Barley Society denies ‘gambling’

Press, 10 October 1984, Page 26

Barley Society denies ‘gambling’

The chairman of the South Island Barley Society, Mr Graham Robertson, has denied an allegation that the board of the society had “gambled on the foreign exchange futures market and lost $1.7 million of growers’ money.”

Mr Robertson said that the $1.7 million was a hypothetical figure. It was the difference between the United States dollars the society actually received, by entering into two forward foreign currency contracts earlier this year, and the amount it would have received after the New Zealand dollar devaluation, had it not been bound by the forward contracts.

Mr Robertson said it was normal for the society to have forward currency contracts and these could be adversely affected by a devaluation in New Zealand or a strengthening of the United States dollar.

The allegation that the society gambled with growers’ money and "lost” $1.7 million was one of a number made recently by a former director, Mr Alan Pye, of Temuka, in a front page article in the “National Business Review.” However, after hearing Mr Robertson’s explanation, Mr Pye has insisted that he wil stand by his allegations that the board of the society was unnecessarily speculating in foreign currency. “My concern is that the society has been dealing in foreign exchange not related to a barley contract in

existence at the time,” said Mr Pye. “The divorcing of currency transactions from barley sales is the core issue in this matter.

“The Barley Society has in the past dealt in currency transactions relating to sales of barley and I do not object to that. “The principal business of the society is the marketing and trading of grain and any outside trading in currency is extremely dangerous and risky,” said Mr Pye. Mr Robertson has also denied Mr Pye’s allegation that the board intended carrying forward any loss on the currency exchange transactions to the 1985 year. Mr Pye replied that a decision was made at the July meeting of society directors to roll forward the currency exchange contracts to the 1985 pool year. He challenged Mr Robertson to make available to members a fully copy of the minutes of the July meet-

ing. Mr Pye has also explained how he expects the “loss” of $1.7 million to become apparent in the society’s returns to growers. He said that Mr Robertson sent a circular to members in March saying that the society had sold 30,000 tonnes of malting barley at a price which would return growers $220 a tonne for March delivery. Mr Pye believes the devaluation of the dollar should have held that price through to the final pool

result, in spite of a weakening of the intematinal barley market which affected A subsequent sales of the remainder of the society’s 90,000 tonnes. He expects that the final “ pool price, after allowances •» have been made for storage increments, will not fully reflect Mr Robertson’s ” March prediction of $220 a tonne.

On Monday Mr Robertson said the society was “still on target” to achieve around $220 a tonne for its malting pool but he did not say for what delivery period. Mr Robertson has said

that Mr Pye resigned from . the board in August because his fellow directors had ; pointed out a possible con- i. flict of interest. “I made it plain at the J time that my resignation ■- was solely because of my t concern over the board’s decisions to deal in currency transactions unre- •» lated to barley sales,” said 2 Mr Pye. Members of the society ’ had been aware for three « years that Mr Pye was a -* shareholder in the grain 4’ merchant, James Meehan j and Sons, Ltd, of Timaru. ” James Meehan recently be- ■ came a member of the 2 Cereal Exports merchant •> marketing company. Mr Pye has said he is not a director of James Meehan. " He also denied any con- .7 nection whatsoever with a * newly-formed Premium * Malting Exports group, an- » other competitor of the ’ society.