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Tag: Regulation

23/05/2024

Building Regulator Toughens Up- Joke?

House collapses, the builder is charged with 9 offences and flees. When he turns up, is tried and convicted he is fined a total of $5,450. He calls it minor and continues working for a friend. None of the convictions were for the collapse.

May 23 2024

A house collapses, the builder is charged with 9 offences and flees. When he turns up, he is tried and convicted and fined a total of $5,450. He calls it minor and continues working for a friend. None of the convictions were for the house collapse.

Is this some sort of joke? No. It is another example of our legal system in action- in this case the ‘beefed up’ NSW Building Regulator. Building Minister Anoulack Chanthivong says the charges reflected the new powers of the Building Commission.

See SMH article below:

On the run for months, builder of collapsed home convicted of fraud

By Anthony Segaert and Olivia Ireland

May 23, 2024

The man whose company built a Condell Park home that collapsed in the dead of night last year has been found guilty of a string of fraud-related charges.

Thirty-five-year-old George Khouzame, director of Hemisphere Constructions, was on the run from authorities for nearly two months at the beginning of the year, before he handed himself in to NSW Police in March.

Khouzame, from South Hurstville, pleaded guilty to nine offences relating to using an unlicensed contractor and the fraudulent lodging of insurance applications on three different worksites, but Building Commission NSW and the state’s police failed to secure any prosecutions relating to the Condell Park home collapse.

When asked about the charges, Khouzame told the Herald that, after having his building licence cancelled shortly after the collapse, he had paid out “every single home owner” who had contracted him for work and his fraudulent insurance claims were “just negligence from my office”.

“It was a very, very, very, very low-end fraud. It was literally an honest mistake from my staff in the office,” he said of the nine convictions: three charges of publishing misleading material to obtain financial advantage, two charges of dishonestly obtaining financial advantage by deception, three charges of making false or misleading statements in an insurance application, and one charge of engaging an unlicensed contractor.

Investigation began before the collapse

Attention turned to Khouzame and his company on Good Friday last year, when a young family renting the home built less than 12 months earlier was woken at 4.30am by the sound of the ceiling collapsing.

Neighbours described hearing what sounded like an explosion as a portion of the house in Sydney’s south-west fell down, hitting several cars parked underneath. A previous tenant of the property said one room had earlier “completely flooded”.

But the collapse was less surprising to authorities, who had launched an urgent investigation into Hemisphere Constructions a month earlier. Only a day before, NSW Building Commissioner David Chandler had made an unannounced visit to a worksite in Concord operated by Hemisphere Constructions and found what he described as “pretty obvious” unsafe work practices.

“There is a strong correlation between unsafe worksites and the potential for serious defects to be incorporated in the project,” he told the ABC.

After cancelling Hemisphere’s building licence the following month, Fair Trading, the predecessor to Building Commission NSW, and investigators from Bankstown Police spent the year looking into the company. By January, they were ready to arrest Khouzame.

On visiting multiple homes connected to him, they encountered a problem: Khouzame was nowhere to be found.

After another month of searching, NSW Police obtained an arrest warrant and appealed to the public to find the wanted man.

“George Khouzame, aged 34, is wanted on an outstanding warrant in relation to fraud offences,” NSW Police posted on social media. “Anyone with information into his whereabouts is urged to not … approach him but to call triple zero (000) immediately.”

He handed himself in at Bankstown Police Station at 5.30am on March 6, and was arrested on the spot.

‘You should be saying thank you’

The builder in May pleaded guilty to the offences relating to his management of homes in Punchbowl, Macquarie Fields and Chester Hill.

At two of the three sites, Khouzame significantly understated how much his building projects were worth on insurance applications.

For a Macquarie Fields dual occupancy construction project worth $900,000, Khouzame was accused of writing in his Home Building Warranty Insurance that it was worth $520,000.

“Had the correct value of construction been stated on both insurance applications the value of the insurance premiums would have totalled $14,799.00 creating a deficit of $7517.94,” the facts tendered to the court read.

For a home renovation in Punchbowl, Khouzame listed the construction value to the insurance provider as $150,000 instead of $400,000.

He also pleaded guilty to engaging an unlicensed contractor to install windows and doors at a site he was renovating in Chester Hill.

Khouzame, who called the Herald on Wednesday from a private phone number after numerous attempts to contact him for comment, said the offences were “all they [the investigators] could come up with over a 10-year investigation and 350 homes”.

“The charges were dismissed in relation to the fraud and I pled guilty to only one charge for the home warranty application,” he said. “OK buddy?”

But after the Herald read out his nine offences, to which he pleaded guilty and was fined a total of $5450, Khouzame repeated his claim that it was “very minor fraud”.

“We failed, our staff failed, to update the home warranty to reflect the variations [in project costs] … It was just negligence from my office, and I did accept it, and I apologised.

“So we had existing 24 open projects when the house collapse happened and the licence was cancelled, and we paid out every single home owner and every single client.

“I didn’t run away from the problem. I approached the problem head on and I [had] done what I had to do to make sure that every client and every home owner has been supported by me personally.

“You should be saying, ‘Thank you, good work’.”

In its first six months, Building Commission NSW has cancelled, suspended or disqualified 136 construction licences.

“We’re starting to see the dividends of the expansion of powers the NSW government provided to the Building Commission,” Building Minister Anoulack Chanthivong said.

“It now has an expanded tool kit to improve build quality and weed out those who don’t play by the rules.

“Already this year, we’ve had a nearly 100 per cent increase in the number of building work rectification orders issued, helping to deliver compliant, safe and trustworthy homes.”

Chanthivong did not respond to questions about why charges had not been laid over the house collapse.

With his licence suspended, Khouzame is now working as a labourer for a friend’s food company.

04/01/2022

The Chinese Way

4 January 2022

Everyone want to criticise China as an authoritarian state, but if you stand back and look at how they tackle challenges that we have, there may be lessons to be learned.

There was an interesting show on ABC TV last night hosted by Hamish Macdonald ‘The China Century’, Part 1 of 5. It looked at the Tiananmen Square protests of 1989 and their ruthless repression. But next week it will look at how they have combined capitalism and strong state control.

Competition increase efficiency when it lowers prices, but note in the late stage of ‘laissez faire’ monopolies allow supernormal profits and their political influence puts them above the law. Sometimes the loss of central control may also mean that a fragmented industry cannot produce state of the art products. I read some time ago that the US is having a problem producing good fighter planes because the intellectual property is now spread over a number of competing companies, so no one company can be state of the art on all aspects. A single body controlling the situation would not have this problem.

The other aspect is that the Chinese can write the rules for its industries and not simply assume that whatever makes the most profit in the immediate term is the best place to consume resources.

In Australia, our economy is totally out of whack because the tax concession of negative gearing has meant that everyone has simply invested in real estate as a ‘no brainer’ way of making money. But the rise in prices is in a sense arbitrary. If a house goes up in price from $100k to a million, it is still the same house. The difference is that the person who now buys it has $million debt. The ‘profit’ is someone else’s borrowing. So at a national level, we have the second highest level of private debt in the world (after Switzerland) and just pay interest to foreign banks. We also have no money to invest in our productive export industries, or even think about them as real estate is so easy. We note that developers distort the electoral process and do dodgy deals to get their approvals through, but once it is all done, we wring our hands- nothing can be done. The building stands, and it will all happen again next time.

We watch askance as our regulatory systems fail. The Banking Royal Commission was initiated by a whistle-blower not the regulator, and nothing much has changed; one banker resignation, no one charged. We saw the Aged Care inquiry, the Casino Inquiry were both whistle-blower initiated as well. We are up to 4 inquiries into iCare and nothing changes. We hope that our buildings are OK, as the regulatory system has not been working too well there for about 25 years.

We note that our rich are getting much richer and our poor poorer, but our government does not want to do much about that. Hey if you can’t afford a Rapid Antigen Test, you can always wait and see if get sick. ‘Universal health care’ is a good slogan.

We see our kids getting fatter and more addicted to computer games, but there is not much we can do about that. We are moving to high rise schools as so many were sold off in the 1980s and now there is no space for recreation, and we also saved on sport teachers and made serious exercise optional.

We worry that our electoral system is influenced by fake news, trolls and data analysis companies. We understand that the social media concentrates on putting like people together so they will stay logged in and be available to advertise to. We understand that a shock headline also attracts more interest and controversy, so we are hyper stimulated until we ignore what is important. Advertising always affected media content towards making people more receptive to the ads and purchasing; social media has now put it on steroids.

The Chinese have taken all this on. They have put a super tax on rich people and made statements about everyone having a decent life. They have tried to lessen kids times on computers and to increase their exercise. They have taken on social media, and most recently forced a major developer to demolish high rise building because the building permit was illegally obtained. The developer is a major one, and already in danger of going broke. Can anyone image this happening in Australia or the US?

Many problems in the world are universal, and watching what a truly authoritarian government can do is interesting. We have the contrast of our governments, that seem to want to be as small as possible and not even acknowledge problems, and theirs which seems to testing the limits of power. We may not want to do it ourselves, but if we ever decide to do anything, it will be helpful to have information on the outcome of the range of possible actions.

Here is an article about Evergrande, the Chinese property developer which is going broke and now had to demolish significant assets. It was in the SMH, from Bloomberg.

Next Monday on ABC TV at 8.30pm the second article on China, considering its use of the combination of capitalism and central control.

China’s Evergrande halts trading after ordered to tear down apartments

By Jan Dahinten

January 3, 2022 — 3.29pm

Chinese developer shares tumbled following local media reports that China Evergrande Group has been ordered to tear down apartment blocks in a development in Hainan province. Evergrande halted trading in its shares.

An index of Chinese developer shares slumped 2.8 per cent as of 11.37 a.m. local time, with Sunac China Holdings and Shimao Group Holdings plunging more than 10 per cent. A local government in Hainan told Evergrande to demolish 39 buildings in 10 days because the building permit was illegally obtained, news wire Cailian reported on Saturday.

Evergrande gave no details on the trading suspension other than saying it would make an announcement containing inside information.

The government of Danzhou, a prefecture-level city in the southern Chinese province of Hainan, asked Evergrande to tear down 39 illegal buildings in 10 days, Cailian reported on Sunday, citing a document from the local government.

The report cited the document, which was dated December 30, as saying that the Danzhou government said an illegally obtained permit for the buildings had been revoked so the buildings need to be dismantled.

Evergrande didn’t immediately respond to a request seeking comment and calls to Danzhou authorities went unanswered on a public holiday in China on Monday.

The company on Friday dialed back payment plans on billions of dollars of overdue wealth management products as its liquidity crisis showed little sign of easing.

Property firms have mounting bills to pay in January and shrinking options to raise necessary funds. The industry will need to find at least $US197 billion ($271 billion) to cover maturing bonds, coupons, trust products and deferred wages to millions of migrant workers, according to Bloomberg calculations and analyst estimates.

Beijing has urged builders like China Evergrande Group to meet payrolls by month-end in order to avoid the risk of social unrest.

Contracted sales for 31 listed developers fell 26 per cent in December from a year earlier, according to Citigroup Inc. analysts. Evergrande’s sales dropped 99 per cent, the analysts wrote in a note dated Sunday.

Bloomberg

04/07/2021

Collapsing Buildings

4 July 2021

The collapse of the front wing of a 12 storey Florida beach residential tower block on 24 June has sent shivers around the world. The rest of the building, more than three quarters of it, is now to be demolished before a tropical storm comes in (ABC News today). Another similar condominium 8km away has been evacuated (SMH- Unsafe Florida Condo evacuated 4/7/21).

It has always been assumed that tall buildings do not fall down in first world countries unless earthquakes are very bad. We need to look again.

I did a locum in Sydney’s Eastern Suburbs in the early 1980s and found that a number of quite famous and prestigious buildings were being treated for concrete cancer, which is what happens when the steel reinforcing rods rust, expand and the overlying concrete flakes and falls off. Presumably the treatment of the Eastern Suburbs buildings was successful as they are still there. When I was at Sydney Water head office, it had a 7 storey old part from 1927 (which is still there repurposed as a hotel) and a ‘new’ building, which was 26 floors in concrete. Though not at all pretty, (the word brutalist comes to mind), the new building had won an architectural award. A fortune was then spent removing the asbestos. Some years later a nice big front overhang was built over the footpath outside. I discovered that this was because the concrete cancer was so bad that bits of it were falling off and might be dangerous to the citizens on the footpath outside. None of that was mentioned at the time of course; that building was demolished some years later.

When I visited Cuba in 2007 the buildings along the foreshore in Havana were all 1930s reinforced concrete two or three storeys high with concrete balconies with concrete balustrades and handrails and the sort of scrolls holding up the verandahs and around the doors. Art deco if I am not mistaken. But they had concrete cancer bigtime and the balconies were literally falling off. As you walked down the footpath, some areas were roped off in case there were more falls. Some houses were condemned, which seemed just to mean that they were full of squatters rather than owners.

It is not clear whether the building falling in Florida was poorly constructed, whether it got concrete cancer, or whether the sand shifted under it. Presumably we will know eventually.

Back here in Australia the wave of deregulation in the early 1990s led to the privatisation of building certifiers, and the distorting effect of real estate money, surely the biggest problem in Australian governance, has hugely affected building standards. We have seen the fiasco of the Opal Towers building at Olympic Park in December 2018 (SMH 24/12/18), and Mascot Towers (SMH 15/5/19). We now have a new building inspectorate and the new NSW Building Commissioner seems aware of the problems. But Body Corporates do not want to report their defects. No doubt they are fully aware that if they do their property values may be totally destroyed, or at best they will be up for a fortune in repair costs if the problem is fixable. So the answer is to hide the defect if you think the place will not fall down.

The Building Commissioner says that there are 200 apartments on the lower North Shore with ‘scandalous’ defects.

When I was in Parliament it was drawn to my attenti0on that air-conditioning ducts often went through supposedly fire-proof walls, as did plumbing that was not sealed off around the pipes. One of Sydney’s major apartment builders and generous political donor was named, and I asked a question as to how many building were there in the Sydney CBD that the Fire Dept. had declined to certify as safe for occupation? I never got a quantitative response, but the company in question sued the Sydney City Council for being slow in issuing certificate of occupancy. I guess that they thought attack was the best form of defence.

A little known fact is that insurers will not insure buildings over 3 storeys.

The system of private certifiers is a farce and the chickens are likely to come home to roost. How do you buy an apartment now?

Inspectors have to have the power to refuse and guaranteed employment, so that they cannot be bullied or blackmailed. Then there have to be protections against corruption. A head of a planning dept. that I knew banned meetings in a certain coffee shop that was known as a place where developers spoke to public servants, banned meetings on a one to one basis and insisted that there be minutes of every meeting and that only what was written down was to be considered as binding. He had lessons on ethics and acceptable behaviour, but admitted, ‘I cannot check on everything’.

www.smh.com.au/national/nsw/construction-watchdog-body-corporates-are-not-reporting-known-defects-20210630-p585hh.html

15/01/2021

Big Tech’s Media Monopoly 15/1/21

Google and Facebook are taking most of the advertising revenue, which is naturally undermining Murdoch as the biggest player in conventional mass media.

The question is how much money are they making? They can transfer money around and avoid tax, but if how much they are making is opaque, they cannot even be taxed properly on turnover.

Australia is leading the world in wanting to tax google to pay for other media that produce content. Who will be the main beneficiary of this? Murdoch; of course. So actually the Australian government is doing Murdoch’s bidding. This is unlikely to be a coincidence. We are having an inquiry into Murdoch’s power on one hand, and passing special laws to give him money on the other.

The key problem is that the media funding model is broken. Years ago media proprietors were willing to keep editorial and advertising departments separate. No more. At first we found there were fewer stories about smoking caused disease in the women’s magazines that took the advertising. Then we noticed that Murdoch’s coverage of Indonesia and China were slanted when he was trying to buy satellites or networks. Naturally his companies were well reported in his newspapers, then there was cross-promotion of his other businesses. So as well as restricting content critical of advertisers things progressed to having stories slanted to be more exciting rather than more accurate or relevant.

Now, as social media eats away at conventional media advertising revenue they sack journalists to save money and delete or slant stories even more.

Simply funding good people to produce news is what has been done with the ABC on the BBC model, and this is what should happen. But the current government wants to manage the media and so want to de-fund the ABC.

So while I favour simply taxing google on its income and using the money to fund the ABC there are a number of problems with this. Who will or can make google disclose how much money it makes and where? An international cooperative of taxation departments empowered to send in IT-savvy forensic accountants? Can governments ever be trusted to fund public media adequately and then not interfere in what they report?

www.crikey.com.au/2021/01/15/google-facebook-ad-regulation/?utm_campaign=Daily&utm_medium=email&utm_source=newsletter

Written 15/1/21