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Weldon ruled NZX with iron fist while underfunding grain exchange, Thomas says

By Sophie Boot

Grant Thomas said Weldon was "very defensive" and it appeared to him that Weldon ruled with an iron fist. Photo / Dean Purcell
Grant Thomas said Weldon was "very defensive" and it appeared to him that Weldon ruled with an iron fist. Photo / Dean Purcell

Mark Weldon couldn't take criticism and ruled NZX with an iron fist while deliberately avoiding requests from Clear's former owners for financial support, Wellington's High Court has heard.

NZX is suing Dominic Pym, Grant Thomas, and their companies Ralec Commodities and Ralec Interactive for providing "wildly inaccurate" forecasts prior to NZX buying the Australian grain trading platform in 2009. Ralec's counterclaim says NZX and former chief Mark Weldon under-funded the business, meaning it couldn't meet earn-out targets.

NZX bought Clear for A$7 million in October 2009, with two earn-outs of A$7 million tied to performance. The initial target for the first earn-out was trading of 1.5 million tonnes of grain by June 30, 2010. If that was missed, Ralec could still get the earn-out, provided Clear reached 3 million tonnes by June 2011 or 4.5 million tonnes by June 2012. The second earn-out payment was based on NZX being able to create a successful agri-portal.

Counsel for NZX Brian Latimour asked Grant Thomas, Ralec's first witness, about his tertiary qualifications and former employment, including previous jobs he had been fired from.

Thomas said he had been sacked as a coach, newspaper columnist and radio commentator because he was "too outspoken."

In reading his brief of evidence, Thomas was critical of former chief executive Weldon, recalling a behaviours-and-values feedback session during an NZX conference where senior members of NZX's staff told Weldon he was too controlling and unable to take feedback.

Thomas said Weldon was "very defensive" and it appeared to him that Weldon ruled with an iron fist.

Much of Thomas's brief was concerned with the business cases which NZX required Clear to complete for expenditure to be approved.

Ahead of NZX's acquisition, Thomas said he had told NZX the company "was unashamedly an IT company" and would need to rely on NZX investment to commercialise as it didn't have those resources itself. Thomas said Weldon promised $5 million to market and commercialise Clear, which gave him confidence that 1.5 million tonne earn-out target was achievable.

"We would rely on NZX to provide the funding, support and expertise necessary in order to commercialise the opportunity to obtain a significant percent of market share of tradable grain in Australia," Thomas said.

I believe that Weldon on behalf of NZX was deliberately blocking the fundamental and basic requirements allowing me to operate the Australian business.

This funding never came, according to Thomas, who said that he expected NZX to provide resources after completion but that very soon after completion he realised that NZX wasn't funding Clear sufficiently for it to achieve market share. Thomas said he had to use his own credit card to meet business expenses as there was a delay for company credit cards for Melbourne-based employees, and NZX's failure to reimburse Ralec was the subject of proceedings in Melbourne.

Thomas said he had forwarded Pym's request for a company credit card, but was now aware that Weldon had deliberately avoided approving a request for funding.

"I believe that Weldon on behalf of NZX was deliberately blocking the fundamental and basic requirements allowing me to operate the Australian business," he said.

Thomas' cross-examination continues this afternoon. The trial has now entered its sixth week, and could last 11 weeks in total.

- BusinessDesk

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