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*The full contracts are downloadable, below ...

This is the second of a four-part series aiming to shine a light into the workings of the Tasmanian Forest Industry. Part 3 will describe the surrender of Gunns Ltd’s wood supply agreement 917 on April 18, 2011; the initial opposition to this by Forestry Tasmania; then the reversal of this position to enable the signing of the Deed of Agreement in September 2011 between the Crown and Gunns Ltd; this ensured payments to keep both Forestry Tasmania and Gunns Ltd solvent ... Part 1: Paul Harriss: A Step Too Far?


This essay covers the two major gifts of access to our Native Forests granted to Ta Ann and Gunns by Forestry Tasmania, a gift which has and will cost the taxpayer dearly.


Of the current leading players (Hans) Drielsma ( Former Executive General Manager, Forestry Tasmania ), (Evan) Rolley ( Former Forestry Tasmania MD, now Executive Director Ta Ann ) and (Bob) Gordon ( Managing Director, Forestry Tasmania ) all graduated from the Australian National University within a few years of each other in 1973, 1975, and 1978. Some 35 years later they are still together.  Drielsma has recently retired from Forestry Tasmania but is still a Director of the Australian Forest Products Association, one of the signatories to the Tasmanian Forest Agreement.


These men will have known each other all their working lives. The systems, organizational structures and processes they have designed, created and then institutionalised around the Forest Practice Authority and the GBE Forestry Tasmania; so closely interlocked that they have become self- protecting.


“Commercial in Confidence” is how all Freedom of Information requests are blocked over sensitive matters, it becomes the umbrella under which those in this dodgy industry shelter from the fallout created by senior management and its actions.


The two principal customers of Forestry Tasmania are or have been two companies of dubious repute, the Malaysian based corporation, Ta Ann and the now bankrupt Tasmanian company Gunns Ltd.


Under the watch of Drielsma, Rolley and Gordon, Forestry Tasmania has been gifted over 750 million dollars by the Tasmanian and Federal Governments ... all of which has now vanished in a seemingly unaccountable puff of smoke. 


To assist this rogue industry our Tasmanian laws have been altered or redrafted to facilitate the clearfall and burn requirements of the now bankrupt woodchip industry. This has resulted in significant destruction of the ancient Tasmanian forest landscape and its conversion to monoculture plantations.


This corruption of due process by those associated with the Forestry Industry in this State has now been a part of Tasmanian life for over 20 years:


. Think Rouse and Gray and the attempted bribing of a Politician in the attempt to bring down a Government; and the resultant Royal Commission of 1991.


. Think Abetz and MIS scams protected in part by Gunns ’ donations to the Liberal Party.


. Think Lennon, and the corruption of due process with the fast tracking of the Gunns Pulp Mill in 2007, by the Paul Lennon Labor Government;  and the Legislative Council.


. Think Forestry Tasmania and approximately 6 million tonnes per annum of woodchips from the people’s native forests being Green Washed into an accepted scientific model.


Bearing all this mind now think Harriss and the potential for his Committee to grant through the Inter-Governmental Agreement up to 50 million dollars to Ta Ann to cancel that free gift by Forestry Tasmania of access to our State Forests.


Ta Ann signed up for the initial Wood Supply Agreement on 16th Jan 2006 (see attached PDF) the financial details of which are protected by Commercial in Confidence blockers. Ta Ann is now entitled to receive under the IGA 265,000 cubic metres of peeler billets and at least 155,000 cubic metres of sawlogs or over 400,000 tonnes of the best timber in Tasmania still standing in our forests - as confirmed by the current CEO of FT one Bob Gordon:


“I have assured KH Wong that FT will continue to meet its contractual obligations and that the IGA stipulates the ongoing supply of 265,000 cubic metres of Peeler Billets and at least 155,000 cubic metres of Sawlog. These commitments by the Australian and Tasmanian governments should be of comfort to Ta Ann’s Tasmanian Board. ”


The initial deal to set up Ta Ann under Rolley is accessible on the internet:
[Smithton Wood Supply Agreement. Ta Ann Plywood Sdn Bhd; Ta Ann Tasmania P/L; Forestry Tasmania; 16 January 2006 as amended.]



Under Part 4 Warranty and Acknowledgements at Clause 4.3 (p. 13 of 41)
It contains this clause:


4.3 The Parties each acknowledge that:
(a) In entering into this Contract they have not relied upon any statement, representation, warranty, condition or other conduct which may have been made by another Party or by any person purporting to act on behalf of such other Party, other than those stated expressly in this Contract;


The following day Rolley provided to Ta Ann a background via a Letter of Comfort; why was this not spelt out in the initial Agreement?  Forestry Tasmania was in no position to supply this volume of wood from plantations without over-cutting the Native Forest resource pledged in contracts to Gunns.

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Google search Ta Ann Rolley 17 January 2006


This letter provides extra details seemingly not apparent in the original Agreement:

“...to supply regrowth and hardwood plantation grown logs….
...Forestry Tasmania will not be supplying old growth hardwood logs….
...All wood supply to the planned rotary peeled veneer mills will come from forests that are certified on State owned land…
...Any logs supplied….will have   to meet AFS and PEFC standards.


This letter has no notation under “Your Reference” or “Our File”, which one would think to be normal business practice by this stage of a transaction.

Why?

Also on the following day the 17th January Rolley sent an extraordinary Greenwash publicity letter to Wong, at Ta Ann, (See below). It appears to be initialled and unsigned, nevertheless Ta Ann put it up on their website. If not a fake it may provide Ta Ann with grounds for a Court Case over misrepresentation:


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Google search Ta Ann Rolley 17 January 2006


A Rolley sentence……. “The primary timber products for which the forests are managed are veneer logs and saw logs. Other logs of insufficient quality for veneer or sawn timber are sold as pulpwood.” it is of note, for Forestry Tasmania sold millions of tonnes per annum of pulpwood most of which came from our Native Forests.


Rolley and Gordon might care to explain this Smithtown Wood Supply Agreement of 2006 and its later additions for it is about to cost Australians a great deal of money. Unlike the Gunns Contract for Wood Supply to the Pulp Mill, Rolley set up with Ta Ann two potentially costly get out clauses which are about to hit the Jackpot:

Clause 21 subclause 21.1,
“Sovereign Risk”
If an Event of Force Majeure arises due to a Change in Law, or an exercise in executive power, the Purchaser and Forestry Tasmania agree to co-operate with each other to the extent reasonably practical in order that each Party may seek compensation from the relevant Crown for loss suffered as a result of that Event of Force Majeure.


Clause 21 subclause 21.2,
For the avoidance of doubt the purchaser acknowledges that, despite being a governmental, statutory corporation, Forestry Tasmania does not have the power to prevent the occurrence of the Events of Force Majeure referred to in Clause 21.1


There we have clearly spelt out the end game of this saga.


Force Majeure was not used as a get out clause in the Gunns Pulp Mill Contract.


Gordon signs a briefing Note over Gunns Debt and Recovery Strategies between Giddings and Green dated the 29 July 2011.This date is very important when discussing Gunns’ solvency for Gordon was then of the opinion that…. ‘Gunns financial problems are overwhelming’


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This document was obtained by a Liberal politician, Elise Archer,  under FOI on 24 November 2011 and seemingly buried. The suggestion could be made that the Liberal Party protected Gunns by not disclosing their financial position as evidenced by the FOI request ...  much to the detriment of those self- employed contractors used by Gunns.


In July 2011, Gunns could have been insolvent a position only corrected by an infusion of Government Funds via colluding Pollies,  regarding previously surrendered Contracts. 


“Forestry Tasmania considers that it is unlikely to recover any more than a small proportion of the amounts owed by Gunns, [$26.83 million] unless specific measures are taken to recover the outstanding amounts….Forestry Tasmania has formed a view that Gunns’ financial problems are overwhelming and may soon lead to the appointment of a receiver….the suspension of supply (hardly relevant, in the current circumstances) the termination of contracts (also of limited relevance, given Gunns, termination of Contracts 917 and 918 by notice in writing on 18 April 2011)…..”


This problem of payment by Gunns was critical to the solvency of Forestry Tasmania;  it was cleared up by the first large payment under the IGA to Gunns who passed on the majority of these funds to FT for the already surrendered contracts. The legality of this payment from Federal funds over Contracts 917 and 918 is arguable;  the fact that it saved FT is not.


FT got their money and a precedent was set.


Will it now work again for Ta Ann?  At least this time it is documented in the Agreement.


Harriss will draw up the Legislative Council document as voted on by his 13 person Committee. As the Chair he does not have to vote, thus he keeps in with his Huon Valley Constituents and more importantly Ta Ann ... for he never reveals his hand.


Forestry Tasmania was granted 10% of the action in the Smithton Agreement. I ask is this still accounted for in their books, was it paid for and how and why was it given?


Perhaps John Lawrence can answer this question and also the legal difference between an Agreement and a Contract.

*Download:

Gunns_Long_Term_Pulpwood_Supply_Contract.pdf

Smithton_Wood_Supply_Agreement.pdf

• David Obendorf: Native forest jobs shrink

First a new report predicts a further 500 jobs will be shed from Tasmania’s struggling forest industry if the peace deal does not become law. Then the Legislative Council inquiry into Tasmania’s forest peace deal has been told the state’s shrinking native forest industry employs just 900 people.

http://www.abc.net.au/news/2013-02-27/forest-peace-deal-jobs-toll/4543750?section=tas
http://www.abc.net.au/news/2013-02-28/native-forest-jobs-shrink/4546138?section=tas

A Socio-Economic study predicts 1900 jobs will be lost in Tasmania if the Tasmanian Forest Agreement does not become law. A predicted 405 job lost if the TFA is passed and up to 1933 job lost if the TFA is rejected (this assumes the closure of both Ta Ann veneer mills).

Terry Edwards [CEO of FIAT]: ‘It’s crystal ball gazing… and frankly we [FIAT] think it’s a bit too doom and gloom. We think it’s a little overly dramatic.’

Mr Bob Smith, the co-author of a commissioned Socio-Economic Impact report on the Consequences of implementing or not implementing the Tasmanian Forest Agreement, produced a startling figure on the shrinking size of the forestry industry.

Bob Smith[ Director of Forestry Tasmania] : ‘The number of contractors, and direct employment in saw-milling of native forests is currently about 900 in Tasmania.’

In 2006 the industry employed 3,500 people.

Meanwhile Commonwealth bureaucrats appearing before the Upper House Committee into Tasmanian Forest Agreement revealed that the State Government has requested the size of Tony Burke’s nomination to expand the Tasmanian Wilderness World Heritage Area be cut by 10,000 hectares. The State Government wants the land excluded for several reasons including continued logging.

Commonwealth Government Official: ‘The Minister for the Environment [Tony Burke] has not made a decision on how he will respond.’ 

Matthew Denholm, The Australian, Saturday:  Election year sees pulp mill on table:

FEDERAL taxpayer assistance may be used to help resurrect the stalled Gunns pulp mill in Tasmania.

Julia Gillard yesterday said she still hoped to see the $2.3 billion project realised and did not rule out government assistance to a private proponent.

Gunns’ receivers, KordaMentha, are hoping to find a buyer for the pulp mill assets, including the permits to operate, the site in the Tamar Valley and the plantation feed stock.

The Weekend Australian understands that several companies may be interested in buying the assets, if uncertainty and complexity surrounding ownership of the plantations can be addressed.

With polling suggesting the ALP will lose at least two seats in Tasmania, and struggle to regain another from independent Andrew Wilkie, the party is desperate to maximise its vote in the once-solid Labor state. Ms Gillard yesterday made her second visit within weeks to the island, announcing $4m to subsidise Vodafone to relocate a call centre from Mumbai to Hobart, attend a federally funded jobs expo and pledge $250,000 to rebuild a community hall burnt in January’s bushfires.

The heightened pre-election political atmosphere and recent comments by federal and state Labor figures talking up the stalled pulp mill have led to speculation of government involvement in resurrecting the project.

Asked whether she would consider taxpayer-funded assistance, Ms Gillard confirmed she would be willing to discuss this with any private proponent. “I would very much want to see this secured for Tasmania, but we do need a private sector proponent to come forward,” she said.

Government assistance mooted in the past has included export credits, tax breaks and funding for related infrastructure. Multiple sources told The Weekend Australian there were still companies interested in purchasing the mill assets, but only if the plantations to feed it could also be sourced.