‘Diamond’ Joe Gutnick’s wife paid $285,000 to work ‘a few hours a day’
A company linked to bankrupt mining magnate “Diamond” Joe Gutnick is paying his wife, Stera Gutnick, $285,000 a year to work “a few hours a day” as a trainee jewellery designer, while her husband earns just $45,000 a year to work full time.
Details of the remarkable pay arrangement came to light during Federal Court examination by Joseph Gutnick’s bankruptcy trustees on Monday.
Joe Gutnick’s statement of affairs shows he owes his creditors $275 million. Photo: Nicolas Walker
Mr Gutnick was chairman and chief executive of Merlin Diamonds before his bankruptcy.
Mrs Gutnick told the court she reported to her husband, who worked longer hours in the company. She said her primary duties as a $285,000 a year executive were “studying jewellery design” and “accompanying my husband to events”.
Stera and Mordecai Gutnik were questioned at the Federal Court on Monday.
Lawyers for the bankruptcy trustees contended that Joseph Gutnick was deliberately being paid a low salary in order to avoid having money taken from his wage.
Trustees can take money from a bankrupt’s salary once it reaches $65,000 per year.
Mr Gutnick’s son Mordechai Gutnick was also questioned under oath about his mother’s salary, which is exactly the same as he earns as a full-time executive director in the company.
“His income is being kept artificially low so he does not have to make income contributions,” said barrister Carl Moller.
Stera Gutnik at the Federal Court. Photo: Jason South
“I don’t know,” responded Mordi Gutnick.
Asked if his mother’s salary was appropriate for the work she does, Mordy Gutnick said “um”, paused for a lengthy period, and sighed.
“She understands jewellery better than any of us,” he finally said.
Asked if his mother, who worked fewer hours and had no input into “operational matters”, deserved the same salary as him, Mordi Gutnick responded “it is what it is”.
Mr Gutnick’s bankruptcy trustees are chasing an estimated $200 million of assets that are believed to have moved offshore to parties associated with Joseph Gutnick and his family.
Mrs Gutnick told the Federal Court she could not explain how she came to be owed $33.5 million by her husband.
Mrs Gutnick also admitted under oath she signed hundreds of documents for a web of companies and trusts without ever asking her husband or his lawyers what they were for.
“I trust my husband. The finances are up to him,” Mrs Gutnick told the court.
Mrs Gutnick was read a lengthy list of Gutnick family companies and trusts that she is either a company director, guardian or beneficiary of. She repeatedly told the court that she did not know what those companies did, and had little if no familiarity with their daily business.
As revealed by Fairfax Media last year, Mr Gutnick’s statement of affairs shows he owes his creditors $275 million, and has no other assets except for $16,087 in savings and a worthless portfolio of shareholdings.
Mr Gutnick declared himself bankrupt in July last year, ahead of a court hearing to hear a petition by his former business partner Indian Farmers Fertiliser Cooperative (IFFCO), which was seeking to have him declared bankrupt over a $54 million debt.
Lawyers for the bankruptcy trustees challenged Mrs Gutnick, and suggested the shuffling of directorships and her taking on a $33.5 million debt were part of a “broader plan to protect Joseph against bankruptcy”‘.
While the loan to Mrs Gutnick dates back to July 2000, she claimed “I wasn’t aware of it then.”
Asked when she first became aware that her husband owed her $33.5 million, she replied “I first knew of it in 2016”.
Asked who told her of the debt, she replied “Joseph did” and added “he told me it was a loan on paper and it doesn’t mean practically I was going to get it”.