ASIC and the ATO crack down on phoenix operators

ASIC and the ATO have the construction industry firmly in their sights as they crack down on 'phoenix operators'. The term phoenix operators refers to companies that suddenly liquidate to avoid paying debts to creditors, employees and the tax office, but then transfer their assets to new enterprises and rise from the ashes to begin trading again almost immediately.

In particular, authorities are focusing on the use of fraudulent statutory declarations. Phoenix operators submit false declarations as evidence that their subcontractors have been paid to claim payment from principals. However, upon liquidation, outstanding debts to employees and subcontractors are often exposed.

ASIC Commissioner Greg Tanzer has warned that directors who take part in phoenix practices and make fraudulent statutory declarations expose themselves to serious consequences. 'While false statutory declarations and fraud matters are matters for other regulatory and enforcement agencies,