Unshakeable faith that right is might

By LIAM DANN

As meat industry types go, the Bell Group are a bloody-minded bunch.

The group of eight shareholders, who between them hold just 1.5 per cent of shares in meat company Richmond, have refused to back down in the battle for its control.

Though Richmond management has accepted that southern meat processor PPCS is the new boss, the Bell Group is forging on to the Privy Council.

They are confident they have the support of the outstanding shareholders - representing the 37 per cent of Richmond PPCS does not own.

They are also unshakeable in the belief that they hold the moral high ground.

Last year the High Court ruled that PPCS was guilty of "gross commercial misconduct". The Court of Appeal did not overturn that judgment in its October ruling. But the penalty PPCS copped - for concealing its interest in a block of shares during a takeover battle in 1997 - was reduced.

The judgment will still cost it $20 million in forfeited shares but the restoration of voting rights on a second block of shares ensured they got control of the company.

Despite the deceit, PPCS has now achieved its original goal.

That, says Bell Group member and former Richmond chief executive John Foster, sets a dangerous precedent.

"The issue is one of international reputation as far as New Zealand corporate conduct is concerned," he says. "There is nothing more important in that area than our reputation as a meat industry."

The battle for Richmond has become a talking point with international customers right across the Northern Hemisphere, he says.

"There are newspaper articles faxed every day to people in the marketplace," he says. "People are questioning how has it got to this ... I'm talking about the level of misconduct."

Former Richmond chairman Tony Timpson agrees.

Timpson, who co-founded Cavalier Carpets, is a supporter of the Bell Group.

He holds shares in Richmond but says it's no skin off his nose who owns the company. "The general principle is the only reason I'm involved," he says. "If that's the sort of decision that's going to be made commercially then we don't have a hope of good governance. We'll revert back to the cowboy days of the 80s."

There is another area where members of the Bell group aren't interested in going back to the 80s.

PPCS has a co-operative structure. Richmond is a listed company.

The dispute between the two groups is in part a philosophical battle about the way a meat company should be run.

PPCS management is passionate about their model which lets farmers invest some of their earnings at sale time back into the company in return for an increased payment later.

John Foster isn't impressed.

Back in the 80s Richmond had a very strong pool arrangement, he says.

But the collapse of sheep meat prices in the late 80s and early 90s and the arrival of new competition "just blew the pools out of the window", he says.

Farmers were no longer interested in waiting for pool payments after the end of the season when they had what they thought was probably superior money offered on the day, he says.

"I don't believe PPCS have understood that adequately. Pools have been wiped out by higher levels of competition in the North Island. To try and bring them back will be a huge ask."

There is an air of Hawkes Bay aristocracy about the Bell Group. Most of them have a long history in the region and a long association with Richmond.

Bill Richmond is the son of company founder William Richmond.

Now in his 80s he says giving up the fight is not an option. He speaks of a sadness that what his father worked so hard to build up might be lost.

Thomas Crosse - at 75 one of the group's older members - recalls William Richmond visiting the family farm to pick out lambs after the war.

Crosse has been personally dealing with the company since he left school.

"The firm has been built on confidence and trust right through from the people that farmed the animals, the people that processed the animals, and the customers at the other end," he says. "Farmers must have trust in the people that they're dealing with."

His belief that he has shareholders behind him is based on feedback to a letter sent out by the Bell Group last month.

"After the statement by PPCS that if either party appealed they would withdraw their offer to take up further shares at $3.11, we felt responsible to find out from shareholders - all of them - whether they felt disadvantaged if the Bell group put that at risk."

The letter, seeking responses, was sent to 500 people. "We fielded over 100 phone calls in 2 days," Crosse says.

"Just one of them said he didn't want us to do it and he only had 200 shares. They were ringing to say: for goodness sake get on with it."

The level of verbal and written support has made them confident that there are very few shareholders not behind them, he says.

"They've had every opportunity to tell us to jump in the lake if they want to."

There is no doubting the passion of the group. But such affection for the company surely leaves them open to accusations of parochialism - of an unrealistic sense of ownership for what is now essentially a stock market commodity.

"No," says Robin Bell. "We accept that anybody can buy shares and people can make a takeover offer. I want to put that on the record. If you act legitimately and within the law and within good commercial and ethical practice we have no complaint."

There is still a standoff between two, he says.

"What the High Court judge referred to as a commercial imbroglio remains."

Any resolution by the Privy Council is still some time away.

Bell estimates it could be as late as May 2005 although it could be as early as August next year.

If PPCS is allowed to retain control for that length of time Richmond could be effectively restructured and reshaped beyond a point that any Privy Council decision could undo.

"That is the whole point of the stay," Bell says. "We were co-operative with the stay between the High Court and Court of Appeal," he says.

PPCS should act in the same spirit.

"The status quo has worked very well, the stay arrangements have worked well, the company has worked well and produced a good result this year so there is no reason that can't continue pending the final determination by the Privy Council."

The Bell Group has never let the cost of going to the Privy Council concern them.

They are a largely self-funded group. While they have some outside support it would be wrong to imply they have any particular financial backer, they say. They have never actively fundraised.

"The cost of going to the Privy Council is not prohibitive," Bell says.

It is relatively inexpensive compared with a Court of Appeal hearing in New Zealand. That's because the issues are pretty well refined, he says.

"We know exactly what's at issue and what's not. Questions of fact have been resolved and you can focus on the main issues. So it's streamlined."

Bell says he has never really been comfortable with having his name at the top of the court papers.

He doesn't see himself as the group's leader. But it was his determination not to give up the fight that brought the group together in May 2002. "It's fair to say that Robin Bell never gave up," Foster says.

The Bell Group

Bill Richmond: son of the founder, board member 1960-1991 (Waikato)

Hamilton Logan: farmer, Richmond chairman 1980-1992 (Taupo)

Tim Logan: farmer (Mareaekakaho Hawkes Bay)

John Cullwick: Richmond board member 1985-1992 (Hawkes Bay)

Robin Bell: Napier lawyer

David Hildreth: Hawkes Bay stud farmer

John Foster: Richmond CEO and board member 1986-1997 (Hawkes Bay)

Thomas Crosse: farmer, Richmond board member 1973-1985 (Hawkes Bay)