How Plutus accused connected with George Alex
Adam Cranston's comeback plan, after being charged with tax fraud, involved going into business with a company allegedly controlled by criminals and getting his father, a former top Tax Office official, involved.
It was a meeting cloaked in mystery: the patrons of the New York Patisserie in Earlwood, in Sydney's inner west, would have ignored the group sitting at the outside table – except for the distinctive pudgy face and animated manner on of Adam Cranston.
Nine months earlier, Cranston had been a corporate high-flyer, only to see his world collapse as his company Plutus Payroll was hit by a storm of tax fraud charges. But according to his father, former deputy commissioner of taxation Michael Cranston, within weeks Adam had got back into business, working for accounting firm Wentworth Williams.
This meeting in the Earlwood patisserie in February 2018 marked the next step in his comeback – and Adam had plans that would put his father into a business connected with a company allegedly controlled by criminals. But who was Adam meeting, and what was the deal about?
Adam looked nervous, talking rapid fire to a large man across from him. On Cranston's right sat an older man with a tie and a folder marked LK. Two muscular men with tattoos lounged beside them.
The Australian Financial Review received photos of the meeting within hours. But discovering whom Adam was meeting and what they talked about would take far longer.
It turned out the most important figure in the picture was the man with his back to the camera. He had the unmistakable build, head profile and haircut of George Alex, a colourful identity with a history of violent associates and links to phoenix companies in the building industry.
The older man was Lindsay Kirschberg – it is one of the few public photos of the 61-year-old financial adviser, who was tied to Alex in a string of colourful phone taps exposed by Dyson Heydon's Trade Unions Royal Commission in 2015.
The New York Patisserie (now closed) in Clarke Street was just a stroll up Lewins Lane to Alex's home on Larkhall Avenue. Alex's family owned the building next door to the patisserie and Alex had an office there protected by closed-circuit television cameras – which Adam Cranston would operate from later that year.
Last week, Alex and Kirschberg were charged with a $17 million tax fraud which saw proceeds of crime invested in the company Adam Cranston now runs.
"I have zero involvement in those alleged offences," Adam Cranston told the Financial Review last Wednesday. No charges have been laid against him.
George Alex did not comment. However, he was caught on a telephone intercept on August 1, 2019, tabled by the Australian Federal Police in the Queensland Supreme Court, discussing questions the Financial Review had put to Kirschberg two days before.
Alex told his associate, Pasquale "Peter" Loccisano, that Kirshcberg's response to the Financial Review should "have no reference to me ... I'm not involved ... I've been a year in hospital ... I live in Queensland, I have nothing to do with them".
What happened after Adam Cranston's cafe meeting in February 2018 can be pieced together from what Michael Cranston and others told the Financial Review in a series of exchanges over the past year.
Adam Cranston joined Wentworth Williams in mid-2017 to open a legal arm for the firm, his father says, but by mid-2018 he had left to be general manager of a building firm, Permaform International.
Canberra builder Robert Rech founded Permaform to sell PVC framing for concrete walls. Permaform's lawyer, Jonathan O'Loughlin, says Adam met Rech and his wife, Laura Fisher, "through long-term family friends".
In late July 2018, two Sydney women, Cheryl Rostron and Caitlin Hall, flew to Singapore to set up two companies, Stanton Oxford Funds Management Pte Ltd and Permaform International Licensing Pte Ltd (PIL), both of which would be owned by Rostron.
Despite the similar name, PIL "has no relationship with Permaform", Adam told the Financial Review last week.
Rech echoed this: "This entity bears no relationship to Australian company Permaform International."
Rostron, 50, is married to Peter Loccisano, whose LinkedIn profile listed him as working for Permaform International last year. Hall, 30, is married to Michael "Mich" Ibrahim, who was sentenced to 30 years prison in May on drug charges.
'My chance to get into business'
In September 2018, two months after the Singapore companies were set up, Lindsay Kirschberg's company Redwood Smith took a 67 per cent stake in Permaform International. The new Permaform website gave the company's address as George Alex's office in Clarke Street, Earlwood, where Adam Cranston was working.
In the previously mentioned telephone call with Loccisano on August 1 last year, Alex said Kirschberg should tell the Financial Review"there is no lease in Clarke Street, it's just someone saying they were working from there, they're in Moorebank. Do you know what I mean?"
The AFP says that from September 2018, George Alex and his associates secretly controlled Permaform.
That same month, Adam convinced his father to join a builder called Stephen Vlahos to invest in a new company called Cospex.
"Adam, who was the general manager of [Permaform], told Stephen that he should get me in to run Cospex," Michael Cranston said last July. "There were connections between the two businesses. Permaform supplies structural wall systems and Cospex can install them and supply concrete.
"The consultancy work had dried up before my court case and this gave me an opportunity to do something."
Cospex was making small profits of $20,000 to $30,000 a year, he said.
"I do not hold shares for Adam. This was my chance to get into business. My son, however, working as the general manager of Permaform did help make this happen."
At his trial last February, when he was found not guilty to two charges of using his position at the ATO to help his son's business, Michael Cranston testified that he had previously considered retiring from the ATO to work with Adam, and that he could provide some governance advice for him.
In its early days, Cospex had no official address and at times quoted the address of George Alex's office where Adam was also sometimes working.
"I never knew George Alex whilst in the ATO and he has no legal or indirect connection with Cospex," Michael said last July. "I have no social or business association with George Alex. To suggest otherwise is clearly wrong and insulting."
Remarkable admission
It's a remarkable admission, for a man who as deputy commissioner headed the inter-agency task force fighting phoenix companies, that he did not know one of the major identities linked to phoenixing in the royal commission report on trade union governance and corruption, a man who had been put into bankruptcy by Cranston's tax officials.
In the month after the Financial Review raised questions about his fellow investors at Cospex, Michael Cranston resigned from the board and sold down some of his shares.
He remains one of the two largest shareholders, tied with 24 per cent apiece.
As for Permaform and its new shareholder Lindsay Kirschberg, there are two very different versions of how this investment worked out.
After the Financial Review questioned Permaform last July, a lawyer for Kirschberg, Rech and Adam Cranston, Jonathan O'Loughlin, said any claimed connection to George Alex was "demonstrably false".
"Mr Kirschberg has never received any funds, legitimate or illegitimate, to manage or disburse on behalf of Mr Alex," O'Loughlin said. "Mr Kirschberg does not hold Permaform shares, directly or indirectly, for the benefit of Mr Alex."
Mr Kirschberg "is actively involved in its day-to-day operations, holding the position of finance and credit manager wherein he attends the offices of Permaform approximately two days per week to fulfil this role".
In a statement of facts tendered in the Queensland Supreme Court last week, the AFP alleges that George Alex and Michael Ibrahim secretly controlled Permaform.
The AFP says labour hire companies controlled by Kirschberg and other Alex associates diverted $17 million in tax payments.
Telephone intercept
At least $4 million was paid to Permaform International Licensing in Singapore, which transferred the funds to the second Singapore company, Stanton Oxford Funds Management, which transferred the money back to Australia, to Kirschberg's company Delphi Finances and other entities.
The AFP statement says that last year at least $1.3 million was invested in Permaform International in Australia last year, including $362,000 to rent a warehouse for Permaform in Moorebank.
In a telephone intercept in May 2019, Alex's brother-in-law, Peter Kat, told Loccisano: "George and Mick have put nearly 3 million in the [Permaform] business."
In another phone call last July, Alex said of Permaform: "Everyone reports to me."
In yet another intercepted call, Alex and Ibrahim, who was in prison at the time, discussed sales targets for Permaform, stock distribution and managing their PVC supplier in China.
There is no suggestion that Permaform itself was part of the tax fraud or money laundering.
The office in Earlwood that Adam Cranston, Permaform and sometimes George Alex worked from. Louie Douvis
The AFP say a Permaform employee, Kieran May, warned Kirschberg "the last thing I want to do with this is bring Permaform International to the attention of the tax office because if they start looking and start tracking through some of, start following some transactions through ..."
Last week Rech told the Financial Review:"Redwood Smith is not the sole shareholder of Permaform International. George Alex is not a shadow director to the extent of my knowledge."
Michael Cranston said Clair Arthur, the wife of "Crazy Dave" Lima, a former senior member of the Notorious bikie group who has been close to the Ibrahim family, is a shareholder in Cospex, but Lima does not have any say in the day-to-day workings of the company.
Their company, Levi Wall, lists its address as Alex's Earlwood office. The AFP have made no allegations against Lima or Arthur.
'Separate businesses'
"I have heard of David's past but have never discussed it," Michael said. "Clair and he are legitimate business persons who have brought in a further opportunity in placing structural wall systems by connecting us with customers of Levi Wall."
Michael Cranston last July stressed that Cospex and Permaform "are completely separate businesses with different directors, operation etc. The only cross-over person is Robert Rech, who is a director and shareholder in both companies."
But after he stepped down from the board last August, the companies grew even closer, with David Lima taking a 25 per cent stake in Permaform International on top of the 20 per cent his wife owns in Cospex, pushing Kirshberg's stake down to 50 per cent.
And last December, Cospex moved its offices to share Permaform's Moorebank site in south-western Sydney.
While AFP officers executed a search warrant on Moorebank on July 21, Adam says Permaform "has not been restrained and is still currently trading".
"Permaform International is not involved in the matters reported in the media this week," says Rech. "I was approached by investigators and fully co-operated and complied with their inquiries into Permaform International."
While the AFP has seized assets of companies accused of tax fraud and money laundering, "Permaform International complied with investigations, and has no restraints on trading in any capacity. It is not the subject of any allegations or charges and our doors remain open," he says.
"I can advise that Mr Cranston has not had at any time financial governance or responsibilities in our business. I have not reviewed any statement of facts so cannot comment on their veracity.
"I see no imperative to comment on the ‘nature of the relationships' of the shareholding entities of Permaform International, a private/unlisted company and won't be doing so."
George Alex, Pasquale ‘Peter’ Loccisano and Lindsay Kirschberg were each charged with one count of conspiracy to defraud and one count of conspiring to deal with proceeds of crime worth $1 million or more.
Cheryl Rostron and Caitlin Hall were each charged with recklessly dealing with proceeds of crime worth $1 million or more.
Additional reporting: Luke Housego
