Worse Is Yet To Come?, page-22

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The Australian Securities & Investments Commission is formally investigating dairy processing giant Murray Goulburn over its corporate disclosure practices after its shock downgrades to profits and its farmgate milk price led to the sudden resignation of chief executive Gary Helou.
It is understood that the corporate regulator has served the nation’s biggest co-operative with formal notice to produce documents and emails relating to last month’s profit downgrade and its March 2015 product disclosure statement, issued as part of its $500 million partial listing on the Australian Securities Exchange.
The move coincided with the resignation yesterday of the third Murray Goulburn board director inside a week, an angry meeting of milk farmer-shareholders in Tasmania and the intervention of federal Labor’s agricultural spokesman in the deepening farm crisis.
An ASIC spokesman would not confirm last night whether the Murray Goulburn inquiry was under way, saying the regulator did not comment on operational matters.
Slater & Gordon is also investigating a potential investor class action with litigation funder IMF Bentham, relating to guidance provided in the PDS, which has since proved to be massively optimistic.
The law firm is investigating whether Murray Goulburn and its directors deliberately or knowingly misled the market in its disclosures, a course ASIC is also pursuing.
Murray Goulburn farmer-nominated director Duncan Morris resigned yesterday, following the departures last week of Max Jelbart and Keira Grant.
United Dairyfarmers of Victoria president Adam Jenkins is demanding that Murray Goulburn explain why its 2600 farmer suppliers will each have to “repay” an average $120,000 to Murray Goulburn because of suddenly proclaimed “milk overpayments” since July last year.
Farmer meetings in western Victoria and Tasmania have questioned if Mr Helou’s promise to farmers of a high $6-a-kilogram milk price was a misguided pitch to get them to agree to partially list the co-operative.
They have also challenged Murray Goulburn’s decision to supply large volumes of $1 a litre home-brand milk to Coles and questioned to what degree the partial sale last year of Murray Goulburn’s capital-raising units on the ASX to outside investors led to the profit overestimations.
And they have demanded to know why the co-operative’s chairman and large dairy farmer Phil Tracy has not resigned, and queried Mr Helou’s $3m annual salary and resignation bonuses.
Deputy Prime Minster and Agriculture Minister Barnaby Joyce has urged farmers to take their concerns to the Australian Competition & Consumer Commission.
But his Labor counterpart, Joel Fitzgibbon, said the ACCC was the “wrong regulator” and urged ASIC to “take a look’’.
“Because if ASIC finds that the company has been effectively fraudulent in its offerings in the lead up to that (ASX) capital raising, then that would help the dairy producers in any action they might want to take,” Mr Fitzgibbon said yesterday.
“To raise capital outside the co-operative, MG had to have the consent of the (farmer) members of the co-operative; to do that they set these very high prices (of $5.60 a kilogram milk solids) so dairy producers would say, ‘Wow, we’re all in for this capital raising venture.’
“Now the allegation is that the capacity to secure that price on international markets to make that deal work was never a realistic one and if the board and the senior management didn’t know that, then they at least should have known that (soon after).”
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