Billionaire dairy family who owned Leppington Triangle fined over water use

A billionaire dairy farming family whose $30 million windfall from a land deal with the federal government became the subject of a corruption probe last year has now fallen afoul of the water regulator, after they were alleged to have illegally taken water to grow cattle feed on a property at Oran Park on Sydney’s south-western fringe.

The Leppington Pastoral Company, owned by brothers Tony and Ron Perich, has agreed to remove a large dam from the property and pay a $425,000 penalty - the biggest ever extracted by the Natural Resources Access Regulator (NRAR) - after it admitted taking water from three dams without a licence and constructing water supply works without approval.

Tony Perich (right) and his son Mark Perich, at their dairy farm in Bringelly.Credit: James Brickwood

Known as an enforceable undertaking, the sanction was negotiated between the company and the regulator to avoid litigation.

The dams, built in the 1970s and 1980s, have the capacity to hold 1680 megalitres, but NRAR was unable to substantiate whether water had been taken from those dams prior to 2016 and the offences only relate to the period 2016-2019.

Leppington Pastoral Company chief executive Tim Bryant said the company accepted it breached the Water Management Act through the use of dams on one of its properties, though the dams had been built prior to the commencement of the Act.

“Leppington Pastoral Company (LPC) is pleased to have reached agreement with the NSW Natural Resources Access Regulator (NRAR) regarding the storage and use of water on one of its western Sydney properties, which is used for grazing of dairy cattle and associated cropping,” he said in a written statement.

“LPC will meet all of its obligations under the enforceable undertakings, including the planned rehabilitation of a 700-metre section of South Creek, and has since secured all necessary water licences and entitlements to ensure it can continue its farming operations.”

The Perich brothers, who ranked 34th on the Financial Review rich list last year with a fortune of $2.64 billion, were born to Croatian immigrants who started their first dairy farm on Sydney’s outskirts in 1951 with 25 cows.

A quarter of a century later, the Hawke government delegated part of their land at Badgery’s Creek to become the site of a second Sydney airport, prompting a long battle for compensation that ended when the federal government agreed to pay $21.5 million for 38 hectares.

The dairy farm is now one element of a portfolio that also includes a 50 per cent share in Freedom Foods and extensive development interests. Leppington Pastoral Company is also considered the frontrunner to partner with the government to develop a new agribusiness precinct next to the airport.

In 2018, the federal government paid the company $33 million for a 12.28-hectare block known as the Leppington Triangle for the airport’s second runway, only to have the land valued at $3 million less than a year later, in an acquisition the Auditor-General found was conducted without due diligence.

The Australian Federal Police investigated potential offences including bribery of a Commonwealth official, conspiracy to defraud the Commonwealth and abuse of public office, but found no evidence of criminal misconduct. A separate review of the deal commissioned by the federal Infrastructure Department also found no evidence of poor integrity and said the government could have offered the company a lower price, but there was no guarantee it would have been accepted.

NRAR’s Director Water Regulation Gregory Abood said best estimates of water use on the property varied between 1000 and 2000 megalitres annually, or enough to fill 400 to 800 Olympic swimming pools.

The financial penalty included a $300,000 fine for taking water without a licence, $100,000 to cover NRAR’s investigative and legal costs and a $25,000 donation to Landcare for work on South Creek.

“The undertaking is also a great result for the people of NSW because it avoids NRAR incurring significant legal costs and delivers a regulatory outcome much sooner than a prosecution in the Land and Environment Court,” Mr Abood said.

The court has the power to impose multimillion-dollar penalties, but the largest it had ever issued previously was $252,000 to a family-owned company in Moree that built an illegal irrigation channel.

Independent NSW MP Justin Field questioned whether the penalty issued to Leppington Pastoral Company matched the offence. “It is extraordinary that a major company owned by politically connected billionaire property developers has been illegally taking hundreds of millions of litres of water a year, potentially for decades,” he said.

“While it is NRAR’s largest ever enforceable undertaking ... the $300,000 agreement needs to be seen in the context of a maximum potential penalty in excess of $5 million.”

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