ALL 0.13% $37.12 aristocrat leisure limited

aristocrat suing des randall

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    Aristocrat shows its hand
    By Jeremy Roberts ( Courier Mail )

    AILING poker machine maker Aristocrat Leisure has laid the blame for its troubles at the feet of its sacked chief executive Des Randall, yesterday accusing him of mismanagement and launching legal action to recover $2.6 million from him.

    Mr Randall, who moved out of a company-owned house on Sydney's north shore this week, has launched his own legal action, claiming $13 million in termination pay and bonuses.

    But in what could prove a landmark, Aristocrat has filed a defence to that claim that relies on section 200B of the Corporations Act to say that Mr Randall cannot enforce claims under his employment contract because that contract was not ratified by shareholders.

    In an extraordinary insight into the breakdown of relations between the company and its long-serving chief, Aristocrat has accused Mr Randall of breaching his employment contract through acts of dishonesty, fraud and misbehaviour.

    It accuses Mr Randall of trying to pass the blame on to the board.

    The company is also suing for about $180,500 in "unauthorised" purchases including a $14,000 self-playing pianola, and $38,600 for mature palm trees and boulders for Mr Randall's Nevada home.

    Included as a co-accused in the cross-claim - which is for repayment of a loan to Mr Randall to buy a home in Las Vegas - is Mr Randall's wife, Vivienne, who is alleged to have been responsible for several unauthorised purchases, including $6500 in silk flowers, also for their Nevada home.

    In defence and cross-claim documents lodged by Aristocrat in the Supreme Court of NSW yesterday, Aristocrat used an apology by Mr Randall to the board made just before he announced Aristocrat's annual profit last February 17, to back its claim that Mr Randall was responsible for the problems that emerged 10 days earlier.

    "Although he ought to have done so, he had not seen coming the problem with profit margins in Aristocrat's North American business that necessitated a downgrading of Aristocrat's profit for 2002 from $109 million to $80.2 million or thereabouts," Aristocrat's claim reads. "He did not have sufficient controls in place to understand the situation in North America early enough to take action and to inform the board and the market."

    Aristocrat alleges that emails from Mr Randall, CFO Lionel Jeyaraj and top executives in the US business sent on December 10 and 11 -- one headed "Urgent: US Outlook Reduction" -- showed Mr Randall was told of a $US6 million "miss" in gross margin in the US and there was no recovery planned that month.

    "Mr Randall was on notice, or ought to have been on notice, that Aristocrat's net profit after tax for the year ended December 31, 2002, would not, or might not, meet Aristocrat's September 2002 forecast of $109 million but would, or might, be substantially less than that amount," Aristocrat's defence reads.

    Aristocrat alleged Mr Randall was responsible for the shipment of 3000 poker machines worth $91.25 million to South America without payment.

    The contract failed on February 5, sparking a trading halt on Aristocrat shares and a public statement flagging a $29 million profit downgrade.

    Aristocrat claims Mr Randall's responsibility for this failure is shown in comments to media and analysts on February 18. In Mr Randall's statement of claim, not made public until yesterday, he denied any "dishonesty, misconduct or misbehaviour" that would allow Aristocrat to terminate his employment.


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