Zeman denies Coles Myer price support

LOCAL entrepreneur Allan Zeman's purchase of shares in Australian retail firm Coles Myer has come under the spotlight in a trading controversy. Mr Zeman's trading has come into question, along the trading of other buyers of Coles' shares. Questions are being asked over whether or not there was a scheme to allegedly buy shares to keep Coles' price up during the run-up to an A$1.2 billion (about HK$7 billion) sale of stock by United States store chain K Mart. K Mart held a 21.5 per cent stake in Coles Myer. Mr Zeman admits investing in Coles Myer at a sensitive moment for the company but said last night that a string of coincidences led to him being swept up in the row between Coles executive chairman Solomon Lew and its former chief financial officer, Philip Bowman, sacked three months into his job over a row about connected transactions. A deal approved by former directors in 1990 was probed after the appointment of Mr Bowman earlier this year to see if Coles had illegally funded purchases of its own shares through a company called Premier Investments, 40 per cent owned by Mr Lew. Mr Bowman was then suddenly sacked and writs flew between Mr Lew, Mr Bowman and Coles, through which almost a quarter of all retail dollars spent in Australia flow. The row became, in the words of one Australian observer, 'a very large can of very wriggly worms'. Mr Lew came under attack for his many roles at Coles. He is a director, executive, key shareholder and also a major supplier of goods and services to the company. Mr Zeman has come into the story because details of his share purchases in Coles that he made in the run-up to a A$1.2 billion share buy-back have come under the scrutiny of Australian regulators who are also said to be looking at share buying from the Coles Myer Employee Share Plan. 'I really don't want to say how big my investment in Coles Myer was,' Mr Zeman said. 'It was a normal transaction for my portfolio. 'I buy shares all over the world.' The inquiry is looking at the buying of shares by Mr Zeman's private corporation California International Investments, and the actions of Eddie Sugar, a former stockbroker employed by Mr Lew. Mr Sugar was formerly Mr Zeman's broker at BZW in New York. Mr Zeman confirmed that he bought shares, and he admitted to knowing Mr Lew. His other link to Coles is that Colby, one of his companies, has been appointed a fashion buyer for Coles department stores. Mr Zeman said suggestions that he had been involved in a share support scheme were unfounded. Mr Zeman bought shares in Coles in the months before K Mart, the United States low price retail chain, sold its stake in September last year. K Mart first signalled it wanted to sell in July last year. Mr Zeman said: 'The first I heard about this was when my broker called me up and said: 'You're in the papers.' This whole story doesn't fly. Why would I do this? 'I have money. There is just no way I would get involved.' He said the story of his involvement in Coles shares was simple and straight-forward. 'I had watched the stock for a long time,' he said. 'About 18 months ago it was trading in the low $4 range and it has been higher than $5.' The rumours that K Mart might be selling were pushing the price of the shares down because of the perceived stock overhang in the market, Mr Zeman said. 'I talked to my broker. I talked to people in Hong Kong and Australia and bought in over a few months,' Mr Zeman said. 'I thought it was a good time to buy. 'It was a good dividend yield of around five per cent and I also felt there might be a currency appreciation.' The signs that his trades might be the subject of any scrutiny came months later. 'I got a questionnaire from the Australian Stock Exchange,' he said. 'It just wanted to know what California Investments was and who I was and what shares I bought. 'It was all very standard.' Mr Zeman said neither he nor his lawyer in Australia had been contacted since. Mr Zeman held the stock as the share purchase went through and started selling at the start of the year. 'I sold down from about January through to April, a bit at a time,' he said. Mr Zeman said he made a profit on his investment. Mr Lew was an acquaintance, he said. 'I talk to him a few times a year. I have met him maybe once in the last year. I was in the fashion business. 'I know lots of people. 'I have only even been to Australia once in my lifetime.' He said he did not recall exactly when he and Mr Lew first met. The third link between Mr Zeman and Coles is that Colby, his fashion business, has been appointed a buyer for a division of Coles called Myers Grace Brothers. Mr Zeman had no involvement in that deal, which he said was in the normal course of business. 'I didn't even know about it and I very much doubt Mr Lew did,' he said. 'He's the company chairman of an $18 billion company. 'He doesn't organise that kind of thing. 'Coles Myer is a public company. 'It did due diligence on five different firms around time before choosing us. I am a passive investor in Colby.' Mr Zeman suspected that he had become caught up in the feud between Mr Bowman and Mr Lew. 'I talked to my broker and my lawyer in Australia,' he said. 'They told me: 'Allan, it isn't you they are after. They are after Sol Lew.' 'I have just been swept up in all this. I have been slung into it because I made an investment.'