Salteri Family

Jan 13, 2021 | Secret Rich List

Top 200 Rich List (2020)No. of Dark Companies:
4
Political Donations since FY 1998-99
Rank: 57Olbia Pty LimitedLabor Party: $748,118
Wealth: $1.69bTenix Holdings International Pty LimitedCoalition: $1,012,953
Wealth (2019): $1.57bTranstunnel (Nominees) Pty LtdIndependent: $5,000
YoY wealth change: 7.6%Transtunnel (Finance) Pty LtdTotal: $1,766,071

The Salteri family made their wealth through defence contracts, infrastructure and engineering projects including the Sydney Harbour Tunnel. They represent one-half of the founding families of the Transfield Group alongside the Belgiorno-Nettis family. The Salteris are major political donors and are linked to an intricate web of Dark Companies on the Secret Rich List.

Carlo Salteri co-founded Transfield – a Dark Company – with fellow Italian-born mechanical engineer Franco Belgiorno-Nettis in 1956. The company operated large scale engineering projects ranging from bridges, tunnels and dams to coal power stations, oil rigs, power lines and major mining projects.

It also built defence infrastructure, becoming the largest defence company in Australia after landing a $6 billion contract to build ten Anzac Class Frigates in 1989.

In less than 30 years, Transfield had grown to 3,000 employees and an annual turnover of $350 million. Their success landed them the job of constructing the Sydney Harbour Tunnel in 1988 which was completed and opened to the public in 1992.

During the project in 1989, the founding fathers stood down from their executive roles and handed the reins to their eldest sons, Paul Salteri and Franco Belgiorno-Nettis.

In 1994, a feud between the already fractured families eventually led to the demerger of Transfield Group. The terms would see the Salteris retain control of the defence sector under their rebranded organisation Tenix founded in 1997.

Paul Salteri is on the board of all four of the family’s Dark Companies, joined by his brother Robert on two occasions. He owns extensive property in the Southern Highlands and sold his Wagyu cattle station to Gina Rinehart for $31.5 million in 2014. In 2017, Robert purchased a $27 million penthouse in Circular Quay overlooking Sydney Harbour.

Together, Paul and his wife Sandra established the Cages Foundation which “funds organisations working to improve the lives of Aboriginal people and create an environment that enables every Aboriginal child to reach their potential.”  The family’s other philanthropic achievements include support for the Aukland Rescue Helicopter Trust via Tenix.

In 2008, the Salteri’s sold Tenix Defence to BAE Systems for $775 million. This was followed by the family selling their remaining assets in Tenix to Downer EDI in 2014 for $300 million.

Despite selling their remaining stake to Downer EDI, the Salteri family still operates several private companies under the Tenix banner. One of which is their Dark Company Tenix Holdings International Pty Limited whose parent company is Olbia Pty Limited, another grandfathered entity.

ATO tax transparency data shows Olbia’s tax record for financial years 2013/14, 2014/15 and 2016/17. For these three years, Olbia generated a total income just shy of $1.5 billion and paid $0 in tax.

Olbia is a joint-venture owner of the Sydney Harbour Tunnel alongside Transfield Holdings, a Dark Company owned by the Belgiorno-Nettis empire. The tunnel’s ownership is determined by a 30-year contract with the NSW government which ends in 2022. Despite the animosity between the Italian patriarchs, they still manage to see eye to eye in generating profits from the harbour tunnel tolls using two Dark Companies.

How we compiled the Secret Rich List

What are they trying to hide? This is the driving question behind our ‘Secret Rich List’ project at Michael West Media.

Our aim is to shine the spotlight on the 1,119 large proprietary companies that continue to enjoy a privileged exemption from having to lodge financial reports to the Australian Securities and Investments Commission (ASIC).

An exemption from any new law or regulation is commonly referred to as ‘grandfathering’. In this case, the exemption from having to lodge audited accounts effectively creates two classes of Australian citizens; large proprietary companies that have to comply with government legislation, and the remaining 1,119 companies that by definition are required to do the same, yet enjoy an antiquated free pass from full public transparency.

What was issued as a “temporary measure” by the government of Paul Keating in 1995 has placed these companies above the law for more than 25 years. We believe it is in the public interest to put an end to this outdated government legislation once and for all.

Although ASIC  defines the companies enjoying the exemption as as grandfathered large proprietary companies, we prefer the term ‘Dark Companies’; it is a more fitting description of old wealth empires whose financial accounts are cloaked by this provision, shadowed from the public eye.

History behind the 1995 grandfathering exemption

This grandfathering regime was issued in response to The First Corporate Law Simplification Act 1995, a 1995 amendment to the Corporations Law at the time.

Before this amendment, whether a company had to prepare and lodge financial accounts with ASIC was determined by whether they were an exempt or non-exempt proprietary company (exempt meant the company did not have to publish accounts).

 ASIC defines exempt proprietary companies as:

“companies where there was no direct or indirect public ownership; that is, they were essentially owned by private individuals. The companies were not required to lodge financial reports where those financial reports were subject to audit and sent to members.”

 

Under the First Corporate Law Simplification Act 1995 the measure of whether a company had to lodge financial accounts with ASIC changed from the reporting entity test (exempt/non-exempt system) to what became known as the ‘small/large test’.If the company was considered a ‘large’ proprietary company, then it must lodge its accounts.

As of the law in 1995, an Australian proprietary company was ‘large’ if it satisfied two of the following three criteria:

  • consolidated gross assets of $5 million or more;
  • consolidated gross revenue of $10 million or more;
  • the company and the entities it controls (if any) have more than 50 employees at the end of the financial year.

The criteria for the small/large test has since been updated.

The new legislation meant that a significant number of previously exempt organisations now had to prepare and lodge their financial accounts.

The explanatory memorandum for the Bill notes: “To avoid disrupting established commercial arrangements, those existing exempt proprietary companies which have their annual accounts audited, which are large and which elect to continue operating under the existing rules, will not need to lodge their accounts with [ASIC].”.

Thus was born the concept of the grandfathered list - or Secret Rich List as we like to call it. In 1995, it was home to more than 2,000 large proprietary companies.

Significant Global Entities

Some 12 of the 1,119 Dark Companies are considered ‘significant global entities’ (SGE). An entity becomes an SGE if it fits at least one of the two following criteria:

  • a 'global parent entity' whose 'annual global income' is A$1 billion or more,
  • a member of a group of entities consolidated (for accounting purposes) where the global parent entity has an annual global income of A$1 billion or more.

These entities must prepare and lodge general purpose financial accounts with ASIC. This requirement is no different for the 12 SGEs on the Secret Rich List as their SGE status overrides the grandfathering exemption.

 

MWM Methodology

Using both the ASIC and Australian Electoral Commission (AEC) databases we have conducted more than 5,000 searches and counting.

Through the ASIC searches we have been able to collate the necessary information for every company on the grandfathered list, ranging from company directors, shareholders (both persons and organisations), a company’s auditor and much more. This has all been incorporated into our database, which is designed to map out these Dark Companies and tackle our driving question.

We also used the AEC database to generate an extensive list of political donations from these Dark Companies that date from the 1998-99 financial year to the present. We have designed a separate database for these figures, listing political donations from the entity itself, its directors and/or its shareholders. Each donation has been separated into recipient categories to better display the amounts funnelled to the Liberal and Labor parties and their constituencies.

The donations help indicate why the exemption, which ensures such a lack of transparency, has stood the test of time despite numerous attempts over the years from both sides of Parliament, the cross bench, the Greens, Treasury, corporate regulator ASIC and a joint parliamentary inquiry, which have all called for the exemption to be abolished. Both databases created by Michael West Media complement each other to bolster the narrative of the stories that follow.

In a similar approach to our Q.E.D. and Revolving Doors series, we will be releasing a profile each day that highlights directors of these Dark Companies, many of whom appear on the 2020 Australian Financial Review Rich List.

The ‘Secret Rich List’ project will provide considerable evidence to shore up the next attempt to repeal the grandfathering exemption, which Independent Senator Rex Patrick is scheduled to move before the Senate in early 2021.

If you have information about this or other entries in the Secret Rich List, contact us in full confidence via ProtonMail - click here.

Rortswear and ClimateCards

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