Could the Collapse of Beechwood been avoided?

If a builder loses $72 million on his racehorses, it is very clear under the NSW Home Building Act that Fair Trading has a duty to start asking questions.
 
In 2005 Larry King suffered such a loss. Media reports suggest he took $40 million from his Beechwood companies to prop up the losses. It is believed Mr King realised he had taken too much and put $20 million back into the business - but it was either insufficient or too late - or both.

Fair Trading could have averted the Beechwood disaster by fulfilling its legislative responsibility to investigate the viability of larger building companies to ensure they can complete their contractual commitments.

How the system is supposed to work:

The Office of Fair Trading is responsible for ensuring licensed building contractors are financially capable of completing homes.

In the case of Beechwood there were clear warnings Beechwood was in trouble:

Written Bloodstock in Receivership The highly publicised $72 million losses sustained by Beechwood, is owner Larry King with the 2005 collapse of Written Bloodstock Pty Ltd, and the bankruptcy of his business partner should have sounded alarm bells;

119 Complaints against Beechwood - many for delayed starts - a sure sign of cash flow problems

The failure of Fair Trading to heed these warnings means Minister Burney’s referral of Larry King to ASIC after Beechwood collapsed is of no use because it is three years too late.
 
A proper monitoring regime for larger building companies would see monthly reports to Fair Trading certifying that:
 
1.      companies are meeting their taxation commitments on time;
2.      all subcontractors have been fully paid by a regular date each month.
 
These requirements are not onerous and would significantly reduce risk to consumers and subcontractors who are facing large losses.
 

NSW Home Building Act (1989) - SECT 56

56 Grounds for taking disciplinary action against holder of a contractor licence

(h) that the holder does not meet the standards of   financial   solvency determined by the Director-General to be appropriate to the class of licence held,

(i) that, in the opinion of the Director-General, there is a risk to the public that the holder will be unable (whether or not for a reason relating to the   financial   solvency of the holder) to carry out work that the holder has contracted to do (whether before or after the commencement of this paragraph)

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