Dramatic week in construction as five builders fail, Chinese crime ring busted

The busting of a huge tax avoidance scheme and the demise of multiple building companies has delivered an eventful week for the construction sector.

ABF staff sort buckets of illegally laundered money.
An illegal tax avoidance scheme in the construction industry resulted in Chinese nationals being arrested with buckets of money. (Image source: Australian Border Force)

In what has been a dramatic week for the construction sector, an Australian Taxation Office (ATO) taskforce has smashed a $137 million criminal enterprise within the New South Wales and ACT construction industries, while five building company collapses have rocked the industry.

An ongoing joint investigation between the Australian Border Force (ABF) and ATO spanning almost two-and-a-half years has led to the disruption of serious criminal behaviour by four Chinese nationals.

The Chinese criminal group, nabbed as part of Operation Underpitch, had withdrawn the $137 million in cash to pay exploited foreign construction workers in a long-running Australian tax avoidance scheme.

Meanwhile, a fifth residential construction company has added to the woes within the building industry, with Melbourne-based residential builder Construct Homes slipping into receivership.

The Australian Business Register lists the failed Victorian builder as being established in 2002.

In what has been a bleak week for an industry battered by unprofitable fixed term contracts undermined by rising construction material costs, labour shortages and diminished consumer confidence in the sector, a string of companies have gone under.

Victorian building company Kleev Homes has left behind creditors owed $3.3 million, Perth’s Modco Residential left 29 unfinished homes and up to $4 million in debts in its wake. Melbourne’s Avra Group met its demise, while on Monday, Sydney building company Allura Homes went into liquidation owing $3.3 million to creditors and leaving 39 homes with uncertain prospects of completion.

Chinese construction crime ring sentenced

A 55-year-old Chinese national this week received a criminal conviction and fine – but avoided prison – for her involvement in money laundering, tax evasion and foreign worker exploitation within the construction industry.

She was one of four Chinese nationals to be successfully prosecuted under Operation Underpitch.

In April, a Chinese national aged 22 was sentenced to 12 months imprisonment for dealing with property reasonably suspected of being proceeds of crime, while on 29 May 2023, a 27-year-old Chinese national received a sentence of 15 months imprisonment for dealing with property reasonably suspected of being proceeds of crime.

The joint investigation executed a warrant at an ACT premise and found 12 Chinese nationals, including 10 lawful non-citizens and two unlawful non-citizens, who were being paid in cash to avoid superannuation and PAYG tax. 

The search found evidence, including identity and financial documents, that indicated employment of unlawful non-citizens and suspected exploitation of foreign workers through cash withdrawals. 

As part of the operation, the Australian Border Force (ABF) issued a civil penalties infringement notice of $49,500, with the taskforce also disrupting the organisation through the restraint of $4 million in accounts and other assets. 

ATO Deputy Commissioner and Serious Financial Crime Taskforce (SFCT) Chief, John Ford, said individuals who take part in financial crime activities are often complicit in larger criminal activities.

“These criminals are motivated by financial gain and their activities rob the Australian public of revenue to support essential services such as health and education,” Mr Ford said.

“This action demonstrates that the SFCT agencies will work together on operational activity that will ultimately bring criminals to account.

“The operation is ongoing and ABF will continue to work collaboratively with partner agencies to address foreign worker exploitation, tax fraud, money laundering and associated criminality.”

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