21/05/2021 - 08:40

Pindan passed financial checks: WA government

21/05/2021 - 08:40

Bookmark

Save articles for future reference.

The state government has defended its decision to award construction tenders to Pindan, revealing the company passed all financial due diligence checks just six months ago.

Business News can reveal that financial due diligence checks for two Pindan entities were completed on November 30, 2020 and December 7, 2020. Photo: David Henry

The state government has defended its decision to award tenders to embattled construction company Pindan, revealing the company passed all financial due diligence checks as little as six months ago.

Pindan Group was placed in administration on Tuesday after rumours began circulating about subcontractors walking off the company’s construction sites amid confirmation that Pindan could not pay them.

The shock collapse has left the company’s 68 active projects, 280 staff and hundreds of subcontractors and trade suppliers in limbo, with initial estimates indicating the losses could fetch more than $A50 million.

Several of those projects were for contracts the company held with the state government, including $10.9 million in upgrades to Hedland Senior High School and a $35 million per year contract with the Department of Communities to maintain social housing in the state’s north.

With the state government having issued contracts to Pindan as recently as February, questions had been raised about how the financial troubles managed to fly under the radar and the veracity of the government’s financial due diligence processes.

Business News understands the Department of Finance conducts three levels of due diligence checks on contractors, including a general capability and reputation assessment, a review of liquidity ratios, asset position, payment performance history, aged creditors and safety, and case-by-case checks of each tenderer’s suitability to each contract.

A spokesperson from the Department of Finance told Business News all three levels of checks were completed for the contracts awarded to Pindan, having requested and received financial reports, management accounts, aged creditors and workload information.

Business News can reveal that financial due diligence checks for two Pindan entities were completed on November 30, 2020 and December 7, 2020, neither of which indicated that the company was experiencing any financial difficulties.

The checks were valid for six months and were due to be re-evaluated this month.

Pindan’s Singaporean-owner, Oxley Holdings, wrote a letter to the group in October 2020 confirming it would support all Pindan companies to remain solvent for the next 12 months.

On Wednesday, Finance Minister Tony Buti said the state government was still in the process of determining the scope of the exposure and who had been affected, but was looking to liaise directly with subcontractors to continue the works.

Dr Buti said he had been advised that Pindan made all payments until the end of March, but that it was unclear what payments had been made during the month of April.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options