Sally Zou’s financial statements to Supreme Court described as ‘fanciful’ by cherry company’s counsel
SALLY Zou’s company Aus Food Alliance has lodged financial statements with the Supreme Court which have been described as “fanciful’’ and based on unverified information.
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SALLY Zou’s company Aus Food Alliance has lodged financial statements with the Supreme Court which have been described as “fanciful’’.
Ms Zou, the state Liberal Party’s biggest donor, is likely to face cross-examination over her financial affairs, as her company faces being wound up over non-payment of a debt of more than $400,000 for 32 tonnes of cherries.
On Thursday, the court heard Aus Food Alliance’s financial documents contained information that had not been verified by the forensic accountant who prepared them.
The court was told the documents claim Aus Food Alliance generated more than $5 million in wine sales last financial year — but the company had spent only $190,000 buying wine, suggesting a mark-up of more than 3000 per cent.
Ms Zou’s company is being sued by South Australia’s largest cherry grower, Torrens Valley Orchards — and its barrister told the court the prospect of Aus Food Alliance’s financial statements being true was “extremely slim”.
Ms Zou is arguing that the cherries she received were not of saleable quality.
As part of the court process she will have to prove that her company is not insolvent.
At the last hearing in early August, Aus Food Alliance was ordered by the court to produce a document showing it was solvent.
Brendon Roberts SC, for Torrens Valley, said while he expected the statement to have been prepared by last Friday, a forensic accountant was only employed to start work on the document on Monday this week.
Mr Roberts said he was given a “draft preliminary” document on Thursday morning, followed by a “preliminary’’ document later in the morning.
But he cast doubt on the accuracy of this report.
“We think that the prospect of this actually being true is extremely slim,’’ he told the court.
“This, with the greatest respect, is fanciful’’.
Mr Roberts said the accountant had indicated that he had had to make a number of assumptions based on information given to him by Ms Zou.
For example, Mr Roberts queried the credibility of the company’s reported wine sales and said he wanted to call both Ms Zou and her accountant to the witness stand.
Judge Graham Dart said he wanted to be assured that the solvency argument was relevant and not “kicking the can down the road’’.
Mr Roberts said the forensic accountant — who is not Ms Zou’s personal accountant — had not been given the sort of documents and information you would generally need to produce a report on the matter of solvency.
He said the materials included a tax return which was signed by Ms Zou but did not have evidence of lodgement, and “all of these materials are question-begging at the very least’’.
The matter has been adjourned until mid-September.
Torrens Valley is a Gumeracha-based cherry company, which traces its history back to 1840 — just four years after the settlement of South Australia, when the Hannaford family established a small farm in Unley.
The company moved to Gumeracha in 1985 to establish its cherry operations.
Earlier this month, the Supreme Court heard that Ms Zou had argued in an affidavit that the cherries were “not of merchantable quality’’.
Counsel for Ms Zou told the court that the affidavit, filed in August, included evidence of money held in Hong Kong bank accounts which would cover the debt.
It was also asserted that she had other sources of money which could cover it.
In essence, Ms Zou is arguing her company has the capacity to pay the debt — and therefore should not be wound up — but is disputing the quality of the goods supplied and therefore whether the debt is valid.
cameron.england@news.com.au