While Chairman of Coles Myer, Solomon Lew involved the company in a deal with a private company Yannon Pty Ltd which ultimately lost Coles $18 million. The money was used to help fund a company of Lew's called Premier Investments which in turn owned shares in Coles Myer. The money was used to help meet Lew's debt servicing obligations to banks, which were high due to his high level of indebtedness and high interest rates at the time .
The Australian Broadcasting Corporation's PM programme described the transaction:
"The Yannon deal was an undisclosed indemnity given by Coles-Myer to a shelf company called Yannon set up by CS First Boston. It bought shares in a company called Premier, a major shareholder in Coles-Myer controlled by then Executive Chair of Coles, Solomon Lew. It guaranteed Yannon against any losses in the share deal, eventually costing Coles $18 million. Coles retrieved $12 million in a later agreement between itself, Mr Lew and with other parties.
The funding of the buying of its own shares, the apparent involvement of the Chairman and the lack of disclosure raised serious governance issues for Coles-Myer, and ended with the replacement of almost the entire Board of Directors and the withdrawal of significant shareholder support."
When Coles Myer's Chief Financial Officer, Phillip Bowman resigned and revealed the details of the transaction it brought a great deal of unwanted public attention to Lew. Bowman's revelations prompted an investigation into whether the Yannon transaction broke the Corporations Law or other laws that lasted five years and gathered a quarter of a million pages of documents and twelve thousand pages of evidence.
The Australian Securities and Investment Commission (ASIC) recommended criminal prosecution against Lew in its brief, although the Commonwealth Director of Public Prosecutions, who has the final decision, decided not to proceed with criminal charges against Lew, Lew's advisers or those working within Coles Myer. The Chairman of ASIC told the ABC:
"I think where the community would have had concern is if the community had felt that a transaction was beyond investigation in some way. This transaction was not beyond investigation."
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