KEY POINTS:
Meat company PPCS has lost an Employment Relations Authority case for $224,665 in damages against the former chief executive of Richmond, which PPCS took over in a bitter battle.
The case involved a $200,000 payment to Richmond's former chief financial officer Simon Gibbs, which the chief executive, John Loughlin, authorised - without authorisation, says PPCS - and which was triggered by Loughlin's resignation in 2002.
On legal advice, PPCS paid the money to Gibbs in 2005.
After he left the Hawkes Bay meat company, Gibbs teamed up with Loughlin in a financial consultancy.
PPCS' legal advice was that the money was recoverable from Loughlin, who it claimed was "indirectly helping himself" or directly "helping a mate".
PPCS claimed Loughlin did not get board approval for the payment, although approval was needed for any payment over $100,000.
Dunedin-based PPCS fought a seven-year hostile takeover battle for Richmond during which, ERA member Denis Asher said, Richmond was "under siege and the board was divided against itself".
Some PPCS actions were described in the High Court as "egregious" although fault was also found with Richmond.
With the takeover imminent, Gibbs told Loughlin he was sick of the "dysfunctional environment" and demanded he get a year's salary if he was made redundant or if he resigned within 90 days of a change of chief executive or management. His annual salary in 2002 was $229,000.
Loughlin knew that if Richmond's four banks discovered Gibbs, a former foreign exchange dealer and Westpac banker, was leaving it would have rung alarm bells and pushed up Richmond's borrowing rate, costing it hundreds of thousands of dollars.
Gibbs was acknowledged to have close relations with Richmond's bankers.
He agreed on the variation to Gibbs' employment contract with Richmond's then-chairman, Sam Robinson, and prepared a draft paper.
Robinson told the ERA he had destroyed most of his Richmond records and "never had a good memory for detail". He noted events in 2002 were "very difficult" and "involved a lot of stress at senior management and board level".
Robinson agreed he did not tell the board about the change, and put his silence down to "tensions in the Richmond board".
Asher said he did not accept PPCS' claim that but for Loughlin's action it would not have given Gibbs his departure payment.
PPCS had not "on the balance of probabilities" proved Loughlin acted outside his authority.
"Despite apparent question marks and uncertainty as to the CFO's actual contractual entitlements vis a vis the realities of his situation, I don't accept the company can now recover the same from Loughlin."
- NZPA
