News.net collapse: the NZ connection
Questions swirl around Australian media startup's failure, and a Kiwi-born accountant is at the centre of the controversy, writes Daniel Dunkley
AKiwi-born accountant is at turn of the year superannuation costs. One individual the centre of growing and another in was said to be owed up to $40,000. controversy across the April, News.net’s News.net’s sole director, Munro, has Tasman following the employees blamed international banking issues collapse of media startup News.net — began to suspect and anti-money laundering laws for with several New Zealand investors set An ambitious plan the business the cash delays. Staff have described to lose their money. Norris, a former local radio station would never go the New Zealander as “invisible” in the
News.net, a digital news venture owner and advertising investor, has live. weeks leading up to the company’s based in Sydney and founded by twotime managed to attract some of Australia’s One ex-staffer, who asked not to be collapse. bankrupt Michael Norris, leading business figures to his news named, described the operation as “a People close to the business have suspended operations last month, ventures over the years. shambles”. described what they believe was a A chequered track record leaving a trail of unanswered A recent Sydney Morning Herald “There were no proper structures culture of secrecy, with senior staff Norris, who was declared bankrupt in questions and unpaid employees in its investigation revealed billionaire in place. I don’t think I even got a pay kept in the dark over key details. 2006 and 2016, has raised capital for wake. mining magnate Gina Rinehart was a slip the whole time I was there.” Before October’s announcement, multiple news ventures over the past
The spotlight has fallen on Brendt former investor in a past version of The person said that in their view, workers at News.net’s swanky Bond St 15 years, using domain names
Munro, an accountant from News.net. Norris lacked the know-how to build offices suspected the company was purchased and acquired through Christchurch, the sole director and News.net marketed itself as a a digital news site. running out of cash. dealings with business partners. Many chief financial officer of News.net, to hyperlocal news network with “I thought: ‘This guy has no idea, and “Tony was given eight hours’ notice of the ventures have gone sour. provide answers about hundreds of international ambitions. he won’t listen to anybody.’” that we were being kicked out of Bond Peter Smith, an Australian property thousands of dollars in unpaid wages The startup raised capital from In June, the company began to miss St,” one journalist said. valuer, bought into News & Sport as former staff wage a legal battle to investors after hiring experienced payroll dates. Norris (not a director in “The owners of the building tried to International (NSI), an early iteration of
INSIDE
force the company to close. journalist Tony Gillies, former editorin-chief the company due to his past give Michael two or three weeks’ News.net, in 2010 after being
Norris, a media entrepreneur with of the Australian Associated bankruptcies) downplayed the notice. But it was all secret squirrel — introduced to Norris by a friend. ventutresh, E gom Ignrouond R incekeygillies thenprogbālemietscaalathed u asppueaeransces.” Fintech company
a string of failed past business Press, as its chief executive. incident, insisting it would not happen they were trying to keep up “We went to see Norris, and he had
ha d ne to s has since claimed he was only again. However, all of these domain names and a News.net informed staff they would be ever a consultant. in the following months. In late October, Munro eventually product that we thought was good,”
Will minnows hold sway over change to gains personal
laid off on October 28. Norris and After being promised the funds to As of mid-november, roughly twothirds informed staff their employment Smith said.
Munaro dt id enol t erecspotni d o to nmu?ltiple build a network of news hubs across of News.net staff have received would be terminated. Smith became a board member as requests for comment from Pattrick Australia, Smellie Gillies hired A20 a team of 30 asset allocation A21 touch A21
only half of their owed salaries, while “I am still in the process of getting NSI’S assets were transferred to Businessdesk. journalists over the past year. many are yet to receive a dollar. the funds to pay the past wages,” the another Norris company, International
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go under. Previous iterations of the After missing its first deadline at the said they were chasing unpaid announcement, staff are still waiting site, including International News Network, have ceased operations or collapsed, only for Norris to start afresh with new investors. for answers.
According to ex-staff, two referrals have been made to the Queensland and Victoria courts over alleged theft of wages. An additional complaint has been made against company director Munro to the Australian Securities & Investment Commission, according to people familiar with the matter.
The owners of the building tried to give Michael two or three weeks’ notice. But it was all secret squirrel — they were trying to keep up
appearances. Former News.net journalist
registered in the British Virgin Islands, with new shareholders brought on board.
Smith claims he later realised NSI’S investors had sought an exit after losing patience with Norris.
“We realised the [NSI] chairman and shareholders had become frustrated with him over-promising and under-delivering,” Smith claimed.
After injecting roughly A$500,000 ($548,320) into the venture, Smith eventually pulled the plug on Norris in 2017. Multiple promises of an overseas rescue deal failed to materialise.
“He didn’t deliver on anything,” Smith claimed. “The company [INN] had debt, so it was resolved to wind up the company.”
Queensland entrepreneur Mason Fok, who went into business with Norris in 2013, has filed a police report over his dealings with Norris. Fok claims the News.net founder stole his web domain, Property.net, while they worked together at NSI and INN.
Fok said he was promised a combination of cash and shares in return for contributing Property.net to NSI.
After INN bought NSI, Fok alleges his web domain was transferred to an external email address and used to raise money for one of Norris’ side ventures.
Fok said he never received cash from Norris, and filed a police report two years ago. He claimed Norris “actively concealed his plans”, describing the situation as “ludicrous”.
Shareholders in INN, including Hancock Prospecting, the investment vehicle of Australian mining magnate Gina Rinehart, approved a motion to wind up the company in 2015. But the process was never completed.
Investors in INN, including Smith, claim the News.net domain name still belongs to INN, as the company was never wound up.
After INN ran out of cash, Norris continued his attempts to raise money for several years, according to documents seen by Businessdesk, eventually shifting focus to yet another iteration of News.net — an unnamed vehicle using a domain name registered in the British Virgin Islands.
NZ connections
Norris’ “persuasiveness” has enabled the entrepreneur to build connections with Australian heavyweights including Rinehart and Flight Centre founder Graham “Skroo” Turner, who delivered a pep talk to News.net employees at the company’s launch. Norris and Munro also tapped retail investors and the NZ market.
Businessdesk understands that several Nz-based individuals have invested in News.net. There is no suggestion that the investors were involved in the missing wages or any alleged wrongdoing.
Graeme Hyde, NZ network chief at Australian real estate group LJ Hooker, is among the Nz-based executives to have supported News.net in its most recent iteration. Hyde did not respond to multiple requests for comment. Other New Zealanders said to have invested or been approached to invest in News.net include Paul Vujnovich, founder of a Harveys real estate franchise in Auckland, according to two people familiar with the matter. Vujnovich declined to comment.
The NZ investors have expressed concern about the current situation, and have been in contact with Norris in recent weeks, sources said.
New Zealander Munro has been an associate of Norris for more than a decade, setting up companies and holding directorships.
According to Australian Securities & Investment Commission records, Munro was a director of NSI Operations, a subsidiary of NSI, between 2008 and 2010. His consulting firm,
Ashley Munro, was listed as a registered address for NSI Operations.
Unpaid staff demand answers
As the months pass without a resolution, former employees of News.net are demanding answers — and money — from Munro and Norris.
“I’m in a holding pattern,” Gillies told Businessdesk. “All I know is that the business has been suspended, and there’s some sort of reset. I don’t know if I’m going to be involved. I’m in the line of people waiting to see what that [reset] means.
“I had no visibility over the financials,” he added. “There was a strong business case behind all of this . . . I provided a strategic plan and was given the authority to recruit people with the assurance and understanding that we had the financial wherewithal to cover it.”
Despite letting go all of its journalists in late October and leaving dozens of journalists out of pocket, News.net remains active online. The site has been updated with Australian Associated Press copy in recent days. Ex-employees believe Norris is adding the stories himself.
“I don’t know who is updating the site,” Gillies said. “There are no longer any journalists involved, at least that I’m aware of.”
Former staff are pushing for the company to be liquidated, taking action through Australian federal courts and regulatory channels.
A formal complaint has been lodged with financial watchdog ASIC, while a wage theft claim is due to be heard in Queensland next month.
The journalists hope to push for liquidation and secure a federal guarantee, which would allow them to claim roughly three months’ pay from the Australian Government.
The News.net saga could continue. As the latest version of the company heads towards ruin, a new company, News.net.pty Limited, was created by Munro in August, prompting fears from ex-employees that Norris could launch the business again with new investors.
Australia’s phoenix activity laws prohibit abandoning a company with creditors to continue operations with a new vehicle.
News.net’s former staff have little faith that the company will pay their wages. “I don’t believe there are any funds to pay us,” one journalist said.
“We have so many questions about where the money has gone because so many of us journalists, suppliers and contractors haven’t been paid. We don’t want this to happen to anyone else.”
The journalist, who has since found a new job, described the events as “stranger than fiction”.
“It’s a bizarre situation. They’ll probably make a Hollywood movie about this one day.”