John Williams (NSW, National Party) Share this | Link to this | Hansard source

Tonight I rise to speak on a matter that greatly concerns me because it is an example of an overseas owned company that appears to be making every attempt to defy an Australian court judgement which in turn would have a severe impact on a large Australian employer. I do caution that the matters to which I refer remain before the court and that that process must be left to follow its course. I have been following the litigation closely as it involves Bindaree Beef, who operate an abattoir in my home town of Inverell and employ around 800 people. There are many others such as tradesmen, stock transporters and beef producers who indirectly rely on Bindaree Beef. The case also involves a large Chinese state owned corporate group.

I've had the opportunity to read two judgements of the Supreme Court of New South Wales which are published online, and there are aspects of the events disclosed therein that greatly disturb me. On 1 May 2015, Bindaree Beef entered into a three-year service kill agreement with a company called Chinatex Australia Pty Ltd. Chinatex Australia is a wholly owned subsidiary of Chinatex Corporation and part of the COFCO group of companies. COFCO's website says it has total assets equating to about $110 billion and annual revenue of around $90 billion. COFCO is China's largest food processing company. In Australia COFCO has many business interests, including its ownership of Tully Sugar in Queensland, which it acquired in 2011 for $145 million.

Under the terms of the service kill agreement, the service kill was to commence in August 2015 and end in August this year. Unfortunately, Chinatex immediately defaulted under this agreement. In May 2016, following continued breaches by Chinatex, Bindaree Beef terminated the agreement, and in June they commenced proceedings in the Supreme Court of New South Wales. This is very interesting: prior to the judgement being delivered, Chinatex Australia transferred its shares in its wholly owned Australian subsidiary called Unibale Pty Ltd to a related party corporate called Chinatex Fortune, which is a Hong Kong based company. Unibale was a registered owner of significant irrigated properties and water licences in the Moree area of north-western New South Wales, and the transfer to Chinatex Fortune was just over $38 million. I repeat: this transfer of shares occurred after the court case commenced and before the judgement was handed down.

On 24 November last year, His Honour Justice Hammerschlag found in Bindaree Beef's favour and awarded $31.35 million plus interest plus court costs. His Honour described the former managing director of Chinatex Australia, Mr Liang, as 'an intelligent, articulate and thoroughly unscrupulous man, entirely lacking in any commercial moral compass.' Then followed a series of court manoeuvres, including Chinatex filing an appeal and Bindaree Beef commencing proceedings to have the transfer of the Unibale shares voided on the basis that the transfer was an abuse of process that was intended to defraud Bindaree of the judgement debt in excess of $31 million. Bindaree also successfully obtained freezing orders against Chinatex Australia and Unibale. In February this year the court ruled that freezing orders in place against Chinatex Australia and Unibale since 1 December 2017 were to continue. His Honour Justice Ball said in relation to the Unibale shares:

There is no evidence of what happened to the $38,035,217 except that all or most of it is no longer held by Chinatex. Without more, that evidence strongly suggests that the sale of the shares was made to defraud creditors and Bindaree, in particular. Chinatex Australia and Chinatex Hong Kong are owned by the same ultimate parent, Chinatex Corporation, a company incorporated in the People’s Republic of China.

Justice Ball continued:

… there are good reasons for thinking that members of the—

Chinatex—

group have taken steps to frustrate the court's processes by taking steps to ensure that—

the original—

judgment will go unsatisfied.

Chinatex Australia's audited accounts for 2015 showed that it was dependent on the ongoing support and funding from its parent entity, Chinatex Corporation. It has not yet filed its accounts for the 2016 or 2017 years. On its website, Chinatex Corporation claims it has registered capital of what equates to about A$95 million and is a large-scale corporation under direct administration of the State-owned Assets Supervision and Administration Commission of the State Council, and, as previously mentioned, is part of the COFCO group of companies. In notes associated with the 2015 accounts, it is revealed that Chinatex Corporation would provide financial support to allow Chinatex Australia to fulfil all obligations until September 2016. It's called a letter of support. However, Chinatex Australia submitted to the Supreme Court:

… its financial position is such that it cannot meet the judgment debt with the result that if a stay is not granted, it is likely to be placed into liquidation …

So the question must be asked if Chinatex Corporation is indeed still continuing to provide the financial support, and, if not, why not?

In summary, the Supreme Court makes an order that Chinatex Australia must pay Bindaree Beef in excess of $31 million; Chinatex Australia claims its parent Chinatex Corporation will not provide it with any funds to pay the $31-plus million; Chinatex Australia did receive $38 million in exchange for its shares in Unibale but failed to disclose to the court where it has gone—so it sold the Moree properties but failed to disclose where the money has gone; and Chinatex Corporation is owned by the Chinese state-owned COFCO, which has huge business interests in Australia, mainly in grain, sugar and other commodities. On the basis of the comments of the judges who have heard the evidence so far, it should be of great concern to all Australian companies who do business with Chinese state-owned companies.

Chinatex Australia, Chinatex Corporation and COFCO should meet their obligations. I intend to raise this matter with the Minister for Foreign Affairs, Ms Julie Bishop, and with the Minister for Trade, Mr Steve Ciobo, and provide briefing updates to them as matters progress. They need to know how this Australian company is being treated and that it faces the real prospect of not getting the money the Supreme Court says it is owed. I will not stand by and watch a terrific Australian company, employing over 800 people in our local town and pouring millions of dollars into the New South Wales regional economy, being treated this way. If you do business in Australia, then you must act as a good corporate citizen.

Senate adjourned at 18:53