Auburn’s Deputy Mayor Salim Mehajer is facing a legal penalty of approximately $700,000 over allegedly violating his duties as one of the directors of his former construction company.

Along with the controversial mayor, his business partner Min Hua is also being charged of misusing his power as a director of the construction company. SM Project Developments was compelled to wrap up in April 2014 due to outstanding taxes in 2013. Prior to complete closure, the company paid the Australian Taxation Office and the rest of its creditors around $890,000.

The former directors of SM Project Development are being sued in the NSW Supreme Court. A commercial finance broker sued the mayor over the claim that he did not disclose his financial interests, which he was required to do as a councillor. He is also being called to a Civil and Administrative Tribunal over the issue.

The liquidator of the construction company, Dean Willcocks advisory’s Anthony Elkerton, told The Australian newspaper that both former directors of the company have breached their responsibilities as directors. He filed the documents in court that claimed the two men “have entered into transactions with [SM Projects] which comprise unreasonable director related transactions.” Elkerton also said that the failure of the company was the ultimate result of poor strategic management.

The accused deputy mayor told news.com.au that he bought a key asset of the construction company, a commercial building at 38 John Street, Lidcombe. He bought it in an auction held by the liquidator after the SM Projects was liquidated. He claimed that the purchase was fully legitimate.

“SM went into liquidation. Liquidator advertised the property, so like any other citizen I attended the auction. I was the successful bidder,” he said, defending himself.

Mehajer is also expected to be present in the District Court in November as a result of a complaint filed by two women who were reportedly injured by his $300,000 Ferrari in January 2012.

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