Trial
In May 2001, Packer and Murdoch's PBL and News Corporation withdrew their earlier stated support for an underwritten rights issue, the Telco then collapsed.[4]
They claimed One.Tel needed $300 million to survive and instructed Ernst and Young to write a report in 36 hours to test this claim. However, former One.Tel auditor and Ernst and Young chairman Brian Long who was responsible for this report, had parts of his evidence rejected by Justice Robert Austin. A file note belonging to Brian Long, "Extract from Underwriting", taken during meetings with the Packers was disclosed during cross examination. Mr Long had a relationship with the Packer family over many years.[5]
It was found that the Rights issue and the continued assistance of the major shareholders would have been enough to support One.Tel until November 2001, by which time the company's businesses would have been generating a healthy group cash flow. The withdrawal of the support may have ensured the company's downfall.[6]
One.Tel ceased operation in Australia in June 2001 and in the same month, ASIC obtained criminal warrants and raids the One.Tel executive directors' houses. Shortly after, ASIC obtained a freezing order over all Jodee Rich's assets and selected family assets, they did not raid the houses, freeze the assets or seize documents of Packer, Murdoch, Yates or any other PBL director.
The Australian operations of the company, which were in Liquidation with 1 million One.Tel subscribers acquired for over $200 million, was sold to Optus and Telstra for a few million dollars in 2001.
ASIC were unable to find minutes of the Commissioners (3 December 2001) meeting where the decision was made to launch proceedings against the defendants. Jan Redfern, ASIC's Executive Director of Enforcement stated there was no formal record of the meeting.[7]
Jan Redfern,[8] refused to provide important company documents. However, the Supreme Court ordered ASIC to provide adequate discovery.[9]
Packer flew a team around the world gathering evidence to assist ASIC with their case
During this time, there were settlement discussions in which ASIC offered a compromise 20-year banning order against the directors.
ASIC alleged that Rich and Silbermann failed to exercise due care and diligence by failing to keep the board of directors of One.Tel sufficiently informed of material information about the true financial condition, performance and prospects of One.Tel, especially in the period leading up to the cancellation of a proposed rights issue in May 2001.
ASIC sought $92m in damages and a lifetime banning order against the former One.Tel directors.
PricewaterhouseCoopers Expert Paul Carter, provided evidence that Justice Robert Austin considered to be flawed. The report consisted of 402 paragraphs detailing One.Tel's financial situation before its collapse, analysing thousands of documents and emails.[11]
CGU, the provider of the companies Director and Officers liability insurance, denied cover. As a result, John Greaves, One.Tel chairman and Brad Keeling, the joint managing Director, were unable to fund their defense.
In Packer's evidence, 1,951 questions were delivered in its cross-examination to which Mr Packer Jnr replied "I can’t recall".[12] Packer claimed that he couldn't recall questions he had with his father, Kerry Packer about One.Tel or the details about several meetings.[13] Justice Robert Austin decided that his approach to the cross examination was misconceived and was reflected in occasionally aggressive answers.[14]
Similarly, Murdoch responded with "I can’t recall" in 881 questions, a higher daily rate than Mr Packer Jnr.[15] It was decided by Justice Robert Austin that there was a significant problem with the lack of recollection in his evidence which inevitably undermined its credibility.[16]
Brian Long had parts of his evidence rejected by Justice Robert Austin.[5] A file note belonging to Brian Long "Extract from Underwriting" taken during meetings with the Packers was disclosed during cross examination. Mr Long had a relationship with the Packer family over many years.
Kleemann's evidence was seen to be an attempt to minimize a role that was in reality, quite significant. It was therefore decided that Mr Kleemann's evidence be treated with caution.[17]
Boaden's evidence was judged as unreliable due in part to his involvement as a paid consultant for the Packer interest[18]
Weston's evidence was not accepted due to its inconsistency with the defendants evidence. Also Weston had a professed lack of recollection.[19]
Similarly, Werner's evidence was described as unsatisfactory and implausible and vague.[20]
- Trial Counsel
- Robert MacFarlan QC- ASIC Barrister
- Philip Durack, SC
- David L Williams, SC J Rich Barrister
- Mark J Steele- J Rich Barrister
- Plaintiffs and Defendants
- David Knott- ASIC Chairman
- Joanne Rees- ASIC Lawyer
- Jan Redfern- Executive Director Enforcement[8]
- Jodee Rich
- Mark Silbermann
- ASIC Witnesses
- James Packer
- Lachlan Murdoch
- Guy Jalland
- Peter Yates
- Brian Long
- Christopher Weston
- Paul Carter PwC expert
- Dick Warburton - Woolworths Chairman
- Sam Randall - Jnr Treasury Manager
- Jan Redfern - Director Enforcement
- Joanne Rees
- Geoff Kleemann PBL CFO
- Chris Werner One.Tel UK CFO
- Drew Boaden - One.Tel UK CFO
- Paul Carter - PwC partner, Expert witness
- Peter Yates - PBL Director
- The Stats
- 67 interlocutory judgments.
- 16,642 pages of hearing transcript
- 232 hearing days Including 9 days in London
- 3000 page judgment
- 104 affidavits
- 243 written submission documents[10]
