Phillip Kingston of Sargon evidence shredded by judge in China Taiping-linked case

“He was not a credible witness,” Justice Delaney said in a ruling revealed today by AFR weekend.

“foreign interference”

It’s a black mark on Kingston’s crusade against alleged wrongdoing since three companies linked to Sargon were put into the estate in January 2020.

Not that he’s taking it easy. “I haven’t invented any evidence,” Kingston said AFR weekend. And despite the ruling saying Kingston failed to prove the housing association was wrong, he says, while he disagrees with elements of the ruling, the ruling still does “what it needs to do in the overall campaign against foreign interference in Australia”.

Kingston has outlined a scenario of lawyers bending the rules. China playing hardball. Secret “agents” bugging his car.

It was a battle for the engineer and entrepreneur, who had started a string of information technology companies and sat on the board of Victorian start-up agency LaunchVic. He had degrees in business and science, a certificate in psychoanalytic studies, attended global investment gatherings, was a decent skateboarder and online gamer, and networker who posted online about Facebook’s Winklevoss twins sending a handwritten note.

Among his startups was retirement software developer Sargon, which he co-founded in 2015. Via acquisitions, it had $50 billion in assets under management by 2019.

He also founded GrowthOps, which floated in 2018 after merging services businesses, from management consulting to marketing.

That’s where the loans came in. Between December 2017 and October 2018, the Chinese financier loaned Kingston about HK$653 million ($119 million). The first tranches were, the court heard, to help buy into GrowthOps’ ASX float.

Justice Delaney’s ruling deviates here for a moment – ​​pointing out that companies “associated with, if not controlled by, Mr Kingston” took $58.9m of shares in the $70m float. They made up 62.2 percent of the shares issued when it went public in March, although the ruling noted that Kingston himself had filed a substantial shareholder filing saying he had an interest in 26.2 percent of the company. (Kingston says his disclosures were accurate, prepared by top lawyers and thoroughly scrutinized by regulators.)

The grandmother

One associated company was registered in January 2018 and its sole director was Kingston’s wife’s 80-year-old grandmother. That company from day 1 applied for $17 million in GrowthOps shares, the judgment says. (Kingston says, “I’m not aware that she ever served as a director … or subscribed to any shares in the IPO.”

The grandmother resigned a month later, and other board members were subsequently appointed, the ruling noted.

Loans from China Taiping’s business, China Insurance Group Finance, came due, but Kingston ran into trouble. “Defaults … began in late April 2019. From mid-May 2019, Mr Kingston began making excuses for late or non-payment of interest. [China Insurance Group] did not hide the desire to have interest on the loans paid on time, the judgment states.

By then, GrowthOps shares had fallen to 45¢ from a high of $1.30 (The company was delisted in December 2020 with shares at 6.5¢). “There [also] There had still been no Sargon float which, in May 2019, Mr Kingston had expected would take place within about a month,” Justice Delaney said.

In November 2019, a China Taiping employee emailed Kingston saying interest on HK$653 million in loans and the additional HK$500 million from a promissory note for Sargon was “still outstanding”.

– Our team is under very high pressure. Please make the interest payment ASAP,” the email said.

In December, Kingston arranged a $4.4 million refund, which would not cover all the money claimed by China Taiping entities that month. Kingston in court denied using the repayment for his loans, saying it was to pay off Sargon promissory notes. But Justice Delaney rejected Kingston’s evidence, pointing to a contemporary Kingston email which referred to $4.4 million in relation to “three invoices”.

Taiping Trustees, which had lent the debenture money and was another part of China Taiping, appointed receivers for Sargon’s parent company and two other affiliated entities in late January 2020. It was a shock.

Sargon had been on an acquisition spree and had attracted former communications minister Stephen Conroy and former Crown Resorts chairman Rob Rankin to the board.

Kingston raced toward the receiving cabinet. A “Chinese SOE [state-owned entity]” had been allowed to “destroy an Australian-grown company”, his self-named website said. Payments had been made on the promissory note and were logged in China Taiping as such, he protested.

China Taiping’s lending business sued Kingston, claiming he owed money under his loans. But Kingston claimed he had signed the loans on promises that he could not be pursued personally – it had started as a business loan that was switched to his name – and only the equity and collateral, which had included Sargon shares, could be seized. Loans had not been defaulted anyway, he claimed.

‘Tracking Device’

His accusations deepened. Ahead of “critical hearings” last year, he posted, “operators tried to intimidate me and planted a listening and tracking device on my car”. As proof, he uploaded to his website grainy security videos of a hooded figure hovering around the tool’s black wheel rim.

He says the police were contacted, but when asked about the outcome of their inquiries he says he “prefers not to comment on the record for my safety”.

Several months later, Liberal MP Tim Wilson, from Victoria, took up the Chinese government’s bogeyman in Parliament. “If an Australian company was maliciously liquidated at the behest of a Chinese state-linked entity, this House would rightly be outraged,” Mr Wilson said.

“Documents that have come into my possession seem to indicate that there has been a deliberate campaign to trigger the reception of Sargon by the China Taiping,” Wilson said.

“The allegations are that the interest payments on finance were deliberately diverted to present a non-service of debt. Accordingly, contractual terms will be triggered, which will allow for the appointment of an administrator, who will appoint a liquidator.”

Wilson, who lost his seat last year, declined to answer questions this month. “Everything I ever said and will say on the matter can be found here,” he said, referring to his original speech.

Kingston had also raised the shadow seizure in its legal battle: the loans were allegedly China Taiping’s plot to take “control of an established pension platform in Australia, thereby implementing its internationalization strategy”, the judgment noted.

But Kingston’s own defense did not actually rely on that point – it was used for context. Among points raised in Kingston’s defence, he highlighted an internal China Taiping email which mentioned that cash had been received for the fourth quarter interest payment.

He says all the promissory note interest payments were up to date.

Still, the judgment said Kingston “did not prove that the appointment of the receivers was in error”, nor that no default had taken place.

Personal responsibility

And Kingston had zero luck arguing that he shouldn’t have been on the hook for his loans either. His claims – of assurances that the loans would not have recourse to themselves – fell flat.

“Mr Kingston is, and was at the end of 2017, a highly educated, sophisticated, experienced businessman. On his case, he was told that any disclaimer of personal liability would be dealt with in a supplemental agreement. Not only did each of the additional agreements signed by him exclude personal liability; Mr Kingston never sent an email, or made a request via WeChat or any other medium, for the exclusion of his personal liability to be dealt with in any of the supplementary agreements, Justice Delaney said.

Even Kingston’s evidence about the Hong Kong meeting, where he was allegedly assured that no personal responsibility was attached, was dismissed as fabrication.

A problem arose with his dates when China Taiping’s side produced a plane ticket and taxi receipts showing that a supposed contestant could not have been in Hong Kong that day; Kingston then changed the date.

When the Chinese financier demanded repayment of its loans, Justice Delaney wrote, “it was entitled to do so”.

He ruled in favor of the Chinese financier. China Taiping was not immediately available to respond AFR weekend questions.

If it was a deliberate sabotage, China Taiping failed to usurp the business, with US-based Pacific Infrastructure Partners buying key Sargon units from administrations.

Kingston is still fighting, seeking to appoint special liquidators to Sargon, which will include work into the circumstances of the company’s demise and whether the Taiping Trustees had the right to send out receivers.

“It’s game on. [This liquidator] is just step one in a long campaign to rid Australia of foreign interference through the insolvency and legal system, he says.

He also tells AFR weekend to “go easy on me”. “I’m all alone against a lot of very well-funded and powerful enemies who want to bury this and me,” he says.

The man himself is still creating, describing himself on LinkedIn as working on a United Arab Emirates-based artificial intelligence, security and healthcare software venture. He has also founded another business. It designs “advanced human survival equipment”.