Shock amount FSG Australia owes creditors
DISGRACED disability service provider FSG (Freedom, Social Justice, Growth) Australia has been put into liquidation, owing more than $25 million to creditors.
Despite receiving up to $60 million a year of taxpayers' money before its collapse, the Government-funded charity owes about $9 million to 900 staff.
Creditors unanimously voted to liquidate FSG on Friday. It entered voluntary administration on June 30.
John Park, the lead administrator for FTI Consulting, said liquidation was a good option as it meant FSG staff would receive their entitlements and redundancies through a government scheme.
The board of directors, including embattled former CEO Vicki Batten, would not be entitled to the same guarantee.
"The creditors unanimously voted to liquidate the company, effective today, which is a good outcome because that allows the former employees to access the FEG (Fair Entitlements Guarantee) scheme with respect to the unpaid entitlements," Mr Park said.
"The FEG scheme is to cover normal employees, not the board of directors."
The FEG scheme is a federal safety net for employees who lose their job due to liquidation or bankruptcy.
While the scheme is a positive for former FSG employees, it means taxpayers face another FSG bill.
Liquidators will now begin the sale of FSG assets, including the sale of IT equipment, company vehicles and the $20 million property empire the not-for-profit amassed.
FSG, which blamed the NDIS and a lack of support from the State Government for its collapse after 30 years, recorded losses of $1 million, $2.29 million and $5.225 million in the 2015-2017 financial years.
It offered disability, child, homeless and aged-care services to vulnerable clients from Brisbane to Ballina.
The Department Director-General Clare O'Connor last week announced stricter measures would be introduced to state-funded NGOs.
These include declaring financial wages as percentage of total income, operating profit, cash assets and current interest-bearing liabilities.
The department is also in the process of assessing 256 similar service providers it funds.
Ms O'Connor said the department only became aware of FSG's dire financial situation after Westpac Bank withdrew their line of credit, forcing FSG to request $10 million from the government.
A department spokesman said an investigation into FSG was also being conducted "to ensure Queenslanders can have confidence in how taxpayer dollars are being spent".
"A second phase of investigation of FSG by (auditors) BDO into use of government funding is underway.
"This investigation is to confirm appropriate use of public money and identify any claims available as part of the administration process.
"BDO is due to report back to government in the coming weeks."