Racing Australia Adopts Rule on Commissions

The Racing Australia board announced Dec. 15 it has adopted a new rule to specifically ban the practice of "secret commissions" as they relate to all people involved in the selling and trading of Thoroughbreds.

A need to tighten regulations came to light in the early part of the year when Richard Callander, an owner and media personality, along with leading jockey Glyn Schofield and Chris Waller’s racing manager Liam Prior, faced a Racing New South Wales stewards inquiry in February during which Callender admitted he collected $20,000 in kick-backs from the sale of Lil Caesar to Hong Kong in 2014. The horse reportedly sold for $90,000 more than had been disclosed to its other owners.

These types of cases have been dealt with previously under the current Rules of Racing relating to dishonest, corrupt and fraudulent behaviour. However, the Board of Racing Australia decided to introduce a new rule (AR. 28) that specifically relates to secret commissions.

In 2011, Australian Sales Thoroughbred Code of Conduct was amended to require bloodstock agents to fully disclose to their clients any payments or commission they are to receive from any other person. It prohibits agents from acquiring any interest in bloodstock for which they are acting as an agent on behalf of seller, prohibits an agent from offering a secret commission to another agent unless the arrangement is fully disclosed to the buyer, and requires sellers to disclose any interest they have in bloodstock they are selling to the company conducting the auction.  

Under the new Racing Australia rule: Any such person must not receive, solicit or offer any payment or benefit that has not been fully disclosed and consented to by all parties involved in the ownership, sale and purchase of that horse.

The new rule will commence on 1 January 2017 in all States and Territories except Western Australia where it will commence on Feb. 1, 2017.

Australian Rule of Racing 28 

AR.28. 

1. This rule applies to: 

(a) any person bound by these Rules (person); and 

(b) any Named Horse or Unnamed Horse (for the purpose of this rule, “relevant horse”). 

2. Any person who is in any way party to or involved in the sale of a relevant horse, must not, directly or indirectly: 

(a) seek or solicit from any person for himself or herself or for any other person any benefit; 

(b) receive for himself or herself or for any other person or entity any benefit, 

unless the person has first: 

(i) fully disclosed, in writing, to the registered owner(s) of the relevant horse that the person: 

A. will be seeking or soliciting for himself or herself or for any other person a benefit; 

B. will receive for himself or herself or for any other person a benefit; and 

(ii) obtained the written consent of more than 75% of the registered ownership to seek or solicit, and/or to receive, the benefit. 

3. Any person who is in any way party to or involved in the purchase of a relevant horse, must not, directly or indirectly: 

(a) seek or solicit from any person for himself or herself or for any other person any benefit; 

(b) receive for himself or herself or for any other person or entity any benefit; 

(c) offer to provide, or provide, to any vendor of the relevant horse, or to any other person (including a person acting, or purporting to act, on behalf of the vendor), any benefit in connection with the sale of the horse; 

unless the person has first: 

(i) fully disclosed, in writing, to the prospective purchaser(s) of the relevant horse that the person will: 

A. be seeking or soliciting for himself or herself or for any other person a benefit; 

B. receive for himself or herself or for any other person a benefit; 

C. be offering to provide to any vendor of the relevant horse, or to any other person (including a person acting, or purporting to act, on behalf of the vendor), a benefit in connection with the sale of the horse; and 

(ii) obtained the written consent of more than 75% of the prospective purchasers to seek or solicit, to receive and/or to provide, the benefit. 

4. Where, in the course of one transaction, a person acts, or purports to act, on behalf of both: 

(a) a registered owner (or owners) of a relevant horse in connection with the sale of a relevant horse; and 

(b) a purchaser (or purchasers) of a relevant horse in connection with the purchase of the same relevant horse, 

that person must comply with the provisions of both sub-rules (2) and (3). 

5. For the purpose of the consent required by AR.28(2)(ii) and AR.28(3)(ii), consent shall be deemed to have been given by a person where that person fails to provide reasonable notice of dissent in writing within 72 hours of receiving the written disclosure pursuant to AR.28(2)(a)(i) or AR.28(3)(i). 

6. For the purpose of this rule: 

(a) “benefit” includes any valuable consideration, rebate, commission, gratuity, profit, fee, benefit or payment of any kind, whether direct or indirect, and to be provided at any time; 

(b) a reference to the sale and/or purchase of a relevant horse includes the sale or purchase of a share or beneficial interest in that horse. 

7. The purchase price of a relevant horse must be disclosed on the relevant Transfer of Ownership form lodged with the relevant Principal Racing Authority, with such disclosure being made on the Transfer of Ownership form prior to any of the outgoing or incoming owners signing that form. 

8. The Principal Racing Authority (or in the case of Tasracing, the delegated Stewards) may, at any time, require any person who is party to or involved, directly or indirectly, in the sale or purchase of a relevant horse to provide full details as they may require of such sale including, without limitation, the purchase price and any benefits. 

9. Any person who refuses or fails to comply with any requirement of this rule may be penalised.