Julie Bishop takes job with Greensill, the firm pushing controversial financing practice
The former foreign minister Julie Bishop has taken a job with financing group Greensill, which specialises in the controversial practice of reverse factoring.
Reverse factoring, also known as supply chain finance, is a practice where suppliers to big business can get paid early by a company such as Greensill in return for a fee.
The Greensill founder, Lex Greensill, would like to expand the idea to take in wages, and in November met with the prime minister, Scott Morrison, to suggest it could be applied to the 150,000 people working for the commonwealth public service.
However, concerns reverse factoring could encourage big business to delay paying suppliers have sparked inquiries by the small business ombudsman, Kate Carnell, and the competition watchdog, which Guardian Australia can reveal has this week been interviewing small business representatives over the practice.
Ratings agency Moody’s has also fingered it as contributing to the multibillion-dollar financial implosions of big companies including UK government contractor Carillion and Spanish renewable energy group Abengoa.
And on Wednesday, the Western Australian premier, Mark McGowan, banned the state’s Water Corporation from using reverse factoring after the company told suppliers it would cost them 0.52% of their bills to be paid within a month.
However, big businesses remain keen on the product because it can free up large amounts of cash, and Lex Greensill has defended it as “completely optional” for suppliers.
Bishop’s post-politics life after deciding not to contest last year’s election has already drawn political fire.
Last year she joined the board of one of the government’s biggest aid contractors, Palladium, a move which together with the former defence minister Christopher Pyne’s decision to take a job at EY ignited concerns about compliance with ministerial standards that ask former ministers not to lobby government about any matter with which they have had “official dealings” over the previous 18 months.
Greensill said Bishop started her job at the company on 1 December. She “will provide strategic advice to Greensill and serve as chair of Greensill Asia
Pacific as the company accelerates its expansion in the region,” the company said.
Lex Greensill said the company would “draw on Julie’s unparalleled experience and expertise – particularly her international credentials cemented during five years as Australia’s foreign minister”.
Labor’s small business spokesman, Brendan O’Connor, said Bishop’s appointment was “seriously concerning and draws attention to the inaction by the federal government in this area”.
“The increasing prevalence of reverse factoring is a significant challenge for small business, as payment times are extended, and small businesses are offered a third-party financier to pay the invoice on time but with a fee, meaning small businesses aren’t receiving full reimbursement,” he said.
“It is increasingly clear that the Liberals take small business for granted, setting the conditions that allow big businesses to treat small businesses like piggy banks.”
Last year, Labor raised the issue with the Australian Competition and Consumer Commission.
Guardian Australia can reveal that the ACCC has been conducting inquiries and this week an ACCC team interviewed Ken Phillips, who heads industry group Independent Contractors Australia and is a vocal opponent of reverse factoring.
Phillips is calling on state and federal governments to use their power as large customers of big business to enforce 30-day payment terms and stamp out reverse factoring.