Bindaree Beef’s Chinese government-owned partner in an export deal gone bad has been lashed as “lacking any commercial moral compass” and ordered to pay the Australian company more than $30 million in compensation.
The deal between Bindaree and Chinatex, a Chinese state-owned corporation, was sealed in mid-2015 and was supposed to have seen Bindaree kill 900 head of cattle a week for Chinatex for three years.
Chinatex would then look to sell the product to customers in China.
But a Supreme Court of NSW judgment released on Friday shows the deal barely got moving before it ran into trouble.
Chinatex, which was represented by a Zhiuhua Liang in the negotiations of the deal, had to bear any risk for rising cattle prices, which is exactly what happened just as the ball got rolling on supply.
In a conversation recounted in the court documents, Bindaree’s chief executive Andrew McDonald told Mr Liang that he could see that might cause difficulty for Chinatex.
“I know there will be a rough time at first and you will lose some money in the beginning, but over the three-year contract there will be highs and lows – we hope that you will come out of it in front,” Mr McDonald said.
Mr Liang said he feared the buyer for the cattle was “going to walk” and that he couldn’t have the contract starting under water.
“I am aware of Chinatex’s obligations under the contract, but I cannot show losses to head office from the beginning,” he is reported as saying.
“I need to hide the losses. I don’t want Beijing to know. You’ve got to help me. Help me, help you.”
Bindaree replied by stating it would continue to purchase and slaughter cattle as per the contract.
Mr Liang denied at the trial ever conceding he agreed Bindaree had this right under the contract, but that testimony was flayed by Judge David Hammerschlag.
“He is an intelligent, articulate and thoroughly unscrupulous man, entirely lacking in any commercial moral compass,” Judge Hammerschlag said in the judgment.
The judge rejected Mr Liang’s testimony wherever it did not square with that given by Mr McDonald or went beyond clear evidence.
Further Judge Hammerschlag said it was clear that Chinatex never intended to honour the contract if conditions moved adversely.
Chinatex, according to its website, is “ready to cooperate with partners and friends at home and abroad to make a brighter future”.
As it panned out, Bindaree found other customers for some of the cattle it was killing for Chinatex but for which Chinatex didn’t pay (except for one short period where Chinatex found a Chinese buyer for the beef it had ordered from Bindaree).
Judge Hammerschlag dismissed Chinatex’s position arguing it had not breached the contract as including a “number or untenable, unmeritorious defences and contentions”.
He then awarded Bindaree $31.35 million in compensation plus interest and costs to be determined at a later hearing.
Bindaree still has its sights set firmly on the Chinese market, recently stating it wants to dramatically increase its direct online sales.
Bindaree entered a joint venture in August with the Hong Kong-based Hui family and investment firm Archstone Capital in a $140 million deal.
The story Bindaree Beef wins $30 million court case against Chinese customer first appeared on Farm Online.