contract for legal services to the NBN project was awarded to Blake Dawson by the very same Department of Communication Officers who were administrating our claim review process.
There is compelling evidence to suggest that the Department in providing briefs to AGS and Blake Dawson were responsible for the misrepresentations. So it was that subsequently I was advised by Members of Parliament to lodge a claim against the Government for Negligent/Unreasonable conduct.
I took their advice and on 8 January 2014 I lodged a Negligence claim with the Finance Minister, Senator the Hon Mathais Cormann. The claim was limited on a without prejudice basis to the loss of capital growth on our homes and superannuation investment properties. Minister Cormann on 14 January 2014 referred the claim to the Government’s Insurance Company, COMCOVER. Finally on 11 April 2014, three months later, Senator Cormann responded that the claim could not be considered because the negligence related to the conduct engaged in by Politicians and not public servants. “On this basis, your claim is unable to be considered by Comcover as the Policy does not extend to cover the actions of Members of Parliament or Senators.”
This of course was not the first time this excuse had been used to avoid a fair and proper assessment, Minister Cormann’s advice mirrored that of Senator Stephen Conroy. On 23 August 2012 Senator Conroy alleged that the CDDA claim did not comply with the guidelines because the conduct was engaged in by Politicians and not Public Servants. Senator Conroy also asserted that the matter had previously been considered by the then Minister Lindsay Tanner when this was factually incorrect. In reality, Minister Tanner had actually deflected the claim away from the Government by alleging it was a claim against Telstra when he said: “the Department had no role in resolving any such commercial dispute with Telstra”. In conclusion the former Minister Lindsay Tanner MP in 2007 dismissed the claim because he alleged “it related materially and overwhelmingly to a private commercial dispute with Telstra Corporation”.
During the debacle that followed the back-flip on Senator Barnaby Joyce’s promise Parliamentary staffers informed us that Prime Minister Howard had cancelled the third promise because of the risk to T3 during the due diligence process. Senator Joyce his staff and others in Canberra said the Prime Minister had canned the deal! In 2008 two of my professional advisers and I met with Senator Joyce in his Brisbane Office, when asked why the Public Servants from the Department of Communications had lied about the promise, Senator Joyce laughed and said they all lie in Canberra that is just how it is.
The fourth Broken Promise
It was Election night, Saturday 7 September 2013 when by 9pm the Coalition had won a decisive victory. Prime Minister-elect Tony Abbott declared that “the time for governing has arrived. I am both proud and humbled as I shoulder the duties of government. The time for campaigning has passed, the time for governing has arrived. I pledge myself to the service of our country. A good government is one with a duty to help everyone to maximise his or her potential, Indigenous people, people with disabilities and our forgotten families, as well as those who Menzies described as lifters, not leaners, he said. We will not leave anyone behind.”
The election win was good news at last. It had been a long six years since Senator Boswell made the promise as he put it, to right the wrongs once the Coalition was back in power. Admittedly no one expected the Labor Government to last as long as it did. Under the circumstances I felt sure that this was a promise that would not be broken.
The background to the fourth promise came about during a meeting with Senator Boswell on Wednesday 7 November 2007, the coalition had just lost Government, when we met at Waterfront Place in the City. Over a coffee we discussed the fact that I had uncovered the source of the misinformation relied on by Senator Alston on that fateful day in Canberra, 30 March 1999. I explained that through the Supreme Court discovery process I had obtained a copy of a Valuation of the Tivoli Theatre that Herron Todd had prepared in May 1998, nine months prior to the survival money debacle. An examination of the Valuation had revealed that the Tivoli had been undervalued by over $2million. Herron Todd White had relied on instructions provided by Deloitte as the administrators and I & L Securities, Warwick Parer as the Mortgagee in possession. I explained to Senator Boswell that immediately on receipt of the Valuation I contacted Mr Kerry Herron to discuss the undervaluation and factually flawed Financial Reports which accompanied it. I explained to Senator Boswell that Kerry Herron was shocked by the revelations as he had been forced to pay out $80,000 with his insurance Company shelling out the remaining $720.000 in compensation to Warwick Parer. Kerry Herron offered to provide a Statement of Facts.
I provided Ron with a copy of the Statement dated 1 November 2007. In the Statement Kerry Herron described how Herron Todd White had been misled in May 1998. In his Statement Kerry Herron identified that the false information provided to his firm had resulted in the Tivoli being valued as an empty shell. I reminded Senator Boswell of the curious and plainly incorrect reasons proffered by Senator Alston on 30 March 1999 when he said that the Tivoli was overvalued and therefore would not be viable. It was now clearly evident as to where this false information emanated from on 30 March 1999 without our knowledge; the fabricated valuation and financial reports were provided to a third party being the new owner of the Tivoli.
At this time the Senate Working Party finalization had been delayed by the Government for fifteen months. I wonder why? The new owner purchased the Tivoli property for the undervaluation of $1.650 million instead of the real value of $3.800 million. He evicted us from the Tivoli in the hours of darkness when Harry was asleep on the couch in the Tivoli Bar. He cut off the doors with oxy welding equipment, tossed Harry out onto the street and continued to threaten our lives and those of the Tivoli staff. He had four body guards with guns, who took over the Tivoli, slept on mattresses on the floor of my office and stole some of our personal possessions.
The Tivoli staff reported that the new owner and his legal advisors were constantly in contact with the Government, Deloitte and Telstra. The death threats did not stop there; the new owner offered the staff the sum of $7,500.00 each if they changed their statements in regard to the events surrounding his violent takeover and acts of intimidation. When they refused he said “people who go behind my back usually end up dead”
Senator Boswell was visibly shocked by the revelation of the events which ended in the survival money debacle and his capitulation on 30 March 1999. It was an extraordinary conversation that led to the fourth promise on 7 November 2007.
We discussed the fact that over two decades had elapsed since Trevor Reddacliff and I enjoyed the chocolate soufflé on the verandah at Roseville Restaurant. Senator Ron broke down in tears and expressed his sincere regret that he had inappropriately accepted the Prime Ministers offer of a Political promotion to the position of Parliamentary Secretary to the Minister for Transport, the Hon John Anderson MP. We discussed the fateful events of 30 March 1999 when he withdraw his demand that the promised independent claim assessment process be honoured by the Government and agreed to inform us that we would receive a survival money only payment because of the risk to the T2 sale process. It was significant that he acknowledged that he and Senator Alston had both promised on 18 November 1993 that our claims would be settled by April 1994 or sooner.
He was shaken by the embarrassing situation and I reminded him of the enormous personal and financial damage we sustained when he traded something that did not belong to him for a Political and personal financial benefit when he had no right to do so! It was some comfort when he promised that as soon as the Coalition was returned to power he would ensure that our family home and superannuation was reinstated. He said I cannot do anything about it now, we are not in Government. This he stressed was on the condition that I was to remain silent and I was not to tell anyone about his error of judgment.
So it was that after the Coalition won Government on 7 September 2013 that I contacted Senator Boswell requesting that he honour his promise. After several submissions it was clear from his comments on 4th October 2013 that Prime Minister Abbott was a serious obstacle in the path of honouring the promise. Subsequently on 23 December 2013 the Prime Minister in response to my submissions relied on the letter from the former Labor Minister for Communications Senator Stephen Conroy dated 23 August 2012. The matter of the intellectually dishonest reasons adopted by Senator Conroy during his assessment are described in Chapter 1 and in Chapter 7 under the third broken promise.
The fourth broken promise by the Prime Minister, the Hon Tony Abbott MP led to the advice provided by COMCOVER that we should submit a claim under the Department of Finance Section 33 of the Financial Management and Accountability Act 1997 for an Act of Grace payment. The limited claim was submitted to Senator the Hon Mathais Cormann, the Minister for Finance on 21 September 2014. The claim was limited on a without prejudice basis to the actual loss of the capital growth on our home and superannuation from April 1994 to June 2010. We are currently awaiting payment of the claim.
At Reference 24, together with other correspondence is exhibited is a copy of my letter to Senator Boswell dated 8 October 2013 together with copies of my correspondence to Prime Minister Abbott and Attorney General the Hon George Brandis QC. The letter to Senator Boswell is as follows:
Chapters 8 -23 will be revealed when the Book is published in April 2015. The version of Chapters 1-7 shown on our Website may change slightly as they are currently being edited for grammatical errors. I do not pretend to be an accomplished writer rather an ordinary Australian who has a compelling true story that must be told, as it is in the Public Interest.
The Book will also be published in a Coffee Table edition to enable the incorporation of many more photos, menus and interesting content.
The Book Launch will be made all the more memorable by the delicious aroma of 50 plus Chocolate Soufflés baked during the launch by some of Brisbane’s top Chefs. In the interim I would like to thank all those who have thus far commented on and enjoyed the Web Edition. For all those who have asked to keep in touch I can be contacted on 0413632078
Ann Garms OAM