Company in trouble over ‘hype’

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Pic CW_Patrick Gaertner,1 INLSA Patrick Gaertner, MD of Orion Cold Storage, outside the Western Cape High Court. Picture: Candice Chaplin

The Muizenberg meat supplier that found itself in hot water last year over the relabelling of pork products as halaal, has blamed the “religious hype” over the controversy for forcing clients to cut ties with it, leaving the company in a precarious financial bind.

This emerged in the Western Cape High Court yesterday where the company, Orion, now finds itself at the centre of a new multi-million-rand storm – involving milk powder for which it has not paid.

Sloan Valley Dairies Ltd (SVD) says Orion owes it more than $1.9 million (R16.3m) for several consignments of milk powder. But Orion has countered that it’s in deep financial trouble thanks to the negative publicity surrounding the halaal debacle.

SVD, however, wants the goods returned, or Orion must pay up.

Orion is arguing that there’s more to the dispute, including an allegation that the goods were defective.

In an affidavit before the court, SVD managing director Mark Higginbottom said Orion chief executive Patrick Gaertner placed four orders for milk powder blend products in September and October last year.

Three of the orders were for skimmed milk powder and a fourth for dairy ingredients for animal feed. The products were manufactured by Parmalat Canada and Dairytown.

But in January, before the last shipment arrived in Cape Town, Orion asked that all orders not already on the water be cancelled, Higginbottom added. This was “as a result of the difficulties (Orion) was experiencing in their business, subsequent to their recent crisis”.

But all the orders had been shipped by then, he said.

Gaertner later sent a letter to Higginbottom, which was attached to the court papers, in which he said the halaal saga had resulted “in such a religious hype that most of our major customers have been forced to cut ties until this has all been resolved”.

A large retailer cancelled orders to the value of R100m.

In addition, the Muslim Judicial Council issued a declaration that no Muslim business buy from Orion, and many Muslim clients had not paid for goods already bought, he added.

Orion’s bank had also decided to put a six-month moratorium on the financing that was to kick in at the end of last year.

Gaertner said Orion needed to take action against two Muslim bodies and a television station to retract false information.

Defamation and civil actions would follow, he added, saying that all the steps Orion had planned would take time.

“Our year-end in February 2012 has been our most profitable to date, and we are in the position to discount stock significantly to try to resume some market share and cash-flow. The fact that we have managed to ride this storm is an indication of the reserves we have built up,” Gaertner said.

SVD stopped a further order of 450 tons of milk powder blend product. The company also requested that the orders that had already been shipped be kept in a warehouse under its name.

“Instead, however, (Orion) cleared the product and kept it in bond in its own name,” Higginbottom charged.

However, in terms and conditions of the contract with Orion, SVD still remained the owner of the product until it had been paid for in full, he added.

The agreements with Orion were formally cancelled on March 28.

Higginbottom said SVD negotiated the return of the products, and that the negotiations broke down earlier this month, prompting it to lodge the court application.

By mid-May, the amount owing was $2.012m.

Higginbottom added that the products had a shelf life of 18 months, and had been in storage for about six months. SVD wanted to sell them before they expired. The applications had also been served on Sars.

In an opposing affidavit, Orion’s attorney, Llewellyn de Wet, disputed the urgency of the matter.

In correspondence attached to the papers, Orion alleged that it had also made SVD aware that the products were defective.

The correspondence stated that one of Orion’s clients in Zimbabwe rejected goods because they did not have production, expiry dates and batch codes on the bags.

Another client had also requested outstanding GMO and allergen certificates.

Orion also alleged that SVD was not an approved importer with Sars, and that it was therefore forced to place the goods in its own name, and incur storage and handling fees.

In court yesterday, SVD’s advocate Mary-Rose Nel argued before acting Judge Rob Stelzner that the case should be heard urgently because it would be detrimental to her client if it was delayed.

But Judge Stelzner said Orion could not be rushed to file its opposing papers. - Weekend Argus


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