Category: Business, Economics and Finance / Company News / Retail / Multinationals / Regulation / Markets / Stockmarket
ASIC not investigating accounting practices, Harvey Norman founder says
Friday, 24 Mar 2017 10:23:09 | Andrew Robertson
Mr Harvey has rejected shareholder claims of a lack of transparency. (Inside Business: ABC TV)
Is Harvey Norman under investigation for troubling accounting practices by the corporate watchdog or is it a mere "review"?
The Australian Securities and Investments Commission (ASIC) has confirmed to the ABC it is probing the accounts of listed retailer Harvey Norman — though the company's chairman and founder is still steadfastly refusing to accept that it is under investigation over the way it accounts for its exposure to failed franchises and troubled franchise loans.
"There is no investigation," billionaire founder Gerry Harvey said today.
Shares in the listed retailer suffered a huge slump after reports in Fairfax media about a maze of "zombie trusts" and failed franchises in the Harvey Norman retailing group.
Harvey Norman's share price is hovering around eight-month lows of $4.29.
On March 21, the retailer was issued with a "please explain" from the ASX after its share price tumbled 8.2 per cent in one day, its biggest one day loss since December 2011.
In response to those queries, Harvey Norman said it was not aware of any information concerning the company that had not been announced to the market.
It referenced an Australian Financial Review (AFR) article that alleged ASIC was reviewing how the group reports its exposure to franchisee losses.
"The AFR article makes false statements and assumptions and then proceeds to make assertions and draw conclusions, which are also false, based upon those false statements and assumptions," the company wrote in a statement to the ASX.
In a previous TV interview with ABC News on Tuesday, Mr Harvey also shot down questions of an ASIC investigation when asked directly.
ABC: Speaking of ASIC, is ASIC investigating Harvey Norman?
Gerry Harvey: No, they're not and where that came from I have no idea.
On March 23, Harvey Norman again reiterated that ASIC was not investigating the company's accounts, saying more articles published by the Sydney Morning Herald and the AFR were false.
But, in a further clarifying statement on that same day, the company said, "HVN (Harvey Norman) discloses that ASIC is undertaking a routine review of HVN's financial report for the financial year ended 30 June 2066 as part of its financial reporting surveillance program".
The Australian Shareholders Association wants ASIC to investigate Harvey Norman over $943 million worth of loans to franchisees in financial difficulty that was disclosed in the company's 2016 report.
At Harvey Norman's AGM meeting in November, Mr Harvey rejected shareholder claims of a lack of transparency over his franchisees' financial accounts.
Shares in Harvey Norman have dropped a further 1.3 per cent to $4.29 by 11:48am (AEDT). Mr Harvey has blamed the share price rout on short-sellers.
ASIC and Harvey Norman have been contacted for comment.
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