A halal certifier wrongly accused a rival of being connected to Islamic extremism to secure the business of a major meat supplier, a Victorian court has found.
The Victoria County Court has ruled that the Islamic Coordination Council of Victoria (ICCV) made a malicious or prejudicial misrepresentation when Midfield Meats canceled a lucrative halal certification contract primarily because its CEO was told the certifier was being investigated by the Australian Federal Police for financing terrorism.
Judge Michael Macnamara ruled this week that the allegation was made by a representative of the Australian Halal Authority and Advisors (AHAA), who then signed a contract with Midfield to replace ICCV.
ICCV averaged almost $35,000 a month in revenue under the contract in the six months before it was cancelled, and the court heard it had a relationship with Midfield that lasted about two decades. Around 35% of this income was profit, the court heard.
In its statement of claim, ICCV said that between August and September 2023, AHAA shareholder Khalil Esfandiar made statements to Midfield that ICCV “was involved in the financing of Islamic extremist groups (and) was being investigated for possible criminal offenses arising from the financing of Islamic extremist groups.”
Macnamara said he was satisfied on the balance of probabilities that Esfandiar made false claims and that they were the reason Midfield canceled the contract.
He noted that Esfandiar was not called as a witness and could have given direct evidence as to whether or not he made the accusation.
Macnamara said an email sent by Midfield CEO Dean McKenna highlighted that false claims were the main reason the contract was cancelled.
In early August 2023, McKenna had a telephone conversation with Edin Dzelalagic, president of ICCV, about concerns that the company would not regain its certification to transport meat to Saudi Arabia, an important market for both companies.
“Dean McKenna…told me that he received information that we were funding extremist terrorist groups and that we are under investigation by federal law enforcement,” Dzelalagic told the court.
“And he said, ‘My team is scared and we’re all panicking,’ or ‘We’re all stressed,’ ‘We don’t know what to do.’
“(He said) this could tarnish and damage his reputation and that of his company. And it could cause damage to his business if this is true.”
Dzelalagic responded that the allegations were completely false and asked where McKenna heard them. He responded “Halil or Khalil,” Dzelalagic said.
Dzelalagic told McKenna to email her concerns.
“I have been told that ICCV will have difficulty getting re-listed for several reasons, one of which is that there is an investigation that ICCV may have recently funded extremist groups,” McKenna wrote in the email.
“My information comes from a reliable source, so I need to know clearly if there is any truth behind this rumor, as if so, this may affect our banking arrangements.
“To be very clear, ICCV is being investigated by any authority for any alleged crime as I need a written response.”
Macnamara said that while McKenna was questioned at trial about “the source of concerns about an alleged ICCV connection to Islamic extremism and an investigation into that matter”, McKenna said he could not or would not “name names”.
“Based on Mr. McKenna’s demeanor and the evidence he presented, I judged that he regretted every minute he spent in the witness box. He agreed,” Macnamara concluded.
“He commented ‘this is a total waste of everyone’s time.'”
McKenna, who was described by the judge as the pivotal witness in establishing that the false claim was made by AHAA, said the main reason for Midfield’s concerns with ICCV was that it had not been responsive enough when millions of dollars’ worth of beef destined for Saudi Arabia was in dispute.
But Macnamara rejected this, saying there was no mention of it in the email. He also rejected McKenna’s suggestion that he normally liked to make such statements in person or over the telephone, as he had an aversion to putting matters in writing.
“I consider that it has been established relatively thinly, but adequately for present purposes, that allegations regarding a connection between ICCV and Islamic extremism or an investigation into such matters (the cause of the rift between ICCV and Midfield) were communicated to Mr McKenna by Mr Khalil Esfandiar.
“The email shows that this was the dominant factor in Midfield’s decision to fire ICCV.”
The claims against Esfandiar and AHAA were upheld, but not against Esfandiar’s father. Losses and damages suffered by ICCV will be determined at a later date.
