THE $16.6 million debt Moses Obeid’s company owed to the City of Sydney was wiped out yesterday after Obeid-friendly creditors voted to accept payment of 1¢ in the dollar in full satisfaction of their debts, most of which were small.
Yesterday the administrators Mr Obeid appointed to his company Streetscape, Ozem Kassem and Robert Kite from the accountancy firm Cor Cordis, used their casting vote to side with creditors owed a fraction of the amount owed to the council.
”The city is disappointed that the majority of creditors owed monies by Mr Obeid’s company Streetscape agreed to accept an arrangement to allow the company to wipe out its debts,” said a spokesman for the council.
Mr Obeid is the son of Labor powerbroker Eddie Obeid. The former Labor minister and his son are both set to feature in an Independent Commission Against Corruption inquiry in November.
Describing Mr Obeid’s conduct as ”dishonest and fraudulent”, in February Justice Clifford Einstein ordered him and his company to pay the council $12,123,470 for secretly selling the council’s multifunction poles overseas in breach of licensing agreements.
With interest and other court costs, the council’s debt has ballooned to $16.6 million.
At a creditor’s meeting yesterday, the council and other creditors such as Telstra, ANZ bank and Streetscape’s landlord Abacus Property Group, voted against the proposed Deed of Company Arrangement that proposed unsecured creditors, owed a total of $17.5 million, accept 1¢ in the dollar in full satisfaction of their debts.
Thirteen smaller creditors such as Mr Obeid’s sister, Gemma Vrana, his business associate Rocco Triulcio, the office cleaner, the local newsagent, the Obeids’s long-time accountant, Sid Sassine, the family’s lawyers, Colin Biggers & Paisley and former employee, John Angus McLeod voted to accept the DOCA.
This effectively meant they agreed to write-off the debts owed to them by Streetscape and to halt further investigations into the company’s finances.
The international arm of Streetscape, which sold the council’s poles throughout the Middle East, made profits of at least $40 million. The council wanted Streetscape to be placed into liquidation so that a thorough investigation of the company’s finances, assets and recent transactions could be done.
Earlier this year, Justice Peter Young of the Supreme Court rejected Mr Obeid’s application that he did not have the money to pay the council’s debt and that any payment should be put on hold until after an appeal is heard in November.
Justice Young said he could have ”very little confidence” in the evidence of Mr Obeid and noted that the Obeids appeared to exemplify the doctrine: ”How to live well on nothing a year” from William Thackeray’s classic novel Vanity Fair.
Moses Obeid claimed he did not have any assets or the means to pay the $12 million but Alan Sullivan, QC, for the City of Sydney, identified a complex series of trusts controlled by the family through which millions and millions of dollars had flowed for the benefit of Mr Obeid and his siblings.
Mr Sullivan also told the court that Mr Obeid’s company Streetscape ”over the years has received large sums of money, hundreds of thousands of dollars in a number of years, as a beneficiary under the Obeid Family Trust.”
The council is pursuing bankruptcy against Mr Obeid but it cannot be finalised until after Mr Obeid’s appeal, which is listed to commence on November 26.
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