Beleagured wine giant Southcorp has been hit with legal action by the Australian corporate regulator which alleges it failed to disclose its true financial situation in April 2002.
According to the Australian Securities and Investment Commission (ASIC), the country’s biggest winemaker knew the poor harvest in 2000 would affect profits in 2002 and 2003, but it failed to fully inform its shareholders.
ASIC said Southcorp had breached new disclosure rules – brought in after the collapse of Enron and Worldcom – by only telling selected analysts rather than the Stock Exchange.
The legal action relates to an email sent by then corporate affairs manager Glen Cunningham to selected analysts, detailing the effects of a bad 2000 harvest. According to ASIC, all shareholders should have been told the news.
If found guilty the company could face fines of up to AUS$200,000 (US$120,000). This is the first case to be brought under the new rules. ASIC chairman David Knott told Australian journalists the lawsuit is against the company, not existing or former officers of the company.
The news came a day after Southcorp reported a 97% fall in profits for the six months to December 2002.
In a statement the winemaker said it would ‘strenuously defend its position.’
Written by Adam Lechmere, and agencies27 February 2003