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sydney alternative media - non-profit community independent trustworthy
Wednesday, 27 February 2008
Crikey calls for tips on Manildra ripping off the taxpayer on ethanol
Mood:  don't ask
Topic: aust govt


Veteran Alan Ramsey took a swing at Dick Honan (pictured above) of the Manildra corporation way back 2003 here:

A disgrace of the old school - smh.com.au 16 Aug 2003

Here is veteran Michelle Grattan back then too:

It's not assets, it's access - theage.com.au 17 Aug 2003

Lateline ABC reportage here of similar vintage:

Lateline - 11/08/2003: Labor attack Govt over Honan ethanol deal ...

Over at the Big Commercials, then Finance Editor Michael Pascoe with Seven Sunrise dishes the Big Money gossip back in Sept 2004:

Michael Pascoe, Finance Editor: While Sunday Sunrise's transmission was interrupted by the Olympics, some amazing business stories were playing out.

Inevitably in a particularly busy period, some extremely interesting details have been largely overlooked - details such as Dick Honan, chairman of Manildra Group, threatening John Pascoe when he was chairman of George Weston Foods - and John Pascoe apparently yielding to that threat - effectively, corporate blackmail.

He is of course no relation of mine.

Now that's the same Manildra Group that is the biggest single donor to the Liberal Party, the company that the Federal Government turned itself inside out to help over a little matter of ethanol. Yes, that Manildra.

George Weston also is a major contributor to the Liberal Party's coffers - some $600, 000 over the past five years. As either chief executive officer for 15 years and more recently as chairman, one might suspect John Pascoe had a say in that.

There's something else worth knowing about George Weston - aside from making Tip Top bread, Golden Crumpets and various biscuits, it's also a serial abuser of the Trade Practices Act with a particular taste for price fixing.

Four times its been hauled before the beak and fined for price fixing and associated matters - most recently two weeks ago when it copped the one and a half million dollar fine the ACCC asked for - and the ACCC has been criticised for not seeking more.

The actual fine was reported by several newspapers - but only the Australian's court reporter, Vanda Carson, picked up the apparent corporate blackmail story in Federal Court judge Roger Gyles' scathing judgement.

Otherwise, it fell through the cracks until the Sydney Morning Herald yesterday ran a riveting feature by Elisabeth Sexton, albeit well back in the paper.

Justice Gyles' judgement is itself a fascinating read - but let's just stick to the corporate blackmail bit.

A George Weston director, Paul Loneragan, had rung Manildra executives to suggest increasing the price of flour - price fixing.

Dick Honan didn't go to the ACCC when he found out about it. He went to John Pascoe because what Honan wanted was to stop George Weston importing gluten. Oh, I should have mentioned, gluten is another product Manildra dominates in Australia.

According to Honan's own extraordinary evidence, he told Pascoe he would go the ACCC about the price fixing unless Pascoe agreed by 5 pm to stop the importation and re-export of gluten.

As Justice Gyles puts it:

"Later that day, Pascoe informed Honan that the commercial matter was resolved in the manner sought by Honan."

Pascoe didn't go to the ACCC either. He did sack Loneragan, but with 12 months pay. And George Weston re-employed him as a consultant the very next month. Justice Gyles makes some interesting comments about that.

As it turned out, some anonymous whistleblower still tipped off the ACCC about the price fixing attempt.

Pascoe also was chairman of Aristocrat and Centrelink as well as George Weston, but he suddenly resigned all his very well-paid board positions two months ago when the Federal Government appointed him chief federal magistrate.

What I'm left wondering is: If that judgement had been made prior to John Pascoe's appointment, would it have had baring on his suitability for such a senior judicial role?

For that matter, would it have had baring on his ability to continue as chairman of a poker machine manufacturer? Would acceding to Honan's threat pass probity in the gambling industry?

I also can't help wondering if the ACCC needs to take a close look at the gluten industry. 

Dick Honan is no slouch in the affluence stakes:

ABIX via COMTEX) -- "BRW" magazine released its "Rich 200" list for Australia for 2002. The net estimated worth of Dick Honan is $A250m, which compares with $A270m in 2001. Honan, who inherited a flour milling and sugar business, has built Manildra Milling into a major Australian food processing company. Manildra rationalised its US food processing operations and bought the bioproducts division of George Weston Foods for an estimated $A41m.

Publication Date: 23 May 2002

Here is Crikey.com.au last Monday 25th February 2008, and it's a cracking story about corporate welfare:

Manildra's fuel ethanol grant will increase inflation

Richard Farmer writes:

As we try to make sense of stories about politics and companies, it pays to keeping looking at the list Crikey published back at the beginning of the month of who is giving how much to which party. I checked this morning and it put the current Independent Commission into Corruption inquiry about goings on at the Wolloongong Council into a proper perspective.

Property developers and development companies provided $5.1 million of the $13.9 million which Australian Electoral Commission figures show was donated to the three major political parties in 2006-07. Now we know that there is no such thing as free morning coffee as well as a free lunch.

The list also would make a normal person wonder why it was that the ethanol producer Manildra Group was the biggest single donor of all. Was there something other than altruism behind Mr Dick Honan's support for the democratic process? One of our website users suggests there just might be. In an anonymous tip the informant writes:

Dear Crikey, Please keep my details confidential. I thought you would find this information of interest.

I note that Crikey recently highlighted the massive donations given by Mr Dick Honan's Manildra Group to the two major political parties.

I'm sure you are aware that Manildra is Australia's near-monoploy fuel ethanol producer and receives a biofuel grant from the Federal government of just over 38 cents per litre. (Mr Howard ensured Manildra received the grant while ethanol importers would not.) Manildra will soon have the capacity to produce around 120 megalitres per year. Anyone doing the sums will quickly realise that the 2% biofuel mandate to be implemented by the NSW government, not to mention the 40 megalitre/year contract BP recently signed with Manildra, will result in Manildra collecting large sums of taxpayers' money.

Manildra asserts that its ethanol is solely derived from waste starch (i.e. fermentation of starch and sugars in the effluent stream of their Bomaderry gluten and starch operation. The plant separates wheat flour into gluten and starch. Some starch/sugars are lost to the liquid effluent stream). This makes them look greener than green. This is not the case.

Manildra has used corn starch from China and is currently negotiating with a Thai company (The THH Group) to supply tapioca chips to produce ethanol. Also, because of the huge profit margin on fuel ethanol, Manildra has been diverting more and more food-grade and industrial-grade starch to ethanol production. It is also rumoured that they are sending sugar from their Harwood sugar refinery to Nowra for ethanol production.

The result is obvious; The price of the starch and starch-based products (glucose, fructose, maltose, etc) that Manildra sells to food and beverage companies such as Fosters, Kraft, Cadburys and Nestle, and that are sold to industrial users such as Amcor, Visy and PaperlinX, must be increased so as to meet the profit margin enjoyed on the subsidised fuel ethanol.

In other words, the government's fuel ethanol grant is leading directly to food-price inflation which is in turn contributing to higher interest rates.

Aside from the food-fuel-inflation issue, wasn't the biofuel producers' grant supposed to assist LOCAL agriculture, not that of Thailand and China, which just makes our trade deficit even worse? Similarly, before handing over OUR money, why hasn't the Fed Government, the NSW Government or BP not demanded that Manildra provide a carbon/GHG lifecycle analysis and net energy analysis of their ethanol, as is now the case with biofuel suppliers to the EU market?

Send your tips to boss@crikey.com.au, submit them anonymously here or SMS tips and photos to 0427 TIP OFF.

Next day 26th Feb 08 Manildra's PR officer responded to Crikey.com.au, which might not be quite apples and oranges on our first reading:


Peter Simpson, General Manager of the Manildra Group, writes: Re. "Manildra's fuel ethanol grant will increase inflation" (yesterday, item 15). I refer to your article in yesterday’s edition. This company does not as a general rule respond to allegations from anonymous informants particularly when such allegations are absolutely false. However the following points will serve to correct the factual errors contained in the points raised by your anonymous informant:

Biofuels Grant: Manildra does not retain the ethanol producer’s credit of 38.143 cents per litre. Not less than 112.5 per cent of this producer’s credit is returned to major oil companies and fuel wholesalers to pass on to Australian motorists. In other words 100 per cent of the Government subsidy paid by taxpayers is returned to the motorist together with another 12.5 per cent paid by Manildra It is for this reason that ethanol blended fuel is able to be sold cheaper at the petrol pump. Additionally, whilst it is true at the moment that this company produces the major part of Australia’s ethanol production, there are a number of new plants on the drawing board as well as other plants already in production. For example, Department of Industry, Tourism and Resources data shows that in 2006/2007, the total volume of ethanol claimed by producers Australia wide under the Ethanol Production Grants Program amounted to around 83.5 million litres of which around 53 million litres were claimed by Manildra. That is, Manildra only claimed 63 per cent of the total subsidy claimed.

Balance of Statements: Manildra does not import tapioca chips and has no intention of doing so. Corn starch imported by Manildra is used for the manufacture of modified products other than ethanol. Manildra is not sending sugar from the Harwood sugar refinery to Nowra.

I will not make further comment on this or the other statements made by your informant as frankly they do not make a lot of sense. I trust that in the interests of fairness you will publish this reply in today’s edition.

Posted by editor at 6:13 AM EADT
Updated: Wednesday, 27 February 2008 7:47 AM EADT

Wednesday, 13 August 2008 - 4:20 PM NZT

Name: "Josh Jones"

An update on Manildra from Crikey


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