ASIC takes Former Murray Goulburn execs to court
25 June 2019, Written by David Simmons
The corporate watchdog has taken former executives of dairy group Murray Goulburn (ASX: MGC) to the Federal Court over alleged breaches of the Corporations Act.
Former managing director Gary Helou and former CFO Bradley Hingle will face the Federal Court over their alleged involvement in Murray Goulburn's failure to disclose to the ASX market sensitive information in a timely manner.
The proceedings relate to announcements released by Muarray Goulburn in February 2016 forecasting an average milk price of $5.60 per kgms, and a full year net profit for FY16 of approximately $63 million.
The Australian Securities and Investment Commission (ASIC) alleges that the pair were involved in the breaches by failing to notify the ASX, the board, and shareholders of information demonstrating that the FY16 figures were unlikely to be achieved.
ASIC further alleges that Helou engaged in misleading or deceptive conduct by approving the February 2016 announcement.
The watchdog is seeking declarations and an order that both Helou and Hindle be disqualified from managing a corporation for a period of time.
"ASIC will take action to disqualify directors and officers who cause a company to contravene its market disclosure obligations, or are involved in the company's contravention," says ASIC commissioner Cathie Armour.
Helou was fined $200,000 for this alleged conduct by another watchdog, the Australian Competition and Consumer Commission, in December 2018.
Helou admitted he was involved in the misleading representations made by Murray Goulburn. This included not informing farmers of risks known to Murray Goulburn and making unfounded assumptions that Murray Goulburn could achieve its milk powder sachet sales targets.
The ACCC says it did not seek a penalty against Murray Goulburn because as it was a co-operative, any penalty imposed against it could end up being paid by the very farmers that were misled.
This development comes just one day after Murray Goulburn settled one of its class actions, known as the Endeavour River class action, for $42 million.
Slater and Gordon launched the suit on 16 August 2018, acting on behalf of aggrieved Murray Goulburn shareholders who the firm argued suffered losses at the hands of misleading and deceptive conduct.
The key allegation in the class action was that Murray Goulburn and its subsidiary MG Responsible Entity (MGRE) engaged in deceptive conduct through financial forecast statements it made to the market during FY16.
Author: David Simmons