News

Gary Helou taken to court by ASIC

By Country News

The fall-out from milk co-operative Murray Goulburn’s 2016 management crisis has continued, with Australia’s corporate watch-dog ASIC announcing legal action being taken against the former managing director, and the proposed settlement of a $42million class action by investors.

ASIC has started proceedings in the Federal Court against former managing director Gary Helou and former chief financial officer Brad Hingle, alleging a failure to disclose to the stock exchange, sensitive market information in a timely manner.

The proceedings relate to the announcements released by Murray Goulburn to the ASX on February 29, 2016, forecasting the farm gate milk price and a full-year net profit after tax of about $63million.

ASIC alleges the two were involved in the breaches in their continuous disclosure obligations under the Corporations Act; and breached their duties as directors and officers to act with reasonable care and diligence by failing to adequately monitor the financial position and performance of Murray Goulburn against the February Earnings Guidance.

They are also accused of failing to inform the board before April 26, 2016 of information which indicated the February Earnings Guidance was unlikely to be achieved.

ASIC wants both men disqualified from managing a corporation.

The case has been set down for a hearing on August 2.

Meanwhile, law firm Slater and Gordon has reached a conditional agreement with Murray Goulburn and its subsidiary to settle a closed unit holder class action on behalf of more than 1000 Australian and international investors.

Under the proposed agreement, the Murray Goulburn Co-operative Co Ltd entities will pay a total of $42million, inclusive of legal fees and interest, to settle the claims of class action group members.

The settlement is subject to Federal Court approval.

The class action was started in August 2018, and was pursued on behalf of more than 1300 institutional and retail investors who acquired Murray Goulburn units between May 2015 and April 2016.

The proposed settlement was reached ahead of a four-week trial which was scheduled to start in February 2020.

Slater and Gordon practice group leader Emma Pelka-Caven said the conditional settlement was an outstanding outcome for group members and, if approved, would be a significant recovery of the clients’ losses.

‘‘It was also achieved within 12 months of Slater and Gordon filing the proceeding,’’ Ms Pelka-Caven said.

The lead plaintiff in the action was Endeavour River Pty Ltd.

The proposed settlement will be presented to the Federal Court for approval, and class members will receive details of the proposed settlement soon.

The Murray Goulburn companies have made no admission of liability under the terms of the settlement agreement.