Bribery scandal engulfs Leighton Holdings
Leighton Holdings is once again facing scrutiny over its business practices following the release of internal documents.PT1M39S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-2usnt 620 349 October 2, 2013
The Abbott government is being urged to consider whether Australia should establish a specialist white collar-crime fighting agency amid the fallout from reports of alleged corruption and mis-conduct involving the Leighton group of companies.
On Thursday Greens deputy leader Adam Bandt called for the Prime Minister to hold an inquiry to determine whether the Australian Federal Police and the corporate regulator, the Australian Securities and Investments Commission, were working together properly and were able to successfully defend Australians against white-collar crime.
“Australians need to know whether white-collar crime is being seriously pursued or simply being given a light touch by gentleman regulators,” Mr Bandt said.
“The UK's Serious Fraud Office and the US's Securities and Exchange Commission are tough cops on the beat, investigating and prosecuting white-collar criminals.
"But if the claims today are correct, corruption appears to have an easier time flourishing in corporate Australia.
“This is a test for Tony Abbott. The government must now immediately inquire into the effectiveness of AFP and ASIC at investigating and prosecuting white-collar crime, especially focusing on how well these two agencies work together.
“The inquiry should consider whether Australia needs to establish a separate body akin to the UK Serious Fraud Office or the US Securities and Exchange Commission.”
Mr Bandt's comments came after Fairfax Media reported on internal Leighton files that suggested some of its most senior executives were aware of alleged illegal practices to win a huge oil pipeline contract in Iraq and other serious wrongdoing by employees in Asia.
Fairfax reported that neither the AFP nor ASIC had yet spoken to many key witnesses, raising the possibility of evidence being destroyed or memories fading.
Lawyers acting for Leighton shareholders are investigating a class action against the company regarding alleged failures to disclose matters relating to its activities in Australia and the Middle East.
Maurice Blackburn special counsel Jenny Tallis told Fairfax Media on Thursday morning: ‘‘We have been investigating a shareholder class action against Leighton Holdings Limited for some time. We are of the view that our clients have strong prospects of succeeding in a claim for compensation for Leighton’s breaches of the continuous disclosure laws.
‘‘Our clients’ claim relates to Leighton’s disclosure to shareholders over three areas of operation, both in Australia and overseas between August 2010 and April 2011. A key part of our clients’ claim relates to Leighton’s activities in the Middle East.
‘‘Given the strength of our clients’ claim we have been engaging in a pre-litigation settlement process since May 2013. This process is subject to strict confidentiality constraints and we cannot comment on the details of the allegations made by Fairfax media today.
‘‘We note the criticism of the investigations undertaken by ASIC and the AFP. We have no comment on those investigations. However this case highlights the importance of private enforcement of corporate obligations, such as class actions, to supplement the work of regulators. It is vital that corporate misconduct be exposed and those responsible held accountable for their conduct.’’
Among the Leighton documents is a handwritten note by former chief executive David Stewart in November 2010, which details an alleged claim by the former head of Leighton's international arm, David Savage, that he and the company's former chief Wal King had approved a $42 million kickback to a Monaco firm with close ties to Iraqi officials.
Mr Stewart's note also referred to Mr Savage allegedly telling him that Leighton could win a lucrative contract extension in Iraq if it was prepared to make another alleged illicit payment of $23 million.
Mr Savage has declined to speak to Fairfax Media.
In a statement on Thursday, lawyers for Mr King rejected any claim of wrongdoing and said the businessman would take any action necessary to protect his reputation.
Shares in Leighton dropped nearly 10 per cent – down $1.78 to $17.80 – in trading in response to the media reports.
The company issued a statement saying it was not aware of any new allegations or breaches of its code of ethics other than the Iraqi matter which it referred to police in late 2011.
Leighton said its directors had at all times "executed their duties with the appropriate care and due diligence" in the best interests of its companies.
The files uncovered by Fairfax referred to advice from a firm contracted by Leighton to investigate its Asian businesses. The advice concluded the company was exposed to allegations of "conflict of interest, kickbacks, unethical staff appointments and so on".