Failed China beef deal turns political

Chinatex Australia has not paid the hefty compensation bill awarded to Bindaree Beef late last year by the Supreme Court of NSW in recognition of its breach of a service kill agreement.

Questions are flying about why it’s parent company, China National Cereals, Oils and Foodstuffs Corporation (COFCO), China’s largest food processor and a company which has big business interests in Australia in grain, sugar and other commodities, is not providing funds to satisfy the judgement.

Now, Nationals Senator John Williams has revealed in the Federal Senate Chinatex transferred shares valued at over $38 million to a related party corporate called Chinatex Fortune, based in Hong Kong, during the court proceedings.

Senator Williams said this behaviour should be a “great concern to all Australian companies who do business with Chinese state-owned companies.”

He described it as an example of an overseas-owned company that appeared to be making every attempt to defy an Australian court judgement which in turn would have a severe impact on a large Australian employer.

He said the matter would be raised with the ministers for both trade and foreign affairs and briefing updates provided.

“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,” he said.

“I will not stand by and watch a terrific Australian company, employing over 800 people and pouring millions of dollars into the NSW regional economy, being treated this way.

“If you do business in Australia, then you must act as a good corporate citizen.”

The deal between Bindaree and Chinatex was hailed as progressive in terms of Australian beef supplying the booming demand for high-end protein emerging in China when it was struck in May 2015.

Bindaree’s  corporate communication representative said the Inverell abattoir was to process 900 head of cattle a week for Chinatex, which would market the beef through its extensive channels in China.

However, the shortage of cattle supply in Australia hit quickly after the deal was signed and as cattle prices rose astronomically, the arrangement obviously looked less attractive to Chinatex.

Legal action on the matter is continuing.

In a lengthy response to Fairfax Media, Chinatex Australia said the parties should resolve the problems via law procedure.

“We hope that Bindaree could obey the law and do not use unfair means to give pressure to a foreign company to reach their purpose,” Chinatex said.

Bindaree Beef did not suffer from any actual loss, according to Chinatex.

Moreover, Chinatex see the court result as handing Bindaree an unwarranted “super profit”.

Chinatex was also scathing of Senator Williams’ attempts to make the situation “a political event between China and Australia.”

“Chinatex hold the position the dispute is entirely a business one and we should resolve it via law procedure but not politics,” the response said.