F.3.3. Consideration
533 The origin of the SRS arrangements can be traced back to July 2013.
534 On 10 July 2013, Mr Georgiou sent an email to Mr Carter alone, with the subject "Coke FYI only !!". It read:
Ok just spoke to BP …he understands !
No more pre off lease inspection.
No more car comparisons until 6 mths out from the 48 mths.
Told him the 2 accounts…profit share and his slush…have to stay separate.
Told him JC will give CCA 12m and they have to pay it back in equal mthly installments [sic] …..for that matter
JC is happy to give CCA whatever they want as long as we charge it back over the life of the lease.
No more smoke and mirrors…although he was adamant he has never tried to dud us!!
He has told Ward…its over …he will get a one off payment of $100 per car for the 1000 cars totalling $100k ...paid from the profit share account before the end of this year…then he's out !
He wants the $1k to continue along...we put that into where ever we want and control it.
He will a few times during the year...invoice us as a consultant totaling [sic] about 180k PA {basically replacing Ward} and we pay from the profit share\accrual account.
The 1000 cars we put on will have the $1000 bkge in there...so we end up with $1m for the next 4yrs of which he will only draw his 180k PA .
What I will do now is do the quotes based on 48/120kms with the 12k and the $1k….that's the rental we want over the next 48mths.
I offered your plan of the credit then invoice fuel…he understands why but wants to see the numbers.
535 The email made plain to Mr Carter that Mr Pereira wanted the $1,000 payment to continue, notwithstanding that Mr Ward would no longer be involved, and Mr Pereira was content that Orix would hold and control the payments. Further, Mr Carter was informed that a "few times" each year Mr Pereira would invoice CCA as a consultant, in aggregate approximately $180,000 per annum, and CCA would pay the invoices from the CCA Marketing Account. Significantly, the payment as a "consultant" was not suggested to be necessary because Mr Pereira might be about to cease to be employed by CCA. Rather, it was suggested as a means by which funds could be made available to Mr Pereira once the arrangements with Mr Ward were concluded. At that time half of the introducer fees payable to Mr Ward were being paid into the CCA Marketing Account.
536 On 30 July 2013, Mr Carter engaged in the following email correspondence with Mr Georgiou:
(a) at 10.31 am, Mr Georgiou sent Mr Carter and email that a deposit made to Mr Chua's account had shown as from "CCA Accrual Account" and that "BP [Mr Pereira] wants the account name changed to BP Fair Wear and Tear Account";
(b) at 11.33 am, Mr Carter responded that "It's not a BP Account….it's a CCA account….no way we have it titled in our accounts BP's account….when they transmit it….they don't need to show anything";
(c) at 11.35 am, Mr Georgiou enquired "Can we call it a Fair Wear and Tear account?";
(d) at 11.37 am, Mr Carter replied "yep with CCA in front of it"; and
(e) at 11.47 am, Mr Carter replied again and said "Actually you need to check with Wilbo as it might be called this for the auditors ie profit share … if this is the case CCA accrual account needs to stay…as I said…with transfers you don't have to write anything so nothing appears on peoples bank statements…".
537 This email exchange between Mr Carter and Mr Georgiou demonstrates the extent of Mr Carter's continuing knowledge and involvement in the payment of money out of the CCA Marketing Account including his sensitivity as to how the account was named and that the payment from the account were not disclosed on bank statements. It was in that context that Mr Carter and Mr Georgiou subsequently required Mr Pereira to nominate a company to receive the payments, rather than to continue to use the various iterations of the CCA Marketing Account to make funds available to Mr Pereira.
538 Between 8 and 11 August 2013, Mr Georgiou and Mr McCulloch engaged in correspondence concerning the pre-end of lease inspections (which was copied to Mr Carter). The effect of this correspondence was:
(a) Mr McCulloch did not believe that pre-end of lease inspections was included in the Fourth Fleet Flip because of the cost to Orix;
(b) Mr Georgiou was of the view that that was agreed "going forward" but that "bp says he has paid for the current cars to have inspection so it should be done";
(c) the cost of the inspections was borne by Orix;
(d) Pickles were withdrawing the service by the year's end; and
(e) Mr Georgiou had told Mr Pereira that Pickles was ceasing the service in December.
539 In response to this chain of correspondence, Mr McCulloch responded "Pickles are dropping it because its been running at a loss for some time. What do you want me to do ?".
540 Mr Carter's response to Mr McCulloch was unequivocal: "Wilbo, where we have committed to do them and we can't get out of it, we need to have an alternative". Mr Carter wanted a replacement to Pickles to be found and, importantly, Mr Georgiou knew that Mr Carter wanted a replacement to be sourced. There is no evidence that Mr Carter was ever told that a replacement was not sourced and instead Pickles had continued to provide the service.
541 By 18 November 2013, it was apparent that the funds remaining in the CCA Marketing Account were very limited and that the previous arrangements under which Mr Ward invoiced Orix for introducer fees had ceased for some time.
542 On 18 November 2013, Mr Carter, Mr Georgiou and Mr McCulloch exchanged the following emails.
543 At 8.21 am, Mr McCulloch advised Mr Carter and Mr Georgiou that as at 1 November 2013, the "BP" account had a negative balance of $3,070.86, if the $70,000 transfer from the CCA Profit Share Account was not taken into account. I infer that, in context, the reference to the "BP" account was a reference to the CCA Marketing Account.
544 At 8.30 am, Mr Georgiou responded:
Thanks bro … how much is in Profit share now ? As he wants to finish up Ward with a $100k in Dec.
545 At 8.45 am, Mr McCulloch advised Mr Carter and Mr Georgiou that the balance in the CCA Profit Share Account was $134,000.
546 At 8.48 am, Mr Carter responded:
I thought the Ward Account disappeared last year....
547 At 8.50 am, Mr Georgiou forwarded Mr McCulloch's 8.21 am email to Mr Pereira and advised him:
Bro..this is the balance of your account and there is $134k left in the profit share. I think u need to start invoicing us for the deals settled like Ray does asap …
548 Consistently with Mr Pereira's suggestion conveyed by Mr Georgiou in his 10 July 2013 email to Mr Carter, Mr Georgiou was suggesting to Mr Pereira the introduction of a mechanism by which Orix would be able to make payments to Mr Pereira to replace the previous invoices provided by Mr Ward. It is significant that Mr Georgiou refers to the CCA Marketing Account as "your account" and distinguishes it from the "profit share" account.
549 At 8.53 am, Mr Georgiou provided the following response to Mr Carter's 8.48 am email:
Its still in his name I think but I did explain how BP wanted to just pay him out at $100k in Dec as Ward hasn't invoiced us anything for months as no new cars were ordered because of the flip. BP told him once the flip happens there is NO more money as it was quoted very fine.
550 Mr Carter was not copied on Mr Georgiou's 8.50 am email to Mr Pereira, but he was advised by Mr Georgiou that the CCA Marketing Account was still in Mr Ward's name but after a payment to Mr Ward in December that arrangement would come to an end.
551 On the following day, 19 November 2013, Mr Pereira emailed Mr Georgiou requesting that $34,000 be transferred from the CCA Profit Share Account to the "CCA Marketing Expenses Accrual Account" and $18,000 be paid from the "CCA Marketing Expenses Accrual Account" to purchase a Toyota Kluger.
552 Later that day, Mr Georgiou forwarded Mr Pereira's request to Mr McCulloch and Mr Dundas, and advised them that the $18,000 was to purchase a Toyota Kluger for a family member of Mr Pereira that was currently being driven by Mr Mossati (to whom Mr Pereira reported at CCA).
553 Mr Dundas gave evidence, that I accept, notwithstanding Mr Carter's denials, that after receiving Mr Georgiou's email he had a conversation with Mr Carter to the following effect:
[Mr Dundas] said: "Why are we purchasing a vehicle for a member of BP's family?"
[Mr Carter] said: "Leave it with me."
554 It is significant that Mr Dundas asked why are "we" purchasing, rather than why is "CCA" purchasing a vehicle for a member of Mr Pereira's family. Mr Carter might have had many responsibilities as the Chief Executive Officer of Orix, but it is remarkable that an expenditure of $18,000 was expressly drawn to his attention by Mr Dundas and Mr Carter responded that he would deal with the request and expressed no concern when he was told that "we" are purchasing a vehicle for a member of Mr Pereira's family.
555 Some two weeks later, on 4 December 2013, Mr Georgiou advised Mr Carter by email:
BP now wants to buy the Mossad Kluger to sell to a mate but wants to use his accrual money to pay for it.
What would you/Gary require for this to happen ?
556 Later that day, Mr Carter responded:
He needs to do what we agreed to ……set up a company…..invoice us for work done for coke…..then we pay that company…..with that money……
557 Mr Carter's response establishes that at some point prior to 4 December 2013, Mr Carter believed that Mr Pereira had agreed to set up a company for the purpose of invoicing Orix and then Orix would then pay the company with "that money". In context, I infer that the reference to "that money" was a reference to amounts previously paid to Mr Ward as explained by Mr Georgiou in his 10 July 2013 email to Mr Carter.
558 I do not accept the following inherently implausible evidence given by Mr Carter in cross examination as to the reasons why it had been agreed that Mr Pereira "set up" a company:
[Mr Jones]: Well, the, coming back to the email on 4 December 2013 at 10232 of the court book, why did you say in the email that he needed - that is, Mr Pereira needed to set up a company?---Because in my mind, he needed to have an entity to invoice properly to perform his work. I probably should have not - he needs to have an - you know ..... company. But I could have - probably should have said needs to be able to register for GST or - and have an ABN.
You weren't concerned that you didn't want to be paying the money to him in his own name?---No.
…
MR JONES: Well, you knew by this stage for at least a decade Mr Ward had been invoicing your company in his own name, didn't you?---I don't know how he was invoicing. But I believe, looking at the documents here, he was invoicing in his individual name.
Yes. There was no problem with him invoicing your company in his own name, was there?---No.
And he didn't have to set up a company for GST purposes to invoice your company, did he?---I'm not - I'm not aware, but probably not.
559 At some stage on that day, 4 December 2013, presumably after being reminded by Mr Georgiou of the agreement that he would set up a company to invoice CCA, Mr Pereira caused a company with the name Systems Management Services Pty Ltd (ABN 83 167 084 951) to be incorporated. This was the first company that Mr Pereira established for the purpose of invoicing Orix for payment of fees.
560 On 3 January 2014, Mr Georgiou and Mr Carter exchanged emails, copied to Mr McCulloch, concerning what was referred to as the "Profit Share account".
561 At 2.42 pm, Mr Georgiou also advised Mr Carter and Mr McCulloch:
OK ……the Profit Share account was set up to hold monies from an "old" flip we did a few years ago !
The shortfall on ET's plus some was actually paid to us by TMCA and at some point (after the flip) we were instructed by BP to send off a chq to CCA as a show of good faith, that we "actually" made some small amount of profit from the program, so we are giving some back to you.
The rest, under BP's instructions was to be used at his discretion to disburse the money as he see's fit.
We have had some "stuff ups" which BP has made good from this account…a few Owner Operator Truck deals, stuff ups in payouts, money to subsidise other Snr Mgt vehicles or accessories purchased………ALL to make us look good !
This account has always remained "by name" as the CCA Profit Share account !
Fact…..CCA do NOT have a profit share facility….so we can in fact close this account.
BP wants to keep around $20K in this account to prop up any future stuff ups by us or purchase some accessories for other CCA Mgt when their cars are due to be replaced…..or just transfer it all into the CCA Mkgt account , again to be used by us if and when needed.
The balance is to be transferred into the "CCA Mktg account" to be used for future CCA Mktg activities.
He will send us an email acknowledging the fact that there is no CCA profit share account and for us to transfer the money to the "Mktg" account.
Are you ok with this?
All future "bkge" charged at $500 per car will be going into the "introducer account" and invoiced properly by a registered ABN company replacing the Ray Ward deal.
(Emphasis added.)
562 The quotation marks around the reference to the "introducer account" implies that it was not in reality an account into which introducer fees were to be paid. Rather it is apparent from the balance of this extract from Mr Georgiou's email it was an account into which all future "bkge", a reference to some form of "brokerage", at least as understood by Mr Carter, of $500 per car would be paid.
563 Mr Carter was not able to provide any plausible explanation for the proposal to pay a fee into an "introducer account" for a "registered ABN company" to replace the previous payments made to Mr Ward as an "introducing broker". As the following evidence given by Mr Carter in cross examination, when pressed about Mr Georgiou's explanation of the proposed new arrangement in his 2.42 pm email, makes clear, there was no relevant "introducing broker" for the Fourth Fleet Flip between Orix and CCA:
And do you agree that the reference to "BKGE", as you understood it, is a reference to "brokerage"?---Yes.
And that would have been confirmed by the reference to the "introducer account", do you agree?---It would be.
And do you agree that in terms of the accounting system at ORIX at the time, that would be a reference to the Ward introducer fee account?---If that's what it was called, yes.
Right. And do you agree that you understood that the way the Ward account operated was that the amount of money recorded in it would be reduced by an invoice and payment process?---Yes.
And do you agree that what is proposed, at least in this paragraph, is that brokerage was to be accessed by an invoice issued by a registered ABN company?---Yes.
…
And do you agree that the suggestion is that this invoicing was to replace the Ray Ward deal?---Yes.
And what the email is saying is that a new deal, whatever it may be, will replace the Ray Ward deal?---Yes.
And do you agree that no ABN company was identified to you at that point?---I can't recall but I believe not.
Right. And do you agree that you knew that no ABN company, whoever it was, introduced the fourth fleet flip deal between Coke and Orix?---Agree.
And you knew that no ABN company, whoever it was, was the introducer of - or the 30 re-introducer of Coke to Orix?---Correct.
And do you agree that when you read this paragraph, you knew that this ABN company could not replace Ward as an introducing broker?---It wouldn't - it wouldn't replace Ward as an introducing broker.
564 The only plausible explanation for the request that the invoices be issued by an "ABN company" and not by Mr Pereira personally is that Mr Carter and Mr Georgiou appreciated that it was important that Mr Pereira not be seen as the person issuing the invoices to Orix. The use of an ABN company would provide a façade behind which the payments could be made to Mr Pereira without exposing what otherwise would be a flagrant conflict of interest given Mr Pereira's employment with CCA.
565 At 2.44 pm, Mr Carter asked Mr Georgiou how much was currently in the "profit share account" to which question Mr Georgiou responded at 2.48 pm with a figure of $134,000 as at 1 November 2013.
566 At 2.51 pm, Mr Carter emailed the following response to Mr Georgiou's 2.44 pm email:
At this point in time I think we need the lot in the account to cover us for "unforeseen" events….ie extension of regos…..contributions to senior managers cars etc ……. especially since there is a new CEO elect ……
567 Mr Carter's response is inconsistent with any notion that he regarded the money in the "profit share account" as money of CCA. Rather, it suggests that it was a fund of money that was available to be deployed for what was euphemistically described as "unforeseen" events, which to Mr Carter's knowledge extended to "contributions to senior managers cars", that is senior managers of CCA, not Orix.
568 At 2.59 pm, Mr Georgiou quickly clarified:
All rego extns are being billed to CCA ………. he just wants the money out of the P/Share account as I have spooked him about it !!
No matter where it is held … we still have control and he will always do the right thing ……. he just doesn't like the name P/S.
Any contributions to snr mgrs cars will also be covered by this.
569 It is significant that Mr Georgiou was emphasising to Mr Carter that irrespective of where the money was held, Orix would "still have control" of it and Mr Pereira could always be relied upon to "do the right thing".
570 Then, at 3.01 pm, Mr Carter advised Mr Georgiou:
I'll check with Wilbo when he gets back however I think we use this to convince the auditors to carry it in that name ……. shouldn't worry him what we call it
571 Notwithstanding the references to "profit share account" in the emails exchanged between Mr Georgiou and Mr Carter, it is apparent that the account they are referring to is in fact the CCA Marketing Account, not the CCA Profit Share Account. This is made clear in the last two paragraphs of Mr McCulloch's response to the email chain on 6 January 2014:
Sorry Guys
Internet was hopeless in Forster for the past 3-4 days. Probably 40,000 more people in town with I Phone / Pads the cause.
BP accrual balance = $76,005.84, Take out the $70,000 transfer from Profit share and he is at $6,005.84. Above includes the December income but if there were any Visa transactions for Dec 13, these need to be deducted from the figure
Profit Share balance $134,576.05
This balance is after the $70k transfer to BP accrual. It does not include 2013 numbers.
2013 numbers to be worked up this on month and it will definitely be a positive number.
Couple of things
George, my recollection of the Proft Share account being set up was that I was told (circa 2009 - Narelle era) CCA had it in their agreement and nobody at ORIX or CCA had picked up on it. I then set up the Profit share account and went back as far as 2004 (to get the losses) and then started accruing from 2011 when the balance turned positive.
I think we need Phil Davie to double check they do not have profit share clause in their agreement. I'll do that today.
The money paid to us from TMCA/Dealers for ET's with the flip to Klugers was more than we needed and I recall that surplus sat in the old Ray Ward Account. This money has not been involved in any way with the current Profit Share balance. When this money was reconciled, we took a large cut and left the rest in the Ray Ward account.
I agree with you George as BP allowing us to mop up stuff ups, CCA contractors etc.. this would amount somewhere in the $100k range however, these have always been from the Ray Ward account, not profit share.
Maybe we are confusing these two accounts ?
Willy
572 Later, on 23 January 2014, I infer as a result of the reference in Mr Georgiou's 2.42 pm email that Mr Pereira "will send us an email acknowledging the fact that there is no CCA profit share account and for us to transfer the money to the "Mktg" account", Mr Pereira sent the following email to Mr Georgiou:
Hi GG
As discussed, we confirm that the Fleet Agreement does not provide for a Profit Share facility for CCA .
The remaining funds in this account of $134,576.05 is to be transferred to the CCA Marketing Expense account to accommodate the immediate and future marketing activities.
…
573 The next relevant event was an exchange of emails between Mr Carter and Mr Georgiou on 16 January 2014 concerning the proposed transfer of funds to the CCA Marketing Account.
574 At 1.45 pm, Mr Georgiou forwarded to Mr Carter an email that he had received earlier that day from Hayley Williams (being Ms Tunnicliff) confirming that 297 RAV4 vehicles had been delivered to date under the latest flip programme and each included the $500 "introducer amount", and in his covering email asked Mr Carter:
Bro
See below....what do we need from BP to move some of this "fee" to the "mktg account" to cover some of his planned golf trips and other CCA execs options on cars in the next few months?
575 At 1.47 pm, Mr Carter responded:
[D]on't know yet…..will look at when I get back ….. need to understand how it's all being reckonised [sic]
576 Mr Georgiou was asking Mr Carter what did Orix need from Mr Pereira to move the "fee" to the "mktg account". The use of quotation marks implied that in reality they were not fees and the account was not in truth a marketing account. Mr Carter did not raise any concern that the "fee" was to pay for some of "his", being a reference to Mr Pereira, golf trips or about the use of a "mktg account" fee to pay for "other CCA execs options on cars".
577 At 2.55 pm, Mr Georgiou forwarded to Mr Carter an email chain that included a confirmation from Mr Dundas that the accounting treatment of the $500 introducer fee in the "new CCA deal" was the same as for the $500 "introducer fee" that had previously been paid to Mr Ward. The "accounting treatment" by Orix might have been the same but Mr Carter was not able to provide any plausible explanation as to how any fee payable under the "new CCA deal" bore any relationship to the previous $500 "introducer fee" payable to Mr Ward.
578 On 11 March 2014, Mr Pereira emailed a draft invoice from SMS to Mr Georgiou and asked him to have a look at it and advise him whether it was "suitable". As noted at [508] above, SMS was the company that Mr Pereira initially proposed to replace the CCA Marketing Account arrangements.
579 The draft SMS invoice attached to Mr Pereira's email was numbered 14-03100 and dated 2 February 2014 in an amount of $163,350 for a total of 297 fees with a unit price of $500 that were stated to be a "Management service fee" for October, November and December 2013. The draft SMS invoice did not make any reference to "introducer fees" or provide any explanation of the alleged "Management service fee". It was addressed to Orix for the attention of Mr Georgiou.
580 On 12 March 2014, Mr Georgiou responded to Mr Pereira's 11 March 2014 email stipulating that the invoice should include "some reference to CCA cars delivered in the particular month plus a signature on somewhere".
581 On 17 March 2014, Mr Georgiou sent a series of emails to Mr Carter in relation to the draft SMS invoice provided by Mr Pereira.
582 At 1.31 pm, Mr Georgiou forwarded Mr Carter a copy of the draft SMS invoice and stated that it replaced "Wards for the $500 bkge", it was "All legit, company properly registered with ABN etc." and Mr Pereira's name did "not appear anywhere". Mr Georgiou concluded:
He will start drawing down on the cars already delivered and as per the Ward deal… always accompanied by OUR report showing unit HAS the $500 etc.
583 The addition of the comment that Mr Pereira's name did "not appear anywhere" highlighted the sensitivity of both Mr Georgiou and Mr Carter that Mr Pereira not be seen as having any connection to the "ABN company" that was being proposed to invoice Orix. The concern was any appearance of Mr Pereira's name, not that it was a company that had been advanced by Mr Pereira to invoice and be paid the "Management service fees".
584 At 1.33 pm, Mr Georgiou then forwarded to Mr Carter a copy of an "old Ward invoice". The old Ward invoice relevantly recorded (as written):
RE; Introduction fee for vehicles settled in Junly [sic] as per attached list. ( Refer Kim Scott)
1 Vehicles @ $500.00
585 At 3.03 pm, Mr Georgiou forwarded to Mr Carter an email that he had received from Mr Pereira which thanked him "for helping out" and in his covering email Mr Georgiou asked Mr Carter:
Mgt /Inspection fee OK bro ?
586 The query that Mr Georgiou made of Mr Carter seeking his approval for the description of the "fee" highlights the extent to which Mr Carter was involved in, and necessarily thereby had knowledge, of the formulation of the SRS arrangements.
587 At 3.15 pm, Mr Carter received an email from Mr Lyons, the National Credit Manager of Orix, attaching an ASIC company search of SMS that Mr Carter had requested from Mr Lyons. The company search recorded that SMS had been registered on 4 December 2013 and that Mr Pereira was the sole director, company secretary and shareholder of SMS and his shares were held beneficially. The registered office for SMS was recorded as "P&A Accountants & Business Advisers, Level 3, 141-149 Ifould Street, Adelaide, SA, 5000".
588 The apparent sensitivity of the SRS arrangements and the significance of them to Mr Carter is again demonstrated by Mr Carter's decision, independently of Mr Georgiou, to request that a company search be undertaken of SMS.
589 Although there are no further email communications or other contemporaneous records in evidence of what took place prior to the evening of 19 March 2014, it is clear from the subsequent emails referred to below that Mr Pereira was advised, presumably by Mr Georgiou, that Mr Pereira could not be recorded as a director or shareholder of the company to which the proposed "Mgt/Inspection fee" was to be paid.
590 On 19 March 2014, Mr Pereira sent an email to Mr Georgiou advising him that his accountant, Andrew Wong, would be "looking to manage the SMS (soon to be deleted) account for me" and asking Mr Georgiou to review three names for the new company to be registered, including "Systems Reporting Services (SRS)". The request for a review of the three names again demonstrates the extent to which Mr Georgiou, and in turn Mr Carter, were intimately involved in the establishment of the SRS arrangements. Mr Pereira was conveying in his email that he acknowledged that SMS was an inappropriate vehicle to invoice Orix but that it was also necessary for him to inform and seek approval from Orix as to the name of the entity that was to invoice Orix.
591 On 30 April 2014, Mr Wong sent an email to Mr Georgiou, copied to Mr Pereira's personal email address, in which he attached two invoices that were purported to have been issued by SRS.
592 The first invoice was numbered 13-001 and dated 2 February 2014 in an amount of $103,400 for 188 "management service inspection fee[s]" each in the amount of $500 in November and December 2013. It was addressed to Orix for the attention of Mr Georgiou.
593 The second invoice was numbered 14-002 and dated 2 April 2014 in an amount of $206,800 for 376 "management service inspection fee[s]" each in the amount of $500 for January, February and March 2014. It was also addressed to Orix for the attention of Mr Georgiou.
594 On 12 May 2014, Mr Georgiou and Mr Carter exchanged emails in relation to the two SRS invoices that Mr Wong had emailed to Mr Georgiou on 30 April 2014 and an announcement that CCA had made to the Australian Securities Exchange (ASX).
595 At 8.34 am, Mr Georgiou emailed the two SRS invoices to Mr Carter for approval and confirmed that all the cars the subject of the invoices had been delivered and all included the "service fee" of $500 and noted that "BP is not on this now."
596 The comment "BP is not on this now" again reinforced the importance of Mr Pereira not being seen to be associated with the SRS arrangements. At the same time both Mr Carter and Mr Georgiou must have recognised that for all practical purposes SRS was a corporate vehicle that was being used to facilitate payments to Mr Pereira. It is implausible that Mr Carter and Mr Georgiou would have facilitated an arrangement whereby significant fees were being paid to a genuine arm's length company that was independent of any connection with Mr Pereira and in respect of which no services were provided to Orix.
597 At 9.38 am, Mr Carter responded:
… haven't opened the attachments assume he did what I said and set up a new one as all old records still show….will get David to do the search when I can open it.
598 It is significant that Mr Carter referred to an assumption that Mr Pereira "did what I said" and informed Mr Georgiou that he would again personally request Mr Lyons to obtain a company search of the new company, SRS.
599 At 10.09 am, Mr Carter emailed Mr Lyons requesting that he obtain a company search of SRS because he wanted "to see directors and shareholders current and past".
600 At 10.19 am, Mr Lyons emailed Mr Carter a copy of a company search of SRS. The company search for SRS revealed that the sole director, company secretary and shareholder was Mr Wong but his share was not beneficially held by him. The current registered address was recorded as Level 3, 141-149 Ifould Street, Adelaide, the same registered address as SMS. The company search also revealed that the company had been initially registered as Crowle Pty Ltd and had only changed its name to SRS on 3 April 2014. Both SRS invoices, however, were purported to have been issued prior to that date on 2 February 2014 and 2 April 2014, respectively.
601 At some time prior to 12.50 pm on 12 May 2014, CCA announced to the ASX that it would be restructuring Australian Beverages, and John Murphy, CCA's current Managing Director - Australian Beverages had decided to leave at the end of June, due to the foreshadowed organisation changes.
602 At 12.50 pm, Mr Carter sent an email titled "CCA" to Mr Georgiou, stating:
I smell a rat.......Murphy gone....reckon the rest of our contacts will be gonski soon……. need to hold onto this dough as long as possible……..
603 The following very candid exchange subsequently took place that evening between Mr Georgiou and Mr Carter:
(a) at 9.49 pm, Mr Georgiou responded "Faaaqrk" to Mr Carter's "I smell a rat" email;
(b) at 10.13 pm, Mr Carter replied:
BP knows he is about to be punted.....we will delay the payment……Mossad will be punted as well....don't want anything to do with this supplier programme....as you know....I never wanted to….this will be an issue for us.....I can see how this is going to play out....and it's not good for us.....
(c) at 10.25 pm, Mr Georgiou responded:
Ok relax...let me find out...there is no way he would leave the $1.5m behind....if he does there's our retirement
(d) at 10.31 pm, Mr Carter replied:
He ain't getting it.....we need it for our profit….there will be a complete clean out over there.
604 The reference to the "supplier programme" was a reference to the Supplier of the Year Programme (or SOTY). It was an annual competition run by CCA for its suppliers, including Orix.
605 Mr Carter submits that the reference to "this dough" in the 12.50 pm email from Mr Carter was necessarily a reference to the $1.5 million surplus payment associated with the "loyalty payment" and not a reference to any payment made under the SRS arrangements. He submits that otherwise Mr Carter and Mr Georgiou would be referring to two separate sums of money without either realising they were referring to different sums. He submits that would also not explain why Mr Carter was referring to the SRS fees as the "dough" and not the "SRS fees", and why he was suggesting that Orix hold onto the SRS fees and not pay them or the reference to "Mossad" (that is, Mr Mossati) in relation to the "delayed payment". Mr Carter further submits that the absence of any reference to the SRS arrangements in this email demonstrates that he had no knowledge of any fraud or fictitious invoices.
606 The fundamental difficulty with these submissions, however, is that the "loyalty payment" was a reference to an anticipated future surplus that Orix expected to recoup from the fleet flip between months 43 and 48 of the flip, that is in a period in 2017, given the Fourth Fleet Flip relevantly commenced in October 2013. In contrast, Mr Carter by reason of his earlier emails that day was considering immediate payments under the SRS arrangements at the request of Mr Pereira. In that context, the reference to the "smelling a rat" was the potential loss of the support that he had expected that Orix would continue to receive from Mr Pereira, directly or indirectly, in return for the entry into the SRS arrangements and the "dough" to be held onto as long as possible and the "payment" to be delayed were therefore most likely references to payments under the SRS arrangements.
607 Mr Georgiou had referred in his 3 January 2014 email to Mr Carter to a suggestion that Mr Pereira had made to him that if Orix agreed to an early payment of some $500,000 of the anticipated future surplus, or "anywhere between $250K to $500K" soon after the "flip has ceased" and that this would make Orix "look real good" and CCA would think that Orix would be "superstars!!". Mr Georgiou, however, noted in his email that he had told Mr Pereira that Orix would have to expense any such payment and you, that is Mr Carter, "may not want to do that!". There was no evidence that Mr Carter ever provided any response to Mr Georgiou on this proposal and on no view was Orix under any obligation to make any early payment of the anticipated surplus to CCA.
608 Further, textually bearing in mind the stream of consciousness by Mr Carter in his 10.13 pm email by reason of the ellipsis points, it is clear that the delay in the payment was linked by Mr Carter in his 10.13 pm email to his concern that Mr Pereira was "about to be punted" and the reference to Mr Mossati was made in the context of the supplier programme.
609 Mr Georgiou then introduced in his 10.25 pm email a reference to the $1.5 million loyalty payment in an effort to address Mr Carter's concern about the potential loss of the CCA relationship, observing that "he", being a reference to Mr Pereira, would not leave the $1.5 million behind. It follows that the "it" referred to by Mr Carter in his 10.31 pm email is a reference to the $1.5 million anticipated surplus associated with the loyalty payment.
610 On 18 May 2014, Mr Pereira sent an email to Mr Georgiou from his personal email account about various matters including:
…
Please hold off on the iPhone 5 Order, will wait till iPhone 6 is out in the next month.
3. Hope you aware the booking for Penang in June is going ahead. There will be the extra charge of Hotel and Golf bookings for Gary too, maybe total is about $6K
4. Am asking Hayley to book Cyril's car in June for 7 days, about $500.00 I think.
5. Please ask your best mate about the 2008 CL 500 (WDD216) Sat Nav upgrade disc.
6. Please process the SRS Invoice.
…
611 Significantly, the email from Mr Pereira included a request for Mr Georgiou to "process the SRS Invoice".
612 On 19 May 2014, at 1.09 pm, Mr Georgiou sought confirmation from Mr Lyons, copied to Mr Carter, as to the identity of the directors of SRS. Mr Carter confirmed that Mr Lyons had already provided an ASIC search for SRS and Mr Pereira did not appear.
613 At 1.22 pm, Mr Georgiou then replied to Mr Pereira's request for him to process the SRS invoice:
Bro
Problem…….JC wants out of the SOTY asap….once that's done….. then wants a 30min meeting with Bill to understand what is going on in CCA….then he will approve payment to SRS.
Let me know when you get us out of SOTY and I will email Bill requesting a meeting.
G
614 The reference to a meeting with "Bill" was a meeting with Mr Mossati.
615 At 4.30 pm, Mr Pereira provided the following response to Mr Georgiou:
Hey GG
No problems with SOTY, I spoke with the Yvonne Mckay this morning, I have to go through the proper channels with Bill and Glenn so they don't misunderstand Orix. I will take care of it.
I will let Bill know later today that you want the meeting as soon as possible.
Regards
BP
616 At 5.00 pm, Mr Georgiou forwarded Mr Carter his 1.22 pm email to Mr Pereira and Mr Pereira's 4.30 pm response, and stated in his covering email:
"Bro, Read from the bottom up".
617 At 5.52 pm, Mr Pereira responded to Mr Georgiou's 1.22 pm email and confirmed:
… Bill is happy to take a meeting with both you and JC.
…
618 At 6.34 pm, Mr Georgiou forwarded Mr Pereira's 5.52 pm response to Mr Carter.
619 On 4 June 2014, at 7.55 pm, Mr Pereira sent the following email from his iPhone to Mr Georgiou with some advice for Mr Georgiou's forthcoming meeting with Mr Mossati:
Hey GG
Glad to see you have to do some work. Remember, Bill is your ally, so he is there to help, especially with SOTY.
Your stance with the FF:
- BP as usual changes the goal post, first it was to be 30 March, than 30 June now it will be later. You are hoping I will still be here to make sure you get your 1,000 cars.
- It was to be 1,000 Rav's. Now it's not.
- ET's were for Rav's not Holden's Hilux's or Hiaces. Now all that's changed.
- BP will not budge on the projected ET budgets after all these changes.
- BP hints at Orix giving CCA some money next year from the FF. Just plead with him that you are doing your best and even Toyota is afraid to talk to him (BP) about the 1,000 Rav's he promised them.
This will make you guys look extremely good and a worthy SOTY winner.
Inside tip is, yes there ARE changes within CCA. But it will not affect you. In fact Bill is trying to introduce you to the NEW Team by making you a winner in SOTY.
Your meeting is on Friday, I will call you tomorrow about 7 or 8 pm your time, will you have time to take my call?
Regards BP
620 The reference to "[y]our meeting is on Friday" is a reference to the meeting that Mr Pereira had arranged between Mr Carter, Mr Georgiou and Mr Mossati on 6 June 2014 that took place at CCA's offices at or about 10 am that morning.
621 Mr Pereira's email to Mr Georgiou highlights the degree of assistance that Mr Pereira was providing to Mr Georgiou and in turn Mr Carter to assist Orix in their negotiations with CCA. In the numbered paragraphs in his email, Mr Pereira was offering Mr Georgiou a script to use at the meeting to enhance Orix's prospects of winning the Supplier of the Year award from CCA. This was a script that included false claims about the tough stance taken by Mr Pereira against Orix and the work that Orix was doing in an effort to meet Mr Pereira's demands.
622 Contrary to the submissions of Mr Carter, I do not accept that the reference to "you are hoping I will still be here to make sure you get your 1,000 cars" was a "plea for help" from Mr Pereira. Rather, for the following reasons, the query was more likely directed at giving Mr Carter and Mr Georgiou an opportunity to obtain comfort that Mr Pereira was not going to be replaced as part of the foreshadowed CCA restructure, before they agreed to pay the SRS invoices.
623 First, the concern about Mr Pereira losing his position came from Mr Carter and Mr Georgiou, not Mr Pereira. There was no evidence of Mr Pereira expressing any concern about his employment with CCA.
624 Second, it is inconceivable that Mr Carter would have agreed to pay the SRS invoices, a payment that he must have recognised would have been for the benefit of Mr Pereira, not CCA, if he was not confident that Mr Pereira would remain employed by CCA. If Mr Pereira was in fact to be "punted", as Mr Carter had initially feared when he read the ASX announcement by CCA on 12 May 2014, there would have been no reason to make any payments to SRS or Mr Pereira for services that were not in fact provided.
625 At 8.31 pm, Mr Georgiou then forwarded Mr Pereira's email to Mr Carter and told him that he would get all the "info updated tomorrow when Hayley gets back".
626 At 8.34 pm, Mr Carter responded to Mr Georgiou that he had already asked "Wilbo for the info I need".
627 Mr Carter and Mr Georgiou then attended this meeting.
628 Shortly following this meeting, on 10 June 2014, Mr Georgiou signed the SRS invoice dated 2 February 2014 for fees referrable to November and December 2013. On the same day, SRS issued another invoice for April and May 2014, authorised by Mr Georgiou on 11 June 2014. The invoice dated 2 April 2014 that had previously been issued by SRS in May 2014 was amended and then signed by Mr Georgiou on 13 June 2014.
629 On 12 June 2014, Mr Pereira forwarded to Mr Georgiou an earlier email sent at 1.15 pm that day to Mr Georgiou, which was in the following terms:
Hi George
Effective July 31, 2013 I have terminated the inspection services provided by Ray Ward Consulting Trustee For The Ward Family Trust.
Effective Aug 1, 2013 I have appointed Systems Reporting Services Pty Ltd (SRS) as the new inspection and reporting company for all CCA and it's Group of Companies vehicles.
…
630 Mr Georgiou then forwarded the email to Mr Carter at 2.17 pm, with the question "Bro?".
631 On 13 June 2014, the amount recorded as payable in the RW AP Account was transferred by a book entry to an accounts payable account in the name of SRS in the amounts of the two invoices signed on 10 and 11 June 2014 and then paid to SRS.
632 The same process also occurred on 19 June 2014, leading to the payment of the invoice dated 2 April 2014 signed by Mr Georgiou on 12 June 2014.
633 Mr Carter did not ultimately contend that any inspection services were provided by SRS to Orix and accepted that the payment of the SRS invoices was fraudulent.
634 I am satisfied that the SRS arrangements were introduced to provide Mr Pereira with access to a facility that enabled him to make and receive payments at his discretion independently of CCA. In no sense, however, did SRS undertake any "introducer role" nor did SRS provide any inspection services that had previously been provided by Pickles.
635 Moreover, I am satisfied that Mr Pereira received a financial benefit from the payment of the SRS invoices, notwithstanding that he was not recorded as a director or shareholder of SRS on the ASIC company search obtained by Mr Carter.
636 SRS was a corporate entity that had been advanced by Mr Pereira as the means by which payments could be made without disclosing that he was to be the recipient of the funds. In circumstances where (a) there is no evidence that any services were to be provided in return for the payment of the SRS invoices, (b) no other person was identified by Mr Carter as having any interest in SRS, and (c) the SRS invoices were proposed to replace the previous use of the CCA Marketing Account, it is fanciful to suggest that Mr Pereira was not the intended beneficiary of the SRS invoices and that he did not receive a financial benefit when they were paid. It is equally fanciful for these reasons and given Mr Carter's involvement in and knowledge of the SRS arrangements and his knowledge of the support that Mr Pereira had provided to Orix in the past, and that he hoped would continue, that Mr Carter did not know that the SRS payments were bribes or illegal inducements provided by Orix to Mr Pereira.
637 I am comfortably satisfied, on the balance of probabilities, and having regard to the quality of evidence required to reach such a serious and adverse conclusion as required by s 140(2) of the Evidence Act, that the payments made to SRS were a bribe or illegal inducement provided by Orix to Mr Pereira.
638 I am also comfortably satisfied, on the balance of probabilities, and having regard to the quality of evidence required to reach such a serious and adverse conclusion as required by s 140(2) of the Evidence Act, that by 30 October 2014, Mr Carter was aware that (a) Orix had been making payments to or for the benefit of Mr Pereira by making payments to SRS, a company nominated by Mr Pereira to be the recipient of payments made pursuant to fictitious SRS invoices, (b) SRS would not be taking on the role of carrying out inspections previously undertaken by Pickles, and (c) the payments being made by Orix to SRS were an illegal inducement or alternatively a bribe to Mr Pereira. I am satisfied that Mr Carter did not want Mr Pereira to be seen to be associated with SRS because of his understanding that SRS would be creating "fictitious invoices" for payment by Orix for the benefit of Mr Pereira and at the date Mr Carter approved payment of the SRS invoices he was confident that Mr Pereira would remain employed by CCA for the foreseeable future.