Honan Family and Manildra Group

Jan 29, 2021 | Secret Rich List

Perhaps the Secret Rich List’s largest political donors behind Anthony Pratt, the Honan family owns one of Australia’s most lucrative agribusinesses, Manildra Group. They control three Dark Companies which are exempt from lodging financial accounts with ASIC.

Top 200 Rich List (2020)No. of Dark Companies: 3
Political Donations since FY 1998-99
Rank: 95Cajosa Pty LtdLabor Party: $2,303,272
Wealth: $1.08bHonan Holdings Pty LtdCoalition: $3,364,649
Wealth (2019): $905mDick Honan Pty LtdIndependent: $112,020
YoY wealth change: 19.4%Total: $5,779,941

The Manildra Group was born out of the Honan family’s purchase of a flour mill by Jack Honan in Manildra, a regional town in central-west NSW in 1952. Almost 70 years later, the Honans continue to control the privately-owned agribusiness, with billionaire Dick Honan acting as chairman and his children John, Caroline and Samantha all sitting on the executive board.

Manufacturing of Manildra’s various products ranges from flour, wheat, gluten, sugar, beef and ethanol and is conducted throughout their eight facilities across Australia. They export their food and industrial products to every continent on the planet.

The facilities include the original flour mill purchased in 1952 and Shoalhaven Starches (pictured above) located in Nowra on the NSW South Coast. It is the largest wheat starch and gluten plant in the world and also operates an ethanol distillery.

The Group also runs operations in the US established in 1974. There they manage a bakery, frozen goods and industrial plant in Iowa and a product development research centre in Kansas.

Cajosa Pty Ltd, a Dark Company, is the ultimate parent of the agribusiness empire (formally called Manildra Milling). This means that all operations and acquisitions conducted by Manildra nationwide, as well as all of its related entities, are controlled by a Dark Company. In addition, all of the Group’s subsidiaries are considered small proprietary companies as their financial accounts are not available on ASIC (see explainer below). Thus, there are no financial accounts within this multinational that are accessible to the public.

Manildra’s focus is said to be on regional development, employing over 1,000 people in rural Australia. They also run the Manildra Foundation which supports many of these communities. Yet the Group has been accused of hurting business for regional wheat farmers when they commenced large-scale imports of Canadian wheat in 2019.

John Honan used the poor harvests from grain growers throughout 2017 and 2018 in the drought-stricken regional areas of Australia’s eastern states to justify the foreign trade.

Not only do the imports pose a biosecurity risk, but they also have the potential to “put a ceiling on local prices in times of drought when growers relied on higher premiums to make up for production shortfalls.”

The Honan’s Canadian imports which included a 57,000-tonne shipment were approved in May 2019 by the federal government’s Department of Agriculture and Water Resources (DAWR). This sanction “marked the first time in more than a decade bulk wheat imports have been allowed in Australia.”

The DAWR insisted the import was conducted under strict biosecurity protocol yet it does not mask the fact that the beneficiaries of the agreement have donated over $5 million to the major political parties since 1998. Worth noting is that 89% of Manildra’s ‘independent’ donations have gone to Katter’s Australia Party (KAP).

Donations of this magnitude have drawn correlations such as the Group’s benefiting from a $200 million regional jobs program issued by the Coalition after the 2016 federal election. The Australian National Audit Office found “substantial administrative shortcomings” in the package such as “Ministers [declining] to fund 28% of grant applications recommended to them by officials and approved 17% of applications that had not been recommended”. One such recipient was Manildra Group’s Shoalhaven Starches Pty Ltd which won a $2.95 million grant to help fund its $13 million export distribution hub project in 2018.

A more famous example is the Howard government’s $30.8 million taxpayer subsidy paid to Dick Honan in 2002 for producing ethanol to be blended into petrol. On top of this, there was an additional “$10 million of ‘short-term assistance’ to the ‘ethanol industry’, that is, Dick Honan, maker of 96 per cent of all local ethanol.” The government declared the payments were subject to the amount of ethanol the Group paid in excise. It thus “overcomes any cash flow problems for Honan in meeting the excise before Manildra pockets the subsidy.” Manildra Group wrote 16 cheques to the Coalition in the 14 months leading up to the cabinet’s decision on the ethanol-petrol scheme.

ATO tax transparency data shows Honan Holdings Pty Ltd, a Dark Company, declared an income of $7.2 billion between financial years 2013/14 to 2018/19. Over this time, their tax payable was $60.7 million, representing 38% of their taxable income. However, taxable income for the six years was $158.3 million, just 2.1% of their total revenue. In the financial year 2016/17, taxable income and tax payable was $0.


How we compiled this list

What are they trying to hide? This is the driving question behind our ‘Secret Rich List’ project at Michael West Media.

Our aim is to shine the spotlight on the 1,119 large proprietary companies that continue to enjoy a privileged exemption from having to lodge financial reports to the Australian Securities and Investments Commission (ASIC).

An exemption from any new law or regulation is commonly referred to as ‘grandfathering’. In this case, the exemption from having to lodge audited accounts effectively creates two classes of Australian citizens; large proprietary companies that have to comply with government legislation, and the remaining 1,119 companies that by definition are required to do the same, yet enjoy an antiquated free pass from full public transparency.

What was issued as a “temporary measure” by the government of Paul Keating in 1995 has placed these companies above the law for more than 25 years. We believe it is in the public interest to put an end to this outdated government legislation once and for all.

Although ASIC  defines the companies enjoying the exemption as as grandfathered large proprietary companies, we prefer the term ‘Dark Companies’; it is a more fitting description of old wealth empires whose financial accounts are cloaked by this provision, shadowed from the public eye.

History behind the 1995 grandfathering exemption

This grandfathering regime was issued in response to The First Corporate Law Simplification Act 1995, a 1995 amendment to the Corporations Law at the time.

Before this amendment, whether a company had to prepare and lodge financial accounts with ASIC was determined by whether they were an exempt or non-exempt proprietary company (exempt meant the company did not have to publish accounts).

ASIC defines exempt proprietary companies as:

“companies where there was no direct or indirect public ownership; that is, they were essentially owned by private individuals. The companies were not required to lodge financial reports where those financial reports were subject to audit and sent to members.”

Under the First Corporate Law Simplification Act 1995 the measure of whether a company had to lodge financial accounts with ASIC changed from the reporting entity test (exempt/non-exempt system) to what became known as the ‘small/large test’.If the company was considered a ‘large’ proprietary company, then it must lodge its accounts.

As of the law in 1995, an Australian proprietary company was ‘large’ if it satisfied two of the following three criteria:

  • consolidated gross assets of $5 million or more;
  • consolidated gross revenue of $10 million or more;
  • the company and the entities it controls (if any) have more than 50 employees at the end of the financial year.

The criteria for the small/large test has since been updated.

The new legislation meant that a significant number of previously exempt organisations now had to prepare and lodge their financial accounts.

The explanatory memorandum for the Bill notes: “To avoid disrupting established commercial arrangements, those existing exempt proprietary companies which have their annual accounts audited, which are large and which elect to continue operating under the existing rules, will not need to lodge their accounts with [ASIC].”.

Thus was born the concept of the grandfathered list - or Secret Rich List as we like to call it. In 1995, it was home to more than 2,000 large proprietary companies.

Significant Global Entities

Some 12 of the 1,119 Dark Companies are considered ‘significant global entities’ (SGE). An entity becomes an SGE if it fits at least one of the two following criteria:

  • a 'global parent entity' whose 'annual global income' is A$1 billion or more,
  • a member of a group of entities consolidated (for accounting purposes) where the global parent entity has an annual global income of A$1 billion or more.

These entities must prepare and lodge general purpose financial accounts with ASIC. This requirement is no different for the 12 SGEs on the Secret Rich List as their SGE status overrides the grandfathering exemption.


MWM Methodology

Using both the ASIC and Australian Electoral Commission (AEC) databases we have conducted more than 5,000 searches and counting.

Through the ASIC searches we have been able to collate the necessary information for every company on the grandfathered list, ranging from company directors, shareholders (both persons and organisations), a company’s auditor and much more. This has all been incorporated into our database, which is designed to map out these Dark Companies and tackle our driving question.

We also used the AEC database to generate an extensive list of political donations from these Dark Companies that date from the 1998-99 financial year to the present. We have designed a separate database for these figures, listing political donations from the entity itself, its directors and/or its shareholders. Each donation has been separated into recipient categories to better display the amounts funnelled to the Liberal and Labor parties and their constituencies.

The donations help indicate why the exemption, which ensures such a lack of transparency, has stood the test of time despite numerous attempts over the years from both sides of Parliament, the cross bench, the Greens, Treasury, corporate regulator ASIC and a joint parliamentary inquiry, which have all called for the exemption to be abolished. Both databases created by Michael West Media complement each other to bolster the narrative of the stories that follow.


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