JUST over an hour’s drive from Melbourne’s CBD lies the Yarra Valley, home to some of Australia’s premier vineyards and wineries.
The area’s unique combination of soil and climate – what the French refer to as terroir – produces wines of distinction, attracting producers of the likes of James Halliday and even the French house of Moet & Chandon.
Nestled in the midst of this bucolic splendour is Oakridge Estate, a small top-end winemaker with 12-hectares of vines, a winery, a cellar-door operation and an upscale eatery for weekend day trippers.
The family-owned operation is regarded as one of the valley’s best-kept secrets. Few, however, would be aware that the family that owns Oakridge is none other than that of Australian Securities and Investments Commission chairman Tony D’Aloisio.
Unlike his fellow regulator, Australian Competition and Consumer Commission chairman Graeme Samuel, D’Aliosio did not place his business interests in a blind trust upon his appointment.
Instead, D’Aloisio and his wife, Ilana Atlas, bought the business in December 2007 – seven months after D’Aloisio was appointed ASIC chairman. And it was bought from the receivers of the collapsed West Australian operation Evans & Tate, a public company that went under on D’Aloisio’s watch.
While his wife is a director of Oakridge, D’Aloisio is a shareholder in the company, a venture he concedes is more than a weekend past time.
”It’s a business not a hobby, and a wonderful contrast to ASIC and keeps us in touch with the joys of owning a medium-sized business,” he confided in a recent magazine interview.
But details on how much the couple paid for the business are difficult to track down and were never disclosed to creditors and shareholders of the failed Evans & Tate.
What is known is that in March 2006, more than a year before his appointment to ASIC, D’Aliosio lashed out $2.7 million to buy the Yarra Valley property from the Challenger Wine Trust.
This effectively made him Evans & Tate’s landlord. The heavily indebted Perth company had been in a dire financial situation for years, having paid too much for its operations only to be slammed by a global wine glut.
On August 21, 2007, Evans & Tate directors finally submitted, calling in Ferrier Hodgson as voluntary adminstrators. The following day, the company’s main creditor, ANZ, appointed McGrath Nicol as receiver and manager to protect their interests.
From that point on, the information trail goes cold. For, in an extraordinary turn of events, just 39 days after its collapse, ASIC agreed to grant Ferrier Hodgson relief from its obligations to produce financial accounts for Evans & Tate.
This is the shortest period BusinessDay has found for such an exemption to be granted to a listed company under outside administration.
According to ASIC’s own records, in the five years from 2003, the next shortest period for such an exemption was 97 days.
On October 1, three days after that exemption was granted to the administrators, a new company was registered with ASIC called Oakridge Wines Pty Ltd. The following month, on November 5, Ms Atlas was appointed a director. Then a month later, on December 19, the D’Aloisio family bought the winery operations and business from the receivers.
How much the couple paid for Oakridge. For unlike Evans & Tate’s main Margaret River operations – which were sold to McWilliams – there was no announcement to the Australian Securities Exchange about the sale.
Statements from the winery, at the time of the sale, gave the impression head winemaker Dave Bicknell was behind the purchase.
”Oakridge is once again family owned, and I’m happy to say, now includes the Bicknell family,” industry website Wine Front announced at the time.
”With our new stable ownership, we look forward to extending our excellent levels of hospitality and giving the wines the attention and support they deserve,” Bicknell was quoted as saying.
One hint at the possible purchase price is contained in a presentation of the old Evans & Tate run Oakridge Vineyard Pty Ltd.
Buried in that presentation is mention of a $1.63 million ”asset sale” in December 2007 to another business, of which ASIC searches reveal Mr D’Aloisio and his wife as directors.
The sale took place five days after the administrator held its second creditors meeting – on December 14 – where it was deemed impossible to properly value Evans & Tate’s assets.
The dearth of information on the transaction and the sale price can be sheeted home directly to those exemptions granted by the regulator to Ferrier Hodgson, three months before the sale.
According to Jeffrey Knapp, an accountancy academic at the University of NSW, the exemption order issued by ASIC to Evans & Tate was ”extraordinary” particularly given the short period of time for the administrators to investigate the group.
”ASIC’s policies in Regulatory Guide 174 indicate that ASIC should not issue exemption orders to listed companies for financial reporting relief in the very early days of a voluntary administration before an administrator has concluded their investigations and report to creditors,” Mr Knapp said.
As a result of that ASIC exemption, Evans & Tate never filed accounts for the year to June 30, 2007.
When the company finally emerged from administration, its new directors highlighted their struggle to find any records from the sale of Evans & Tate’s various assets during the period when it was under administration.
The full-year 2008 accounts that were provided before Evans & Tate – since renamed Alexium – was recapitalised and relisted in mid-2009 note the lack of any financial records for the period.
Even the auditor, PKF, delivered an adverse ruling on the 2008 accounts, blaming the lack of an audit report for the previous financial year.
The company also noted in its 2008 accounts that ”despite numerous requests, only very limited historical financial information has been made available to the directors following the sale of the majority of the company’s assets to McWilliams Wines”.
”It has not been possible to obtain all the books and records of the entire economic entity for the relevant periods, particularly books and records which would have been held by the company prior to the appointment of the joint administrators with certainty or at all,” it said.
But not only is there a black hole in the company’s financial information, there are numerous accounting irregularities.
BusinessDay has counted more than 30 errors, irregularities and omissions in the 2008 financial accounts. There are discrepancies between the numbers in the accounts and the report to creditors prepared by Ferrier Hodgson in October 2007, which said the books and records were in order.
The creditors report originally said Evans & Tate reported a unaudited loss of $29.7 million in the year to June 30, 2007. But when the 2008 accounts were finally lodged, the loss recorded for the corresponding period in which no original accounts were produced was $89.6 million.
The extra $59.9 million in losses correlates to another area of the accounts where the numbers do not add up.
The 2008 accounts note how the accumulated losses in July 2006 were $70.2 million. But the original audited accounts from 2006 show accumulated losses of $130.1 million.
This irregularity, according to Mr Knapp, gave the impression that $59.9 million of accumulated losses were recycled into 2007, making the losses for the period for where there are no accounts look much worse.
”The 2008 financial report also nets off cash flows inappropriately and there are at least 40 errors and omissions relative to the requirements of accounting standards. The report should be thoroughly investigated by an appropriate authority and that may not be ASIC under its current executive,” said Mr Knapp.
Those aren’t the only anomalies. Debt repayments between the various accounts fail to stack up.
ASIC, however, disagrees. Special counsel Stephen Yen told BusinessDay the commission had considered whether action was warranted but had found ”no instances where it has been considered necessary to proceed to a formal investigation”.
Mr Yen said the chairman had made all the appropriate disclosures to the Minister regarding the Oakridge acquisition.
Last June, BusinessDay reported that more than 100 documents had been deleted from ASIC’s public database around the beginning of last year, coinciding with the Senate inquiry into the insolvency industry. The documents related to exemptions provided to administrators providing relief from financial reporting.
Mr D’Aloisio, meanwhile, denies conflict of interest in purchasing an asset from a listed company in financial distress while ASIC chairman.
Meanwhile, things seem to be going swimmingly at Oakridge. Awards are pouring in. The 2009 pinot noir is on special for $326.40 a case, and the family-owned estate is ”dedicated to producing outstanding and distinctive wines while providing visitors with a memorable experience”.
MARCH 26, 2006 Tony D’Aloisio enters into agreement to buy land from Challenger Wine Trust for $2.7 million.
AUGUST 21, 2007 Evans & Tate placed under voluntary administration.
AUGUST 22, 2007 McGrathNicol appointed receiver and manager to Evans & Tate.
SEPTEMBER 28, 2007 ASIC grants an exemption to administrator Ferrier Hodgson.
NOVEMBER 5, 2007 Ilana Atlas appointed executive chairman of Oakridge Wines Pty Ltd, which was registered on October 1, 2007.
NOVEMBER 28, 2007 Mortgage documents for Oakridge, signed by Ms Atlas, include declaration valuing the Oakridge assets at $5.5 million.
DECEMBER 14, 2007 E&T second creditors’ meeting told “accurate valuation of assets could not be determined”.
DECEMBER 19, 2007 D’Aloisio buys Oakridge winery business from Evans & Tate.
APRIL 28, 2008 Prospectus lodged as part of Evans & Tate deed of company arrangement.
JUNE 30, 2008 Evans & Tate resumes trade on ASX as ETW Corporation (ETW renamed Alexium in 2010).
JUNE 10, 2009 ETW lodges 2008 full-year accounts.