Catering for elite, leaving staff with bitter taste

It was an exquisitely Melbourne affair. A who’s who of business and the arts.

Melbourne's caterer-to-the-stars Peter Rowland. Picture: David Geraghty

It was an exquisitely Melbourne affair. A who’s who of business and the arts admiring Dior fashion, sipping Moet from golden goblets and nibbling canapes by Peter Rowland, the king of high tea.

They had gathered at the ­National Gallery of Victoria for a private viewing of a travelling Dior exhibition.

Rowland, determined to put on a brave face after being forced to sell his debt-ridden catering businesses, had gone all out: lemon creme fraiche caviar, truffled mushroom pithiviers, black bread sliders filled with Moreton Bay bugs and kohlrabi remoulade.

Behind these glittering scenes, staff who used to work for Rowland and Australian taxpayers were being served a sandwich of a very different kind. About 16 former staff are owed $364,000 in unpaid entitlements and the tax office $1.25 million in unpaid taxes from the past two financial years.

The former employees have been told their only chance of ­seeing their money is through the federal government’s Fair Entitlements Guarantee scheme, meaning taxpayers ultimately will pick up the tab for both.

Beyond that, Rowland has stiffed former business partner and friend, Scottish-born Paul Lappin, about $464,000 owed from a $700,000 loan he made to their company to keep it afloat. Lappin was the largest shareholder in Rowland’s old group of companies and served as a director for six years. Those companies, now in administration, were stripped of their only asset of value: the Rowland name. That is now attached to a new company owned by property ­development company, Capital Alliance.

The debts owed to the tax ­office, staff and Lappin were kept in the old companies, which are awaiting liquidation subject to a meeting of creditors today.

If the companies are wound up, as Ferrier Hodgson partner John Lindholm recommends in his voluntary administrators’ report circulated to creditors, the debts will vanish into the corporate ether. Once that happens, the liquidator will help employees apply to FEG.

In the meantime, as Melbourne prepares for the seven-day, rolling party of the Flemington carnival, Rowland will be back on his favourite track, serving his famed chicken sandwiches to members and guests of the Victorian Racing Club. As one of his marketing slogans reads, “Peter likes to party’’.

Rowland is no corporate villain. Under a rescue package negotiated with Mohan Du, managing ­director of Capital Alliance, Rowland agreed to sell his Toorak mansion and another house to pay back $8.5m of a $10.2m debt his companies had amassed to the National Australia Bank. As part of the arrangement, NAB assigned the $1.7m balance to Capital Alliance. It was a creative solution to a dire predicament. Rowland’s old companies turned over $43.8m last financial year but reported a net loss before tax of $3.2m. Sales were in decline and poorly structured contracts were bleeding the companies. As of June 30, net liabilities exceeded assets by $14.5m.

Du said the company had been badly mismanaged and could no longer pay its bills.

“Peter Rowland himself has acted honourably and should be congratulated for his selflessness during this period where he has lost everything,’’ he said. “An independent liquidator has investigated the sale and determined that it was a far better outcome for creditors than if the business was to have simply fallen over.’’

Du said he acquired the business, after nine months of due diligence, to “diversity our holdings’’.

The sale of Rowland’s well-­established but financially stricken catering empire, finalised in August, enabled about 100 employees to keep their jobs. Having owned Peter Rowland Catering for 33 years and fed some of Melbourne’s most discerning mouths at the Melbourne Cup, Formula One Grand Prix, NGV and countless parties and weddings, he was left as a 79-year-old employee with no equity in the business.

The terms of sale were negotiated between Du and Ferrier Hodgson, the administrator of the old Peter Rowland companies. Rowland told The Australian the only alternative was immediate liquidation. “Did you think I was going to argue about the colour of the life raft that was thrown to me?” he said. “If Capital Alliance didn’t come around, the whole thing would have fallen over and everyone would have been out of a job. I picked up the tab for everything I could. I can assure you I’ve got nothing squirrelled away, I’m not going to live in Thailand. I’m lucky enough to have a job with the new company.’’

For staff who weren’t given jobs with the new company, the corporate restructure meant an ­abrupt loss of wages and so far, a denial of what they are owned in unpaid leave and redundancy entitlements. Some of them are the sons and daughters of Toorak, Malvern and Armadale clients that Rowland has long catered for.

“There is deep-seated damage,’’ Rowland said. “There are generations of Melbourne kids who worked for us, got married and their kids worked for us. Do you think I am relishing this? I’m not basking in any glory.’’

The Melbourne establishment however, is well practised at looking after its own. Some of the city’s richest, most powerful families could not imagine a spring without one of Rowland’s chicken sangers and, after so many parties, he still has friends in the right places. This includes Melbourne’s The Age, which last month provided a soft landing for Rowland’s financial fall with a prominent, sympathetic report that didn’t mention the money owed to workers, the ATO or his former business partner.

As part of the Peter Rowland Group’s rebirth, it renegotiated contracts with the NGV, the VRC and the Grand Prix Corporation. The VRC is chaired by Amanda Elliott, whose daughter Edwina Machado is the business development manager of Peter Rowland Catering. The former chairman of the Grand Prix Corporation is Ron Walker, a Caulfield Grammar school chum of Rowland.

At the NGV, the Peter Rowland Group holds exclusive catering contracts for the NGV Tearoom, the NGV Garden Restaurant and the cafe and bar at the Australian Centre for the Moving Image. The state government is the biggest source of revenue for both the NGV and Grand Prix Corporation and is part-funding a new, $128m grandstand at Flemington. For the Peter Rowland companies, considerable public money has helped the souffle rise twice.

Rowland is charmingly gormless about money. Several years ago, he was trying to negotiate a more favourable contract with the NGV’s then president, commercial barrister Allan Myers QC. Despite pleading financial hardship, Rowland turned up to the meeting in a specially imported Bentley — the first of its model to be driven in Australia. Rowland says buying that car was the worst decision of his life but he has made a few. He is, as one observer described, a brilliant caterer and a terrible businessman. “I am clearly a bad businessman, obviously,” he said. “I wasn’t focused on all parts of the business.’’

The business is now run by chief executive Emma Yee, a hospitality school graduate who worked as general manager of ­operations for Peter Rowland Catering for four years. Rowland has stayed on as a consultant. The VRC has assured staff and suppliers at Flemington the new company will pay its bills. For some, Rowland’s latest offerings have left a bitter taste.