Scientology ties to 'super city' in Melbourne?

Free to shine

Shiny & Free
Bloody 'ell.

Australian media outs Scientologist behind ‘super city’ plans near Melbourne

First, a little more about the project in Australia. It’s to be built on nearly 1,000 acres that the Victoria government is selling west of Melbourne (East Werribee) that currently features fields and old research laboratories. In August, The Age reported that a consortium calling itself “Australian Education City” was one of five bidders for the parcel, and that the actual company behind the consortium was something called Investors Direct. Now, Australian Education City has been named preferred bidder by the state of Victoria’s Finance Minister, Robin Scott.

“The consortium has promised a 1.5 million-square-metre city on the site with soaring residential towers and Australian and overseas universities providing an employment mecca it says will eventually provide 58,000 jobs,” says The Age.

Free to shine

Shiny & Free
I'v just read this comment which may explain it more:

John P. • a day ago

Sorry to be a little late to the discussion this morning, but here's the Global Capitalism HQ perspective on the deal. The tl;dr version: it's a scam designed to soak unsophisticated rich Chinese investors. It doesn't really matter that Zheng is a Scientologist in assessing this as a risky deal that's unlikely to succeed (at best) and a way to get funding for a bunch of development studies bought at inflated prices from related companies for a project that never goes anywhere (at worst).

On the surface, it looks like a good idea: a large patch of land not too far from the center of a city that usually tops polls of the most livable cities in the world, and a focus on mixed-use development with an interesting angle of foreign university. But the devil is in the details.

1.) He's talking about 1.5 million square meters of space, which works out to about 16.5 million square feet. Assuming an average construction cost of USD$200 per square foot for high-end commercial real estate, he's looking at a total project value of USD$3 billion plus. It takes a lot of firepower to swing the financing for that. I'm not sure that a guy who doesn't appear to have any experience with projects of that scale is going to be able to get money from banks, the typical source for such things, especially given the current state of the Australian economy with its dependence on Chinese commodity purchases, which we in Global Capitalism HQ think will lag significantly for at least the next few years.

If Zheng can't get capital from banks, he'll have to raise it from private (foreign) investors. Doubtful he can get even gullible new money from China to give him $3+ billion, especially as they're dealing with a collapsing stock market and their own banking system is over-leveraged. We suspect that the average Chinese millionaire is going to be more risk-averse than this project.

2.) A tipoff that this is intended to gull Chinese investors in particular is the "foreign university" angle. This is something that a number of countries have tried, particularly in the Middle East. A lot of new money in China wants to send their kids to US universities but would prefer to keep them in a more secure environment than the allegedly gun-crazy US. If they're unable to get sufficient commitments from foreign universities, they won't sell the residential component of the project. Locals are not likely to be buyers for overpriced condos on the edge of town.

3.) The discussion about company valuation is irrelevant. The value of the capital to start the company has nothing to do with the company's true value. Zheng had a shell with $16,000 in capital then he sold stock in the company to a handful of Chinese investors. Typical venture funding of this sort will yield crazy numbers like a "value" of $254 million. All that says is that the investors are getting only a small part of the company for the amount of cash they're putting up. Zheng has done a great job on selling them a piece of blue sky (where have I heard that phrase before?). That's all.

4.) The fact that the average contribution was $700,000 ($4.25 million divided by six individual) implies that he's dealing with fairly small investors and potentially unsophisticated ones who are willing to bet big on a project that's in such preliminary stages.

Either that or he's dealing with small contributions from smart real estate money who are hitting him with conditions that give them a strong liquidation preference if he doesn't deliver -- it's a cheap way for some smart guys to get a toehold in the Melbourne market, especially if they wouldn't be allowed by the Australian government to invest on their own. The theory is that they'd be allowed to invest as very minor investors in this scheme and it would be harder for the government to kick them out if they try to wash Zheng out of a failed project than it would be for the government to turn them down on a clean sheet of paper deal. I have no idea how Australian law works on regulation of foreign investment, but in that scenario, I'm guessing that Zheng may just be nothing more than a Trojan horse to help others circumvent rules.

5.) You have to remember that Scientologists tend to aim fairly low in the types of scams that they pull, with the exception of Reed Slatkin. I don't think this guy is thinking far enough ahead to how he can actually build this project and sell it at inflated prices. I strongly suspect that because of this, he's just going to grab everything he can over the short term and abandon the project before it gets really under way.

I have no doubt that once Brian Seymour and Steve Cannane and Senator Xenophon read today's article, they'll be on the case, and this thing will sink into the swamp as it should.

Finally, it's important to remember the precedent of the somewhat difficult mixing of foreigners and Australian universities, like this docmentary showing the introduction of a British professor newly hired in the philosophy department of the University of Woolloomooloo.


Patron Meritorious
Are they wise members?

He might be cutting lines of flow for church donations with this project, l think we better write a kr on him!