Elders fears 'irreparable harm' from cattle traders' defection
The defection of Elders' live cattle trading team to rival Ruralco threatens the business with "irreparable harm", with a major Indonesian customer already considering buying elsewhere, a court has heard.
Elders made the allegations as part of a lawsuit against four of the seven rebel cattle traders.
The company has asked the court to stop the traders poaching clients and require them to return confidential information.
Elders also alleges the four traders targeted - George Last, Ashley James, Vincent Heeran and Mark Odgers - ran up expenses totalling more than $740,000 in nine months this year.
Details of planned shipments of thousands of live cattle are also exposed in court papers.
Ruralco, which has twice tried to merge with or take over Elders, poached the seven traders on October 1 to set up its own live cattle division. On the same day, Elders said it was investigating "certain discrepancies and issues" in cattle valuations at the export division. The company is to receive a report from forensic accountants at PPB Advisory this week.
The lawsuit against the four traders, filed in the Victorian Supreme Court, does not mention the alleged irregularities.
In an affidavit filed on October 25, senior Elders executive David Goodfellow said that if the four traders were not required to comply with strict non-compete clauses the impact on Elders subsidiary Elders Rural Services Australia (ERSAL) "would be catastrophic".
Under their employment contracts, Mr Last, Mr Heeran and Mr Odgers are banned from soliciting Elders clients for six months after they stop working for the company. Mr James has a non-compete clause lasting three months.
Mr Goodfellow said ERSAL "has been hampered by the sudden and unexpected loss of its entire trading team".
He said the ERSAL Australian network, of which he is group general manager, stood to lose 15 per cent of its total business if the non-compete clauses were not enforced.
"ERSAL has already received feedback from its customers regarding their concerns that it no longer has the capacity to fulfil its contractual obligations to them," he said.
Indonesia's TUM has been a major customer of Elders subsidiary North Australian Cattle Company for 10 years. Mr Goodfellow said TUM was considering an alternative supplier of live cattle.
Elders chief executive Malcolm Jackman declined to comment on potential damage to the company.
The company is to announce its full-year result on Monday and has foreshadowed an underlying loss of between $32 million and $39 million.
All four traders have told the court they have already returned to Elders all the confidential information they possessed.
In an affidavit, Mr Odgers, whom Elders alleged ran up expenses exceeding $100,000 between February and October, said it was a common practice for fellow employees to use his company credit card "for booking travel, accommodation, meals for customers/agents etc".
Mr Heeran, whose expenses bill allegedly came to more than $274,000 over the same period, said his card was also used to cover the expenses of staff and company agents.
Affidavits filed by Mr Last, whose expenses allegedly topped $136,000, and Mr James, whose expenses bill allegedly exceeded $228,000, do not disclose how the money was spent.
Mr Last told the court Elders had a "very strong" live cattle export order book, including "an aircraft load of 200 pregnant Holstein to Taiwan" next month and 11,000 cattle to be shipped to China early next year.
The defendants have been ordered not to approach former Elders clients before a trial, set down for November 25.