Sydney firm facing $54m lawsuit over pokies deal - Friday 14th of October 2005

South American casino owner Luis Fuentealba has begun a $US41 million ($54 million) damages action against Sydney-based Aristocrat Leisure, the worlds second-biggest poker machine manufacturer.

In a David and Goliath contest, Mr Fuentealba is determined to have his day in Perus Supreme Court, and possibly the Australian courts, over an agreement to buy 3000 Aristocrat machines that went badly wrong.

Aristocrat says it has acted according to its contractual obligations with the Peruvian corporation and is fighting the action.

Visiting Sydney to meet lawyers, accountants and company regulators, Mr Fuentealba said he had been looking forward in 2001 to a long and mutually enriching association with Aristocrat, but their deal collapsed amid recriminations.

What surprised him most was Aristocrats decision to use Peruvian associates to wage what he called a smear campaign against his privately owned Meier Corporation and Perus judicial system.

Full-page advertisements carrying the Aristocrat logo were taken out in Peruvian newspapers to attack two judges and accuse the countrys court system of being corrupt.

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AdvertisementAristocrat Australias senior counsel David Greenslade flew to the provincial capital of Trujillo in June to co-host a company-backed seminar dedicated to exposing judicial "corruption".

"We had no idea that an Australian company would take responsibility for condemning judges just because they gave verdicts which the company didnt agree with," Mr Fuentealba said.

"Imagine if we came to Australia to attack your judges in public and condemn your judiciary - we would never do such a thing."

In the November 2001 deal, Meier signed a contract to buy 3000 refurbished poker machines plus software for new games for four years. The purchase price for each machine was $US9260, making it a $US28 million deal.

When the machines arrived in Peru in 40 shipping containers, however, they allegedly werent in working order, many were in parts, and the price on the invoice had been reduced to $US225 each.

Meier bought a technical company to get the machines in working order and from 2002 until 2004 paid $US540,000 each month to Aristocrat. But with cash flow problems due to the delay in getting the machines onto the gaming floor, Meier asked for a six-month extension to complete payment.

When Aristocrat refused, Meier suspended its payments and court manoeuvres landed both sides in an arbitration court, but that resulted in a stand-off.

Aristocrat spokesman Tim Allerton denied there had been a smear campaign, saying: "We are actively and aggressively protecting our legal rights in Peru."

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