China food giant sued for Aussie wheat-market meddling
![A Chinese food processor is being sued over claims it interfered with local wheat market prices. (Dean Lewins/AAP PHOTOS)](https://images.thewest.com.au/publication/C-15473535/b26f2ed9a8da625fe8bbaa3a7e4e90e33a66cf4d-16x9-x0y0w1280h720.jpg?imwidth=810&impolicy=wan_v3)
A Chinese state-owned multinational food-processing giant has been accused by Australia’s corporate watchdog of manipulating the nation’s wheat market prices dozens of times.
The Australian Securities and Investments Commission has sued local subsidiaries of China Oil and Foodstuffs Corporation (COFCO), accusing it of manipulating settlement prices and driving up costs for consumers.
The alleged manipulation took place on 34 occasions between January and March 2022.
A wheat trader at China Oil and Foodstuffs Corporation International Australia, named in ASIC filings to the Federal Court as Nicholas McGaw, allegedly made a series of offers late in the afternoon as the ASX24 derivatives market approached its daily close.
ASIC alleges the offers were not genuine trades and were instead designed to affect daily settlement prices.
The regulator alleges Mr McGaw told investment bank JP Morgan in an email the company was protecting its short position on the contracts from another party bidding to push the price up.
About a third of the offered trades were completed and had the desired effect of causing the daily settlement price to be calculated as lower than it otherwise would have been, ASIC alleges.
The trades were allegedly worth almost $100,000.
The corporate watchdog is seeking pecuniary penalties and declarations of contravention in the court.
ASIC chair Joe Longo said manipulation of energy and commodities markets was a focus for regulators.
“This conduct is illegal; it erodes trust and confidence in our markets, increases costs for participants, hurts farmers, food manufacturers, importers and exporters, and impacts the prices Australians pay at the checkout,” he said in a statement on Thursday.
“We allege these companies engaged in a repeated pattern of manipulation to benefit themselves to the detriment of other participants in the market.”
China Oil and Foodstuffs Corporation is China’s largest food and agriculture company, while its international arm employs more than 11,000 people in 36 countries, according to the state-owned firm.
The company and its subsidiaries have been active in Australia in recent years, buying water entitlements in key agriculture-producing areas and a stake in a Queensland sugar mill among other deals.
China Oil and Foodstuffs Corporation’s Australian office has been contacted for comment.
The company is yet to file a defence and a court date is yet to be scheduled.
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