No comfort in ABC Learning invoices
Sydney Morning Herald
Wednesday March 10, 2010
EDDY GROVES'S former brother-in-law, who provided maintenance services for ABC Learning, was "uncomfortable" with the way his company was asked to invoice the childcare group.At public examinations into the company's collapse yesterday, its new chief executive, Rowan Webb, told the Federal Court in Brisbane he met Frank Zullo, the owner of Queensland Maintenance Services, in October 2008, to discuss irregular payment procedures.Mr Zullo was married to the sister of the founder, Mr Groves, who left the childcare company theprevious month.After investigating the company's finances following Mr Groves's departure, Mr Webb and former chief financial officer Peter Trimble discovered Mr Groves had been wrong by about $200 million when he told lenders the company's projected earnings for 2009 would be $265 million.Mr Webb said that on his second day in the job he had become aware of the irregular way Queensland Maintenance Services billed ABC Learning. "The cleaning bill was a very low amount in relation to the amount of work done. However, we may be paying $100,000 for a sink."Asked about his company's billing procedures, Mr Zullo "made it quite clear he was uncomfortable in invoicing us that way," Mr Webb said. Mr Zullo told him the way ABC Learning was invoiced was "what the client wanted".Asked who that meant, Mr Webb told the court: "It would have been clear to me he was talking about Eddy Groves."When asked by Michael Cashion, SC, counsel assisting ABC Learning's administrators, how QMS fees were portrayed in ABC Learning's accounts, Mr Webb said payments had been listed as capital expenditure items.That resulted in an understatement of expenses and would have affected the company's projected wealth, which Mr Groves presented to ABC Learning's lenders in mid-September 2008, he said.The examinations continue.
© 2010 Sydney Morning Herald