A leading corporate law expert says the reaction to the penalties imposed on former Murray Goulburn head Gary Helou is perfectly understandable.
But the University of Melbourne Centre for Corporate Law and Securities Regulation director Professor Ian Ramsay said laws governing corporate misconduct were currently being strengthened.
Farmers have reacted angrily to the $200,000 in penalties imposed by the Federal Court of Australia, for providing false and misleading claims about the farmgate milk price it expected to pay dairy farmers during the 2015-16 milk season.
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“At the same time, there is a significant constraint on the court that there is a maximum penalty, per contravention,” Prof Ramsay said.
"What people do need to understand is that this was a negotiated outcome, between the ACCC and the two defendants, being Gary Helou and Murray Goulburn.
“In that context, the Australian Competition and Consumer Commission had the interests of dairy farmers to consider, when it said it didn’t want to impose a penalty on the company.”
The penalty was commensurate with similar cases where the defendant had admitted wrongdoing.
He said the penalty was imposed under Australian Consumer Law, but was similar to those under the Corporations Act.
“Penalties imposed on directors under the Corporations Act have not increased for more than 20 years,” he said.
Court ruling The ACCC said Mr Helou had agreed to pay $200,000, after admitting he was knowingly involved in the company's "false or misleading claims about the farmgate milk price it expected to pay dairy farmers during the 2015-16 milk season".
The maximum penalty for an individual under the Australian Consumer Law is $220,000 per contravention.
“The court is never there to rubber stamp a joint submission that comes up,” Prof Ramsay said.
“The court’s role is truly an independent one, it looks at the facts and whether the proposed penalty is appropriate, and that’s certainly what it did here.”
Justice Jonathan Beach ruled on claims MG had said the final farmgate milk price would be $5.60 kilogram/milk solids.
He found Mr Helou knew the claims contravened Australian Consumer Law.
Prof Ramsay said the Federal Government was now looking at increasing penalties, for similar offences.
“I think, generally, there is a strong case for the penalty to be increased,” he said.
“Given the Royal Commission into the banking industry, and enforcement action by the ACCC and Australian Securities and Investments Commission, there is quite an important debate about whether penalties are sufficient to provide deterrents,” he said.
He said it was serious misconduct, which misled and disadvantaged farmers.
“He held a most senior position at Murray Goulburn and was well remunerated,” Prof Ramsay said.
“$200,000 looks modest, but at the same time a banning order has also been imposed.”
He described the banning order as “unusual,” as it specifically referred to the dairy industry.
“This one is quite tightly defined, but it’s likely the defendant has no interest in re-engaging in the dairy industry,” he said.
The court also determined whether the penalty was sufficient to be a general deterrent to others.
Farmer anger Crossley, Vic, dairy farmer Karinjeet Singh-Mahil argued the law did need to be changed, as the penalty was too low.
“And the $200,000 doesn’t go back to MG suppliers, it goes into government coffers,” Ms Singh-Mahil said.
“It’s not commensurate with the damage he did; it needs to be changed to a percentage, or a sliding scale, of some sort.
“That money should have gone to MG to be distributed to the victims of all this, and that’s the farmers.
“There people out there who no longer farm as a result of what MG did, what about them?”
Others said while they’re angry at the penalty imposed on Mr Helou, they have now moved on.
Maffra, Vic, farmer Raelene Hanratty said she was pleased Mr Helou had finally admitted his guilt; an admission for which suppliers had long been waiting.
“You have to focus on your own business, and it’s taken a bit of a whack,” she said.
“He was dealt with according to the law regarding this investigation, but unfortunately the punishment does not represent the severity of the misconduct,” Ms Hanratty said.
It was a shame other members involved in the “fiasco”, with the exception of chief financial officer Brad Hingle, were not brought to account.
“Gary Helou, the board and executive management were instrumental in the eventual demise of a proud, farmer-owned co-operative - Murray Goulburn," she said.
"These people have moved on. Some of them with their integrity unscathed.....you wouldn’t even know their names.
“The farmers are still suffering the financial and mental burden of their decisions.”
Ms Hanratty said the dairy industry was still in crisis.
“Speaking with other former MG suppliers has reinforced my opinion that all parties involved with the demise of MG should have been held accountable in a court of law and that the consequences suffered by the (over 1200) farmer suppliers should be the catalyst for their punishment,” she said.
Cobram, Vic, dairy farmer Paul Mundy said “rightly or wrongly” farmers had moved on.
He described the penalty as “a token gesture” and a “slap on the wrist,” given the amount of money Mr Helou had been paid.
“His company car was probably worth more than the fine he got slapped with,” Mr Mundy said.
“Farmers feel there is little to be gained by mulling over it, but the directors, who were responsible at the time, have certainly got off scot-free.”
“Farmers have to move on; there are no other avenues or options, there is nothing else.”
The Treasury Laws Amendment (ASIC Enforcement) 2018 Bill is currently before the Senate.
In part, the new bill proposes financial penalties would increase more than fivefold, from $200,000 to $1.05 million, or three times the benefit gained from the breach, whichever amount is greater.