THE HANDIWORK OF CHIEF FEDERAL MAGISTRATE JOHN PASCOE–WITNESS BRIBING, PRICE FIXING, SUCCUMBING TO BLACKMAIL TO CONCEAL A CRIME AND LYING TO SHAREHOLDERS ETC. IS THERE ANYTHING THIS MAN CANNOT DO?

July 26, 2011 here

John Pascoe was appointed Chief Federal Magistrate of the Federal Magistrates Court of Australia on the 14th July 2004 by his good mate the former Australian Prime Minister John Howard.

John Pascoe’s shady conduct has been written about before to some degree in the press but to the best of my knowledge not to the detail that I am about to get into.

It says on Wikipedia:

John Henry Pascoe, AO, CVO is Chief Federal Magistrate of Australia and Deputy Chancellor of the University of New South Wales. Previous positions he has held have included Chairman and CEO of George Weston Foods, Chairman of Centrelink, Deputy Chairman of Aristocrat Leisure Limited and Managing Director of the Insurance and Risk Management Division of Phillips Fox. He has also held positions on several other corporate boards, such as Qantas.

Presently, he is a member of the board of directors of the International Award Association (which operates the Duke of Edinburgh Award scheme). Previously he has held positions on the boards of the New South Wales Cancer Council, The Sydney Opera House Trust, and The Royal Alexandria Hospital for Children. 

A brief outline of the issues that I will raise are:

1. John Pascoe’s time as CEO / Director and Chairman of George Weston Foods where there was mass price-fixing, witness bribing and John Pascoe succumbed to blackmail by Dick Honan (Chairman of Manildra) to conceal price-fixing.

2. John Pascoe’s time as Director/Chairman of Aristocrat Leisure Limited where he was involved with making false and misleading statements and breaching continuous disclosure laws. This lead to a multi-million dollar payout to the victims.

3. John Pascoe’s attempt to conceal plagiarism by the former Federal Magistrate Jennifer Rimmer.

4. The fraud at the Federal Magistrates Court of Australia under his direction and management.

5. Chief Federal Magistrate John Pascoe hearing a case where there was an alleged breach of the Trade Practices Act. The same Trade Practices Act that John Pascoe was breaching on an ongoing basis when he was CEO/Chairman at George Western Foods.

6. Is Chief Federal Magistrate John Pascoe permanently out to lunch? His lazy work ethics as Chief Federal Magistrate.

What is not well-known is that he was parachuted into this job just as his corporate career was about to end given his criminal conduct. This was brought to light in a judgement handed down in the Federal Court of Australia on the 25th August 2004 case known as – Australian Competition & Consumer Commission v George Weston Foods Limited (ACN 008 429 632) and Paul Benedict Loneragan.

If you find the ACCC v George Western Food section to in-depth you may want to skip to the other sections of this post.

1. George Weston Foods

The main reference point is “ACCC – George Weston Foods”. This is the decision Justice Gyles handed down in 2004, just a couple of months after John Pascoe was appointed Chief Federal Magistrate. Below I dissect the judgement and make certain conclusions based on that judgement and raise valid questions that have gone unanswered. 

A quick outline of the case is that the ACCC took legal action against George Weston Foods for price-fixing and also one of its directors Paul Loneragan. George Weston Foods claim they sacked Paul Loneragan when they found out that he was trying to fix the price of flour but this does not stand up to scrutiny. Mysteriously the charges against Paul Loneragan were dropped as you will find out.

Questions: (re: ACCC – George Weston Foods)

1. In paragraph 7, John Pascoe obviously succumbed to corporate blackmail by Dick Honan to conceal the crime of attempted price-fixing of flour. Why did he do this?
2. From paragraph 6, it looks fairly clear that Goodman Fielder was involved in the price-fixing as well. If this is correct, his company also colluded with Goodman Fielder to fix the price of flour and fraudulently ripped off the Australian public.
3. In Paragraph 9 Justice Gyles says “It is of some significance that no notes were taken of the meeting between Pascoe and Loneragan. Pascoe considered whether the company should make disclosure to the ACCC but elected not to do so.” Why did John Pascoe not take notes? And why did John Pascoe not go to the ACCC?
4. Paragraphs 10 to 15 deal with Loneragan’s termination. Why if John Pascoe sacked him did he not make other employees aware?
5. Why did John Pascoe make out Loneragan had resigned?
6. Why did John Pascoe give Paul Loneragan $461,787 when he left?
7. Paul Loneragan’s actions were cause for summary dismissal and John Pascoe should not have paid him anything?
8. In paragraph 14 John Pascoe re-employed Loneragan. Why did he re-employ him?
9. In paragraph 14 Justice Gyles says: “Although the evidence is not very satisfactory, that arrangement appears to have continued in one form or another until at least October 2003, notwithstanding that Pascoe said in his s155 examination that the practice had ceased by late 2001.” Why did John Pascoe lie to the ACCC and tell them that it had ceased in 2001 when in fact it had continued until 2003?
10. Paragraphs 16, 17 and 18 deal with previous price-fixing and it is interesting to note at the end of paragraph 16 Justice Gyles says “The penalty was imposed by Sheppard J on 7 October 1981. Pascoe gave evidence at the s155 examination that he had been the solicitor for Weston for some years before joining it.” So that means all the price-fixing was going on at the company either while John Pascoe was a solicitor for the company, a Director(1981), CEO and Director(1985 -2000) or Chairman (2000).
11. Paragraph 21 shows your abuse of the legal system in delaying tactics. Why did John Pascoe do this?
12. In Paragraph 23 Justice Gyles says “An alternative hypothesis, of course, is that this kind of activity was commonplace in a tightly organised oligopoly and that this incident only came to light because of Dick Honan’s desire to play it as a card in a collateral commercial dispute. The evidence given by Loneragan as to his discussion with the officer of Goodman Fielder is to be noted.” Is this is true? John Pascoe  and George Weston Foods were ripping of the public for years if not decades?
13. Why did the ACCC not prosecute Loneragan? Did John Pascoe negotiate a settlement with them via his mate and ACCC Chairman Graeme Samual?
14. In Paragraph 24 Justice Gyles says “These decisions are sought to be justified by the receipt of legal advice as to defamation on the one hand and an action for wrongful dismissal on the other. That legal advice has not been tendered and no author has been called. Weston has gone to considerable lengths to avoid any disclosure of that legal advice in the course of these proceedings. In the absence of that evidence and in the light of the circumstances, I do not take that explanation seriously”. John Pascoe is a qualified lawyer and did not need to get legal advice. Justice Gyles is in effect calling John Pascoe a liar? This is important as it is consistent with what happened at Aristocrat when John Pascoe was Chairman there and I will raise it later in this post.
15. In paragraph 25 Justice Gyles again basically calls John Pascoe a liar. John Pascoe was telling the ACCC one thing and doing the total opposite. Why was this?
16. In paragraph 26 Justice Gyles says: “On the evidence before me the conclusion is open that Weston was keeping Loneragan ‘on side’ during the ACCC investigations. Whether that is so or not, there is much concerning the contravening conduct and its aftermath which has not been satisfactorily explained.” This is in effect bribing a witness? John Pascoe kept him on the payroll so he did not spill the beans against John Pascoe and George Weston Foods.
17. In paragraph 27 Justice Gyles says: “What is more, the conduct is typical cartel behaviour, very similar in substance to that in which the company was involved in the glucose price-fixing case. Such behaviour is notoriously difficult to detect. In those cases where it is detected, deterrence demands a heavy penalty.” The average person would think that the price-fixing was rampant over many years which is was.
18. In paragraph 31 Justice Gyles says: “I am not persuaded that the orders sought concerning a compliance program should be made in this case. I have said that I am satisfied that the existing compliance program is serious and well designed. No compliance program can effectively deal with deliberate breaches by those at board level.” Having regard for the numerous breaches of the laws and the continued price-fixing, why was this continually happening on John Pascoe’s watch?
19. Lying during a s155 examination is a criminal offence and clearly John Pascoe has never been charged. Why is this? This is the same offence that Richard Pratt was charged for.

I could dissect the judgment all day but will leave it there except for two more elements that I will raise that seem to me could only be explained by John Pascoe’s friendship with the chairman of the ACCC, Graeme Samual who both have close connections to the Liberal Party and the Prime Minister at the time John Howard. (Graeme Samual retires this week as Chairman of the ACCC). 

If you look at Gyles decision at paragraph 28 it looks like the ACCC argued on behalf of George Weston for a low fine. It must be remembered this was the third time in four years they had been caught. Why did the ACCC and Graeme Samual go so lightly on George Weston foods and only seek a fine of $1.5 million.

In paragraph one of the judgment Justice Gyles says “The proceedings against Paul Benedict Loneragan (Loneragan) were discontinued at the conclusion of argument on this hearing”. In paragraph 22 Justice Gyles questions why the ACCC dropped the prosecution and says it is “unexplained” and “The mere fact of his giving evidence for the ACCC could hardly have justified that course.” Why did the ACCC and Graeme Samual discontinue proceedings against Paul Loneragan even though he had confessed? What was the deal done between Graeme Samual and John Pascoe? This seems strange as the ACCC fined two managers of Visy $2 Million in total. One $1.5 million and the other $500,000. (Click here to read: “ACCC calls for harsher penalties for cartels”).

When John Pascoe was up to neck in price-fixing at George Weston Foods it was only a civil offence which means those caught could only get fined or barred as a director etc. As of 2009 it is now a criminal offence in Australia as well so those caught could go to jail.

2. Aristocrat

John Pascoe is a former director and chairman of Aristocrat Leisure Limited that was successfully sued by its shareholders which was settled in 2008.

Aristocrat is the largest gaming machine manufacturer in Australia, and is one of the largest manufacturers of slot machines in the world (currently second only to US-based International Game Technology).

John Pascoe was Chairman until he retired when he became Chief Federal Magistrate in 2004. Aristocrat Leisure Limited and its directors were sued by shareholders for losses suffered as a result of the company and directors failing to properly disclose their true financial position. The company settled for $40 million but is was estimated that the total figure would be at least $144 million with the directors indemnity insurance covering the rest.

Joh Pascoe also oversaw the payout of the previous chairman John Ducker which the legality of was called into question and which John Pascoe refused to fully explain.

For a background of the history the below links help substantially:

Rumour prompts confirmation but no disclosure – Aristocrat shareholders dump John Ducker from Board – Aristocrat pays $40 million to settle class action – Ducker’s no-show earns $577,000

The questions it raises are:

1. At the time John Pascoe was a director or chairman of Aristocrat it knowingly mislead shareholders and the public and breached continuous disclosure laws which resulted in the successful shareholder class action.
2. Why did John Pascoe do this and what was his motive?
3. Did John Pascoe gain financially from it?
4. As a qualified lawyer, John Pascoe had to have known that he and the company were breaking the law?
5. The company never disclosed whether it had insurance cover for the case. I have to wonder if John Pascoe had Professional Indemnity Insurance or any type of insurance and did impact on his actions?
6. Why has John Pascoe not resigned as Chief Federal Magistrate?
7. If you look at the link: “Aristocrat shareholders dump John Ducker from Board” it shows when John Pascoe took over from John Ducker as Chairman he paid him $577,000. John Pascoe also made out that he did not want to pay him but had to because of legal advice, although he refused to make the advice public. This is eerily similar to what happened at George Weston Foods (see question 14 above). I think a fair-minded person could only come to the conclusion that John Pascoe is an habitual liar who says that he has had legal advice to do this and that and in fact does not have any legal advice at all?
8. Why did John Pascoe not release a copy of Mr Ducker’s contract to the ASX as requested?

3. Plagiarism by the former Federal Magistrate Jennifer Rimmer

In December 2006 Federal Magistrate Jennifer Rimmer tendered her resignation after being accused of plagiarizing the judgments of other magistrates. Chief Federal Magistrate John Pascoe did his best to try to conceal this until the media found out.

For the background click on the following links: Magistrates and Plagiarism (when you go there you will need to click on “show transcript”) and Magistrate accused of plagiarism quits.

The questions it raises are:

1. John Pascoe did not take any real action and did not issue a press release until the media found out and ran a story on the plagiarism. Why is that?
2. Two other examples of plagiarism were found and John Pascoe issued a second press release. How long did John Pascoe sit on this information for before he issued the second press release?
3. I think that the average person would see this as consistent with John Pascoe’s approach of covering up corruption?

4. The fraud at the Federal Magistrates Court of Australia under his direction and management.

In March 2009 Michael Pelly wrote an article in the The Australian newspaper titled “Federal Magistrates Court audit uncovers $5m black hole“

Some of the key things that Michael Pelly says in the article are:

“The KPMG report also reveals the court — regarded as the workhorse of the federal judiciary — spent $60,000 on fine bone china at a time when it was crying poor to the federal Government.”

“The Semple report quoted the court in projecting a $1 million deficit for 2008-2209, but the KPMG audit says the projected deficit was more like $5 million.”

“It added that “after the defection of key financial personnel during the year there are no qualified accounting personnel” at the court.”

“Mr Pascoe confirmed he had two offices in the Sydney business district — one for administrative work and the other for carrying out his judicial work. He said the former would soon be vacated.”

The article is well worth a read. 

The questions it raises are:

1. John Pascoe approved spending of $1000 per magistrate for fine bone china. Each Magistrate has 2 or maybe 3 staff so this equates to at least $250 per person for plates, bowls and cups. This is unbelievable. I have to wonder if a little bit of fraud has not gone on here and someone has not pocketed some fairly handy dollars. Even at its highest of 60 magistrates with 3 staff each giving a total of 240 staff, surely the china could have been bought for no more than say $30 per person which would be $7200. If it was where did the other $52,800 go?
2. The court (John Pascoe) was projecting a deficit of $1 million when in fact it was more like $5 million. Well no surprises here given John Pascoe’s handiwork when he was a director at Aristocrat Leisure Limited. The man needs to buy a calculator. I wonder where the extra $4 million went? John Pascoe obviously needs to answer that.
3. Under John Pascoe there was a “defection of key financial personnel during the year there are no qualified accounting personnel.” One has to surmise they did not want to get caught up in the fraud going on there and left.
4. John Pascoe had two offices ”one for administrative work and the other for carrying out his judicial work. He said the former would soon be vacated.” I have never heard of someone needing an office for “administrative work” and another for “judicial work”. It is worth noting that as soon as it hit the media he says that the office for “administrative work” would soon be vacated. Well why did he need it in the first place? I have to wonder what was going on. Maybe he had the tax payer paying for it and he was leasing it out to someone else and keeping the money. There should be an investigation by the police fraud squad.
5. When did John Pascoe finally vacate the second office or is it still being leased using tax payer funds?

5. Chief Federal Magistrate John Pascoe hearing a case where there was an alleged breach of the Trade Practices act.

As we all know John Pascoe was a serial abuser of the of the Trade Practices Act. It is worth noting that as Chief Federal Magistrate he heard a case that covered this area of law. The name of the case is Wilczak v Alpine Refrigeration & Anor (No.3) [2006] FMCA 554 (8 May 2006) where he ordered indemnity costs against the applicant. He also heard the case on two other dates those being at Wilczak v Alpine Refrigeration & Air Conditioning [2005] FMCA 931 (4 July 2005) and Wilczak v Alpine Refrigeration & Anor (No.2) [2006] FMCA 305 (21 March 2006).

At no place in any of three judgements can I see that John Pascoe informed the parties that he was a serial abuser of the Trade Practices Act and offer to stand down for perceived bias.

If he had awarded standard costs it would have been around 60-75% of the other parties costs but by awarding indemnity costs in favor of the respondent meant that the applicant had to pay 100% of the respondents costs. Just as a side note costs are not normally awarded in Family Court matters and Unlawful Termination proceedings, but most other cases they are.

Now the decision of CFM Pascoe may have been a just decision, that I do not know. But imagine if John Pascoe was hearing your case which involved you accusing a company of breaching the Trade Practices Act. Would you want him to hear the matter? I know I wouldn’t. And is he a fit and proper person to hear such a matter?

Fore those who do not know an overview of the Trade Practices Act is:

The Trade Practices Act aims to enhance the welfare of Australians by promoting competition and fair trading and providing for consumer protection.

The Act deals with almost all aspects of the marketplace: the relationships among suppliers, wholesalers, retailers, competitors and customers. It covers anti-competitive conduct, unfair market practices, industry codes, mergers and acquisitions of companies, product safety, product labelling, price monitoring, and the regulation of industries such as telecommunications, gas, electricity and airports.

The Act is enforced by the Australian Competition and Consumer Commission (ACCC) although you can institute proceedings yourself against companies if you believe that your rights under the Act has been breached.

6. Is Chief Federal Magistrate John Pascoe permanently out to lunch?

I did quick search of the judgments on the Federal Magistrates Court of Australia website and I could only find one judgement from John Pascoe in 2011 and 2 in 2010 and the previous years were not much better. If those numbers are right, I think Chief Federal Magistrate Pascoe has a lot to answer for. He has obviously been out to lunch plenty. And why did he need 2 offices?

In 2006 he had a total of 10 cases. Hardly justifies the 2 offices he had. It must be remembered that the Federal Magistrates Court of Australia has a CEO and Deputy CEO to run the courts.

In comparison I did a search of the cases heard by Chief Justice Keane of the Federal Court of Australia who was appointed last year on the 22/3/10. A quick count says he heard 21 appeals last year and has heard 10 appeals this year. I could not see where he had heard individual cases by himself. Appeals are heard with three judges in total. Not a huge work rate by Chief Justice Keane but it still makes John Pascoe’s work ethics look like a joke. It must be noted that Chief Justice Keane is based in Brisbane and would have spent substantial travel time to go around the country to hear the appeals as I suspect most would have been interstate from his base in Brisbane.

Would someone who has succumbed to blackmail to conceal a crime also take a bribe to conceal someone else’s crime or do a favour for a friend to conceal a crime? I think the public would believe so. How can any member of the Australian public have any confidence in the Federal Magistrates Court when John Pascoe is the Chief Federal Magistrate, given the history of Mr Pascoe?

This is a clear example of when the Government should exercise section 72(ii) of the Australian Constitution which states:

Australian Constitution – Section 72 – Judges’ appointment, tenure and remuneration

“(ii) shall not be removed except by the Governor‑General in Council, on an address from both Houses of the Parliament in the same session, praying for such removal on the ground of proved misbehaviour or incapacity;”

If there was an independent body for the appointment of judges and magistrates there is no way that John Pascoe would have been appointed to the role of Chief Federal Magistrate. Also if there was an independent body to investigate complaints against judicial officers he would have long been removed.

I know a lot more about John Pascoe’s “handiwork” but it would take at least a 1000 page novel to document so I have left it at the above for the time being. But there is enough to show what a joke the Australian judicial system is when someone like him is a judicial officer.

This is what Michael Pascoe, Finance Editor, Channel 7 Sunrise program,  wrote at the time in 2004 when Justice Gyles handed down his judgement:

“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.”

Normally I would only put some of the text of the above article by Michael Pascoe in the post and put a direct link back to the source. But mysteriously it disappeared off the Channel Seven Sunrise website just after I attached it correspondence that I sent to John Pascoe, the Attorney General and ACCC etc in relation to Mr Pascoe in November 2007.

Declaration: John Pascoe and Graeme Samual both get mentioned and have their own chapters in my book, Love Letter from the Bar Table, about corruption in the Australian judiciary.

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