RM Williams Agricultural Holdings, which spent several million dollars buying a cattle station in the Northern Territory back in 2007 as part of a plan to build the world's largest carbon farm, has been placed in receivership.
The company was founded and is run by former News director Ken Cowley and counts Australian Competition and Consumer Commission chairman Rod Sims as a shareholder – although Sims was trying to sell his stake as long ago as 2011.
The ACCC was contacted, but no reply was available prior to publication.
PPB was appointed as receivers last week, at the behest of Westpac. Partner Steve Parbery said the investigation is still in its "early days".
The appointment comes as the company was attempting to build the world's largest carbon farm – it actually won a $9 million grant from the federal government to do so.
But the apparent failure of this project has sparked a warning from the Australian Farm Institute, which says the company's situation raises questions about the government's "Carbon Farming Initiative".
The CFI allows farmers and land managers to earn carbon credits by "storing" carbon or emissions in large areas of land. These credits can be sold to businesses wanting to offset their emissions.
RM Williams Agricultural Holdings was created, in part, to take advantage of the CFI. The business bought the Henbury Station in the Northern Territory for several million dollars, and received a federal grant in order to build the world's largest carbon farm.
News Corporation put $30 million into RM Williams Agricultural Holdings back in 2009.
Mick Keogh, executive director of the Australian Farming Institute, said it was never clear how the RM Williams project was ever intended to produce carbon credits.
"We've just remained completely confounded about it and why the Commonwealth put millions of dollars into it."
"We've never been able to sort out exactly how the project, under the known rules, was able to make credits."
In a blog post on the AFI's website, Keogh said the receivership should serve as a warning to any company involved with the Carbon Farming Initiative.
He writes that "in the absence of considerably more clarity about carbon prices and future carbon trading rules", the best option for landholders getting involved in a carbon project is to ensure the project structure transfers risk to the buyer of any carbon offsets generated.
However, Keogh says it is unknown whether the company collapsed due to any issues regarding the structure of the carbon deal.
"The fact that the Henbury project seems to have encountered difficulties should serve as a caution to landholders contemplating getting involved in a carbon project, but does not mean that the opportunities presented by the development of a carbon market should be completely ignored."
Parbery said it would be premature to determine whether RM Williams Agricultural Holdings had entered difficulties because of problems with the carbon farming plan.
"The shareholders and directors having been going through a capital raising which was unsuccessful...at that stage they called in the bank to seek the appointment of receivers."
"Our role at the moment is to keep things operational, and to keep the subsidiary companies operational. We are investigating those businesses as we speak."
RM Williams Agricultural Holdings also owns the Labelle Downs and Welltree stations in the Northern Territory, and the Mirage Plains and Inglewood Farms stations in Queensland.
The company is not related to its namesake fashion chain RM Williams, which was recently sold to Louis Vuitton.This article originally appeared on SmartCompany.