The offal truth of Coles’ Queensland cattle battle
MULTI-millionaire cattle baron Trevor Lee's beef with Coles has been laid bare in extraordinary detail after he dropped a lawsuit against the supermarket behemoth.
Mr Lee, who is worth up to $500 million and lives in upmarket Ascot with designer wife Keri Craig-Lee, alleged Coles cancelled a lucrative export contract with his company in "hostile retaliation" after he accused it of using creative accounting to artificially inflate profits.
In a witness statement lodged with the Supreme Court, he said shortly after he made allegations of profit shifting to senior managers from Coles and parent company Wesfarmers, his business Australian Country Choice lost an exclusive contract to export $150 million worth of Coles' offcuts and offal to Asia.
Coles' bosses denied the retaliation claims and any suggestions of profit shifting, which were also detailed in statements Mr Lee filed in court before his lawyers dropped a lawsuit in October, days before it was due to go to trial.
Mr Lee told the court that Coles' general manager of meat, Allister Watson, came to him in 2012, and asked him to "defer some expenses until the following year".
"I asked him exactly what he had in mind and he came back to me and asked that ACC defer expenses of about $3 million," Mr Lee told the court.
"He said that, if ACC did this, I would be assisting Coles and he and other staff would reach their budgets and get a bonus. I recall Mr Watson laughing when he said these words."
Mr Watson, who left Coles in late 2015, told the court that he had a "practice of deferring expenses" that "did not happen in every year but only in years where we were short of our targets".
Mr Lee told the court he believed profit-shifting to be "a practice where a company defers expenses from one financial year to the next".
In his court statement he said that in April 2016, he made allegations to that effect during private meetings with Wesfarmers' boss Richard Goyder - one of Australia's most powerful business leaders - and separately with Coles' head of meat Will Mulholland.
Mr Goyder had publicly said people who knew about profit-shifting should come forward.
Mr Lee said he told Mr Goyder: "You do know that Coles has been involved in profit shifting? I have no intention of taking this to the press, however due to your recent articles I believe it important I mention this".
"Mr Goyder went pale and I recall regretting that I had mentioned the issue so abruptly. Mr Goyder simply turned on his feet and walked us out… to the lift," Mr Lee told the court.
Mr Lee says he also raised his accusations with senior manager Will Mulholland two days earlier saying that he believed Coles had shifted profit of $14.7 million in the financial year ending June 2015, as well as $3 million for the financial years ending June 2013.
But then-Coles boss John Durkan told the court that he denied Mr Lee's claims that Coles retaliated against ACC for alleging profit-shifting.
"When these allegations were raised they were investigated by Coles," Mr Durkan said in his witness statement. "ACC raising these allegations with Coles did not have any impact on my decision making or attitude toward ACC."
Coles issued contractual "no rollover notices" to ACC on April 28 2017, with the effect that the ACC beef agreements will come to an end in June 2021.
"This decision was based on a commercial assessment of Coles requirements," Mr Durkan told the court.
Mr Lee told the court he has supplied cattle to Coles for over 40 years, firstly through agents and then direct to Coles since about 1975. He has run the ACC group since it was established in 1993.
Wesfarmers was the nation's largest employer until last month when it spun off Coles so that Coles could float on the ASX.