For the first time, an Australian business owner has been jailed for contempt of court by ignoring provisions imposed by the Fair Work Ombudsman.
Leigh Alan Jorgensen, the owner-operator of Cairns tourism business Trek North Tours, was given a 12-month jail sentence and fined $84,956 by the Federal Circuit Court after he was found to be in contempt of court by breaching a freeze order on his company’s accounts.
The accounts were frozen as part of proceedings against Jorgensen and his business for unpaid staff wages.
Jorgensen has been in the sights of regulators for several years. He was initially found guilty of underpaying backpacker employees in 2013 and 2014, and ordered to reimburse the affected workers as well as pay a personal penalty of $12,000. Trek North Tours was also fined $55,000.
However in July 2015, with none of the payments made, the FWO successfully sought to have the bank accounts of the company and Jorgensen frozen.
“At the time, Jorgensen’s communications with the Fair Work Ombudsman suggested he was prepared to ‘bankrupt’ his company to avoid paying the penalties and back-pay order,” the FWO noted.
He was caught out attempting to do just this in February 2016. However that prompted separate action by the Australian Securities and Investments Commission (ASIC), which ultimately found he had misled the corporate watchdog by claiming that his business had no outstanding liabilities while trying to deregister it.
As part of that conviction, Jorgensen was automatically banned from managing a company for a five-year period.
My Business then became involved in the case after an anonymous reader suggested Jorgensen had breached this ban and continued to operate his business, much to the frustration of other local operators.
My Business took the allegation to ASIC, which launched an investigation into the matter.
Jorgensen subsequently paid the personal fine, freeing up his own accounts, while the company’s remained frozen. Yet a month later, Jorgensen allegedly transferred $41,035 from the company’s two frozen accounts into a family trust, in direct breach of court orders.
It may have taken a further three years, but the FWO secured a conviction against Jorgensen for the breach – the first time the Ombudsman has pursued a contempt of court case.
According to the FWO, Jorgensen served 10 days behind bars before being released pending the outcome of an appeal he has lodged against his conviction.
As part of his release, Jorgensen had to pay the almost $85,000 fine, surrender his passport and report to police twice a week. He is also barred from travelling interstate.
“We will use every lever open to us to ensure the integrity of the administration of justice and compliance with court orders imposed under the Fair Work Act 2009,” the FWO’s Natalie James said.
“This includes taking unprecedented new actions available to us across the legal framework such as this one.”
A date has not yet been set for the court to hear Jorgensen’s appeal.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.