AACo not aware who leaked to billionaire accused of insider trading

Australian Agricultural Co says it has not asked who provided confidential information to the British billionaire accused of ‘brazen insider trading’ on the company’s shares.

Clockwise from top left: AACo chief executive David Harris, chairman Donald McGauchie and shareholder Joe Lewis.

Australian Agricultural Co says it is unaware which of its directors provided confidential information to British billionaire Joe Lewis who is accused of “brazen insider trading” on the company’s shares.

Mr Lewis, who is the controlling shareholder of the 199-year-old firm, has been indicted for insider trading in the US and faces charges including sharing confidential information with his personal pilot about the impact of the 2019 Queensland floods on the company.

Chairman Donald McGauchie, a former Telstra chair and director of the Reserve Bank, said on the sidelines of the company’s annual general meeting Thursday that the matter would “require significant investigation” but declined to comment on the specifics of the case.

Andrew Forrest’s Tattarang wrote to the AACo board requesting the AGM be delayed after the insider trading charges were publicised, sources told The Australian, so shareholders could have time to deliberate on the election of directors and remuneration. Tattarang, which owns 18.5 per cent of AACo shares, declined to comment.

Mr McGauchie said no one outside the company was given any more information than others but replied “certainly not” when asked whether the board had asked US regulators the identity of the director who provided the confidential information to Mr Lewis.

Mr McGauchie said he had visited Mr Lewis along with “lots of other shareholders.” Mr McGauchie is not accused of any wrongdoing.

“The reality is this requires significant investigation and we are not making any other comments until it has been properly looked at,” Mr McGauchie said.

“I hear a lot of these things and what stands up to testing remains to be seen. This is all part of an ongoing investigation that will be done as a proper process.

“I don’t even know if a director leaked the story. There is an allegation but there are allegations every day.”

AACo said it has sought legal advice about Wednesday’s indictment of its biggest shareholder on insider trading charges, including in shares of the nation’s biggest cattle producer.

Mr Lewis, 86, has pleaded not guilty to the charges in Manhattan federal court, Reuters reported. Two of Mr Lewis’s pilots, Patrick O’Connor, 66, and Bryan Waugh, 68, also pleaded not guilty to related insider trading, the newswire said.

The US-based pilots are accused of making millions of dollars in illegal profit from Lewis’s tips.

AACo said it only became aware of Mr Lewis’s insider trading indictment when it was announced by the New York Southern District Attorney Damian Williams 24 hours earlier.

“As the proceedings are against Mr Lewis, AACo has no further information and is not able to comment further,” Mr McGauchie told shareholders at the company’s annual meeting being held in Brisbane on Thursday.

“The board is focused on AACo’s business … The company will inform the market as required.”

Currency trading

The Bermuda-based Mr Lewis, who made his money in currency trading and owns football club Tottenham Hotspur, plus British pub chain Mitchells & Butlers, could not be reached for comment but his lawyer said Mr Lewis had travelled to the US to face these “Ill-conceived charges” and would be defended “vigorously in court.”

In the charges, Mr Williams alleges that using “information stolen by Joseph Lewis”, the billionaire’s employees and friends were “collectively able to make millions of dollars by insider trading in the stocks of Solid Biosciences, Mirati Therapeutics, Australian Agricultural Company, and BCTG Acquisition Corporation.”

The insider trading allegations outlined by Mr Williams about AACo relate to the devastating floods in 2019 that resulted in the deaths of about 43,000 cattle, accounting for 10 per cent of its herd.

It is alleged that a the day before AACo announced a material financial hit from the floods a board member advised Mr Lewis of the likely scale of losses.

Mr Lewis then shared this information to one of his pilots with the advice for him and the Mr Lewis’s other private pilot to sell their shares.

“After the call, Pilot-I told Pilot-2 the information, and they both contacted their stockbroker to order the sale of all of their stock of AAC,” Mr Williams wrote in the lawsuit.

The next day AACo made an announcement about the impact of the flooding to the Australian Securities Exchange and its shares fell 12.3 per cent.

However, the lawsuit states that the pilots had been unable to sell their shares in time because they had been bought over the counter.

“After the stockbroker apologised to Pilot-I about the delayed sales execution, Pilot-I responded by email, “Just wish the Boss would have given us a little earlier heads up,” according to statements in the lawsuit.

ASIC said it would be looking into the case.

Outlook

Mr McGauchie told shareholders its AGM that AACo had “demonstrated great resilience over the years, and particularly since the Gulf floods in 2019.”

“We continue to prepare for ongoing volatility and new challenges in the year ahead,” said Mr McGauchie said.

Chief executive David Harris said the herd size was now back at 2019 levels “but the growth has come with a focus on our strategy and markets around the world.”

Live cattle sales, which represented about 20 per cent of AACo revenue in full year 2023 “may be still impacted in the future. There are also other factors outside our control that will create price pressures in our global markets,” he said, citing the ongoing US destocking which has increased supply in North America and an over supply of local cattle in AACo’s key export market of South Korea.”

“We are monitoring opportunities that might arise from free trade agreements, including the UK FTA and the EU agreement that is currently being negotiated.”

The company recently reported a 35 per cent jump in operating profit for full year 2023 to $67.4m.

On the upside, Mr Harris said the “exceptional wet season” was boosting fertility and kilograms in the herd.

“The Brunette Downs, Anthony Lagoon and Eva Downs lakes systems are at 100 per cent capacity,” Mr Harris said.

Mr Harris said the current year represented an “opportunity to reposition ourselves for further growth.”