NOTICE OF FILING
This document was lodged electronically in the FEDERAL COURT OF AUSTRALIA (FCA) on
7/08/2018 12:26:00 PM AEST and has been accepted for filing under the Court’s Rules. Details of
filing follow and important additional information about these are set out below.
Details of Filing
Document Lodged: Statement of Claim - Form 17 - Rule 8.06(1)(a)
File Number: ACD93/2016
File Title: Inabu Pty Ltd (ACN 003 657 654) as trustee for the Alidas Superannuation
Fund (ABN 38 718 529 455) v CIMIC Group Limited (ACN 004 482 982)
Registry: AUSTRALIAN CAPITAL TERRITORY REGISTRY - FEDERAL COURT
OF AUSTRALIA
Dated: 7/08/2018 1:13:56 PM AEST Registrar
Important Information
As required by the Court’s Rules, this Notice has been inserted as the first page of the document which
has been accepted for electronic filing. It is now taken to be part of that document for the purposes of
the proceeding in the Court and contains important information for all parties to that proceeding. It
must be included in the document served on each of those parties.
The date and time of lodgment also shown above are the date and time that the document was received
by the Court. Under the Court’s Rules the date of filing of the document is the day it was lodged (if
that is a business day for the Registry which accepts it and the document was received by 4.30 pm local
time at that Registry) or otherwise the next working day for that Registry.
Filed on behalf of: Inabu Pty Ltd (ACN 003 657 654) as trustee for the Alidas Superannuation Fund (ABN 38 718 529 455), Applicant
Prepared by: Rebecca Gilsenan, Maurice Blackburn
Tel: (02) 9261 1488 Fax (02) 9261 3318
Email [email protected]
Address for service: Level 32, 201 Elizabeth Street Sydney NSW 2000
Form 17 Rule 8.05(1)(a)
FURTHER AMENDED STATEMENT OF CLAIM
No. ACD93 of 2016
Federal Court of Australia
District Registry: Australian Capital Territory
Division: General
Inabu Pty Ltd (ACN 003 657 654) as trustee for the Alidas Superannuation Fund (ABN
38 718 529 455)
Applicant
CIMIC Group Limited (ACN 004 482 982)
Respondent
TABLE OF CONTENTS
A. INTRODUCTION 3
A.1 The Applicant and the Group Members 3
A.2 The Respondent 4
A.3 Leighton’s business 6
A.4 Directors and officers of Leighton and its subsidiaries 8
B. THE 3 OCTOBER 2013 DISCLOSURES AND THEIR IMPACT 11
B.1 The 3 October 2013 Articles 11
B.2 The price impact of the 3 October 2013 Articles 13
2
C. LEIGHTON’S CONDUCT PRIOR TO 23 NOVEMBER 2010 13
C.1 Leighton’s 2010 publications and representations about ethical practices 13
C.2 Leighton’s current and prospective Iraq contracts as at 23 November 2010 14
C.3 Leighton’s knowledge that conduct in connexion with its Iraq contracts was corrupt or
potentially corrupt 35
C.4 Leighton’s knowledge of the cover-up of potentially corrupt practices 42
C.5 Leighton’s knowledge of the deficiencies in its ethical monitoring practices 45
D. LEIGHTON’S CONTRAVENING CONDUCT (23 NOVEMBER 2010 ONWARDS) 46
D.1 Continuous Disclosure Contraventions 46
D.2 Alternative Continuous Disclosure Contraventions 48
D.3 Further Continuous Disclosure Contravention – Ineffective Ethics Compliance 50
D.4 Misleading or deceptive conduct 51
D.5 Continuing nature of the 2010 contraventions 52
E. LEIGHTON’S CONDUCT AFTER 23 NOVEMBER 2010 52
E.1 Publications in 2011 about Leighton’s ethical practices 52
E.2 Leighton’s 13 February Announcement 54
E.3 Publications in 2012 about Leighton’s ethical practices 55
E.4 Publications in 2013 about Leighton’s ethical practices 58
F. LEIGHTON’S FURTHER CONTRAVENING CONDUCT (13 FEBRUARY 2012 ONWARDS) 61
F.1 Misleading Conduct Contraventions 61
F.2 Continuing nature of the 2012 contraventions 62
G. CONTRAVENING CONDUCT CAUSED LOSS 62
G.1 Market-based causation 62
G.2 Reliance 64
G.3 Loss or damage suffered by the Applicant and Group Members 65
SCHEDULE A (DEFINED TERMS) 68
SCHEDULE B (TRANSCRIPT OF THE STEWART MEMO AS PUBLISHED BY FAIRFAX MEDIA) 70
3
A. INTRODUCTION
A.1 The Applicant and the Group Members
1. This proceeding is commenced as a representative proceeding pursuant to Part IVA
of the Federal Court of Australia Act 1976 (Cth) by the Applicant on its own behalf
and on behalf of all persons who or which:
(a) acquired an interest in fully paid ordinary shares in CIMIC Group Limited
(formerly known as Leighton Holdings Limited) (LEI Shares) during the period
between 23 November 2010 and 3 October 2013 (Relevant Period);
(b) suffered loss or damage by reason of the conduct of the Respondent
(Leighton) pleaded in this Statement of Claim; and
(c) were not during any part of the Relevant Period, and are not as at the date of
this Statement of Claim, any of the following:
(i) a related party (as defined by s 228 of the Corporations Act 2001 (Cth)
(Corporations Act)) of Leighton;
(ii) a related body corporate (as defined by s 50 of the Corporations Act) of
Leighton;
(iii) an associated entity (as defined by s 50AAA of the Corporations Act) of
Leighton;
(iv) an officer or a close associate (as defined by s 9 of the Corporations Act)
of Leighton; or
(v) a judge or the Chief Justice of the Federal Court of Australia or a Justice
or the Chief Justice of the High Court of Australia,
(Group Members).
2. The Applicant:
(a) is a corporation entitled to sue in its corporate name and style;
(b) is the trustee of the Alidas Superannuation Fund, a self-managed
superannuation fund, the members of which are also directors of the Applicant
4
(as required by s 17A(1)(c) and (d)(ii) of the Superannuation Industry
(Supervision) Act 1993 (Cth)), which has its place of business at Reid in the
Australian Capital Territory;
(c) has at all material times had as its directors David Wayne Sloper and Alison
Jean Sloper, of Reid in the Australian Capital Territory, who, have at all material
times caused investment decisions to be made by the Applicant for and on
behalf of the Alidas Superannuation Fund from that place;
(d) acquired interests in LEI Shares during the Relevant Period.
Particulars
Details of the particular acquisitions of LEI Shares by the Applicant are set out below.
Date Transaction type
Number of shares
Price
24 December 2010 Buy 700 $31.35
5 January 2011 Buy 400 $30.27
13 January 2011 Buy 300 $31.44
18 May 2011 Buy 378 $22.50
3. Immediately prior to the commencement of this proceeding, the group, on whose
behalf this proceeding is brought, comprised more than seven persons.
A.2 The Respondent
4. At all material times, Leighton (formerly known as Leighton Holdings Limited, and
now known as CIMIC Group Limited) carried on business as one of the world’s major
contracting, services and project development organisations, and the world’s largest
contract miner.
5. Leighton is and at all material times was:
(a) incorporated pursuant to the Corporations Act and capable of being sued;
(b) a person within the meaning of s 1041H of Corporations Act;
(c) a person within the meaning of s 12DA of the Australian Securities and
Investments Commission Act 2001 (Cth) (ASIC Act);
(d) a person within the meaning of s 12 of the Fair Trading Act 1992 (ACT) (FT
Act), as in force prior to 1 January 2011;
5
(e) a person within the meaning of s 18 of the Australian Consumer Law set out in
Schedule 2 of the Competition and Consumer Act 2010 (Cth), as applicable
pursuant to:
(i) s 7 of the Fair Trading (Australian Consumer Law) Act 1992 (ACT);
(ii) s 28 of the Fair Trading Act 1987 (NSW);
(iii) s 12 of the Australian Consumer Law and Fair Trading Act 2012 (Vic);
(iv) s 16 of the Fair Trading Act 1989 (Qld);
(v) s 6 of the Australian Consumer Law (Tasmania) Act 2010 (Tas);
(vi) s 19 of the Fair Trading Act 2010 (WA);
(vii) s 14 of the Fair Trading Act 1987 (SA); and/or
(viii) s 27 of the Consumer Affairs and Fair Trading Act (NT),
as in force after 1 January 2011 (individually, or together, the ACL); and
(f) included in the official list of the financial market operated by the Australian
Securities Exchange (ASX), and by reason thereof:
(i) LEI Shares are:
(A) ED securities for the purposes of s 111AE of the Corporations Act;
and
(B) able to be acquired and disposed of by investors and potential
investors in LEI Shares (Affected Market) on the financial market
operated by ASX;
(ii) Leighton is and at all material times was:
(A) a listed disclosing entity within the meaning of s 111AL(1) of the
Corporations Act;
(B) subject to and bound by the Listing Rules of the ASX (ASX
Listing Rules); and
6
(C) obliged by ss 111AP(1) and/or 674(1) of the Corporations Act
and/or ASX Listing Rule 3.1 to, once it is, or becomes aware of,
any information concerning Leighton that a reasonable person
would expect to have a material effect on the price or value of LEI
Shares, tell the ASX that information immediately (unless the
exceptions in ASX Listing Rule 3.1A apply) (Continuous
Disclosure Obligations).
A.3 Leighton’s business
6. At all material times in the relevant period, Leighton was the consolidated reporting
entity for Leighton and its controlled entities (Leighton Group).
7. At all material times from 1 July 2010 to 30 June 2011, Leighton:
(a) carried on business through operating companies (with independent brands):
(i) Thiess Pty Limited (Thiess), which was an operating company which was
a wholly-owned subsidiary of Leighton, with operations in mining, civil,
building, rail, process and services in Australia, South East Asia and the
near Pacific;
(ii) Leighton Contractors Pty Limited (LCL), which was an operating company
which was a wholly-owned subsidiary of Leighton, covering mining,
services and telecommunications operations in Australia and New
Zealand;
(iii) John Holland Group Pty Ltd (JHG), which was an operating company
which was a wholly-owned subsidiary of Leighton, covering engineering,
contracting and service provision in Australia;
(iv) Leighton Properties Pty Ltd (LPL), which was an operating company
which was a wholly-owned subsidiary of Leighton, covering Leighton’s
property development business in Australia;
(v) Leighton Asia Limited (LAL), which was an operating company which was
a wholly-owned subsidiary of Leighton, covering Leighton’s operations in
Hong Kong, Macau, China, Mongolia, Taiwan, the Philippines, Guam,
Thailand, Vietnam, Laos and Cambodia;
7
(vi) Leighton International Ltd (LIL) (and its subsidiaries), which was an
operating company which was a wholly-owned subsidiary of Leighton,
covering Leighton’s operations in India, the Arabian Gulf, Malaysia,
Brunei, Singapore, Sri Lanka and Indonesia (and included entities trading
as Leighton Offshore); and
(vii) Al Habtoor Leighton LLC (formerly known as Al Habtoor Engineering
Enterprises Co (LLC)) (HLG), which was an associate of Leighton of
which Leighton held a substantial (45%) interest, and which carried on
construction business in the Middle East; and
(b) organised management reporting to the Chief Executive Officer of Leighton
from each of those operating companies.
Particulars
Leighton’s Concise Annual Report for the financial year ended 30 June 2011, published on 29 September 2011 (FY2011 Report), pp.27-28, and p.45 of the Financial Report included in the FY2011 Report (Note 30 – Segment Information)
8. On and from 1 July 2011, Leighton restructured its international operations and LIL,
such that at all material times after that time, Leighton:
(a) carried on business through operating companies which were wholly owned
subsidiaries of Leighton (with independent brands):
(i) Thiess, with an area of operations in Australia, India, Indonesia and New
Zealand;
(ii) LCL, with an area of operations in Australia, New Zealand and Papua
New Guinea;
(iii) JHG, with an area of operations in Australia, Hong Kong, India, New
Zealand, Qatar, Saudi Arabia, Singapore and the United Arab Emirates;
(iv) Leighton Properties, with an area of operations in Australia;
(v) LAL (together with Leighton Welspun Contractors Pvt Ltd and Leighton
Offshore), with an area of operations in Brunei, Cambodia, China, Hong
Kong, India, Indonesia, Iraq, Laos, Macau, Malaysia, Mongolia,
Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam; and
8
(vi) HLG (together with Leighton Africa), with an area of operations in Bahrain,
Botswana, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab
Emirates; and
(b) organised management reporting to the Chief Executive Officer of Leighton
from:
(i) Thiess;
(ii) LCL;
(iii) JHG;
(iv) “Commercial & Residential”, comprising LPL together with Devine Ltd;
(v) “Leighton Middle East & Africa” (LMEA), comprising LIL’s former
operations in the Middle East and Africa, and LHG; and
(vi) “Leighton Asia, India & Offshore” (LAIO), comprising LAL and LIL’s former
operations in Asia;
Particulars
i) ASX Announcement dated 18 May 2011 entitled “Leighton announces restructure of international operations”
ii) Leighton’s FY2011 Report, pp.27-28, 45 (Note 30)
iii) Leighton’s Annual Report for the transitional financial year ending 31 December 2011, published on 30 March 2012 (2nd FY2011 Report), pp.28-29, and p.45 of the Financial Report (Note 30 – Segment Information)
A.4 Directors and officers of Leighton and its subsidiaries
9. Wallace Macarthur King AO (Wal King) was:
(a) between January 1987 and 31 December 2010, the Chief Executive Officer of
Leighton;
(b) a member of Leighton’s Ethics and Compliance Committee in 2009 and 2010;
and
(c) at all material times prior to 31 December 2010, one of Leighton’s key
management personnel.
9
10. David Graeme Stewart (David Stewart) was:
(a) From 1 January 2006, managing director of JHG;
(b) between 1 July 2009 and 31 December 2010, a Chief Operating Officer of
Leighton with responsibility for JHG and LPL;
(c) at a time presently unknown to the Applicant after 13 September 2010 (when it
was announced he would succeed King) acting Chief Executive Officer of
Leighton;
(d) between 1 January 2011 and 24 August 2011, Chief Executive Officer of
Leighton; and
(e) at all material times between 1 January 2006 and 24 August 2011, one of
Leighton’s key management personnel.
11. David George Savage (David Savage) was:
(a) from 2003, managing director of Leighton Asia;
(b) from 2005, managing director of LIL (then known as Leighton Asia Southern);
(c) from about September 2007 to September 2009, managing director of both LIL
and HLG;
(d) between July 2010 and 31 March 2011, a Chief Operating Officer of Leighton,
with responsibility for LIL; and
(e) at all material times between 2003 and 31 March 2011, one of Leighton’s key
management personnel.
11A. William Joseph Wild (Bill Wild) was:
(a) from February 2000, managing director of JHG;
(b) from 2006 to April 2011, Chief Operating Officer of Leighton;
(c) from 2 January 2010 to June 2011, Deputy Chief Executive Officer of Leighton;
and
(d) at all material times between 2006 and 30 June 2011, one of Leighton’s key
management personnel.
10
12. Russell Waugh (Russell Waugh) was:
(a) from 1 January 2009 to 31 March 2010, General Manager, Oil and Gas for
Leighton Contractors India Pvt Ltd (LCI), a wholly-owned subsidiary of LIL;
(b) from 1 April 2010, Managing Director of LCI;
(c) from early 2010 until November 2010, acting CEO of Leighton Offshore; and
(d) from early April 2011 to 16 July 2012, Managing Director of Leighton Welspun
Pvt Ltd (part of LAL).
13A. Peter Cox (Peter Cox) was:
(a) from November 2010, Chief Executive Officer of Leighton Offshore; and
(b) around 5 July 2012, dismissed as CEO of Leighton Offshore for “failure to meet
governance standards in respect of the proper documentation of contractual
arrangements” in relation to Leighton Offshore’s contracts in Iraq.
13. Robert Douglas Humphris OAM (Bob Humphris) was:
(a) from September 2004, a non-executive director of Leighton;
(b) from 24 March 2013 to 11 June 2014, the non-executive Chairman of Leighton;
and
(c) a member of Leighton’s Ethics and Compliance Committee in 2009, 2010 and
2011, 2012 and 2013.
14. By reason of the matters pleaded in paragraphs 9 to 13:
(a) each of Wal King, David Stewart, David Savage and Bill Wild (each a Senior
Leighton Executive) and Bob Humphris was an officer of Leighton within the
meaning of s 9 of the Corporations Act, and ASX Listing Rule 19.12; and
(b) any information of which any of Wal King, David Stewart, David Savage, Bill
Wild or Bob Humphris became aware, or which ought reasonably to have come
into his possession in the course of the performance of his respective duties,
was information of which Leighton was aware (as awareness is defined in ASX
Listing Rule 19.12).
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B. THE 3 OCTOBER 2013 DISCLOSURES AND THEIR IMPACT
B.1 The 3 October 2013 Articles
15. On 3 October 2013, Fairfax Media published newspaper articles entitled “Building
giant Leighton rife with corruption: claims” and “Wal King ‘approved’ Iraq bribe” (3
October 2013 Articles).
Particulars
i) http://www.smh.com.au/business/building-giant-leighton-rife-with-corruption-claims-20131002-2ut2e.html (authored by Nick McKenzie and Richard Baker)
ii) http://www.afr.com/business/wal-king-approved-iraq-bribe-20131002-jh0c9 (authored by Nick McKenzie and Richard Baker)
16. The 3 October 2013 Articles stated, inter alia, that:
(a) bribery, corruption and cover-ups in Leighton Holdings’ international
construction empire were rife and known to top company executives and
directors, according to internal company files;
(b) those in the know included the Australian construction giant’s chief executive at
the time, Wal King, and his short-term successor David Stewart;
(c) Fairfax Media had obtained hundreds of confidential company documents
which revealed a culture of rewarding corruption or incompetence, and abysmal
corporate governance;
(d) one of the company files was a memo written on 23 November 2010 by then
acting CEO David Stewart (a copy of which was transcribed and published by
Fairfax Media, and is annexed to this Statement of Claim as Schedule B)
(Stewart Memo), which said that:
(i) Leighton International managing director David Savage had revealed he
and Wal King knew of a $42 million kickback paid by Leighton to secure a
$750 million oil pipeline contract, and Stewart had written “I asked did Wal
K approve this? And he said yes”; and
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(ii) David Savage had allegedly suggested an extra $50-60 million payment to
win a further $500 million worth of work in Iraq. David Stewart had
recorded himself telling David Savage that “it is exactly what got the AWB
into trouble with their trucking contracts at 2 to 3 times market rates”, and
“Wal King is still CEO and if he is OK with it, go for it.”
(e) Leighton received confidential legal advice in late 2010 (from Sydney lawyer
Malcolm Davis) that executives might be linked to corruption or serious
mismanagement and that the company was facing an “extreme” risk of damage
to its reputation; and
(f) the Stewart Memo was not passed to police until November 2011, a year after
David Stewart wrote it and only after lawyers working for Leighton accidentally
stumbled over it.
17. The transcription of the Stewart Memo published by Fairfax stated, inter alia, that:
(a) David Savage advised David Stewart that he has an opportunity to negotiate
US$500 extension/variation to the current contract in Iraq, but it will require a
payment of $50-$60 million to a third NSC [nominated subcontractor] who
would do all the onshore works;
(b) David Stewart asked David Savage what was the real value of the work, and he
said “less than 50 per cent of the payment”;
(c) David Stewart asked how we won the current $700 contract and David Savage
said it was won by a $87 million dollar payment to a NSC “on the same terms”.
David Stewart asked David Savage if Wal King approved this, and he said yes
but Wal King will now deny it and have “forgotten it”;
(d) David Stewart said he understood the concept and it was exactly what got the
AWB into trouble with their trucking contract at 2 to 3 times market rates;
(e) David Savage advised David Stewart that RW [being a reference to Russell
Waugh] was in Baghdad now and meeting with the minister to try to negotiate
this job; and
(f) David Stewart said to David Savage that Wal King is still CEO and if he is OK
go for it, but Wal King had to approve it.
13
B.2 The price impact of the 3 October 2013 Articles
18. On 3 October 2013, following the publication of the 3 October 2013 Articles,
Leighton’s share price declined by approximately 10.42%.
Particulars
i) On 2 October 2013 the closing price of LEI Shares was $19.58
ii) On 3 October 2013, LEI Shares opened at $17.70 and closed at $17.54.
C. LEIGHTON’S CONDUCT PRIOR TO 23 NOVEMBER 2010
C.1 Leighton’s 2010 publications and representations about ethical practices
19. On 29 September 2010, Leighton published and lodged with the ASX its Concise
Annual Report for the financial year ended 30 June 2010 (FY2010 Annual Report).
20. In the 2010 Annual Report, Leighton made the following statements (September
2010 Ethics Statements):
(a) Leighton was firmly of the view that the reputation and integrity of the Leighton
Group would only be maintained if all its officers and employees observe the
highest standard of corporate conduct when engaging in corporate activity;
(b) Leighton’s commitment to ethical and responsible decision-making and its
shared values were promoted throughout the Leighton Group which helps to
ensure that Leighton has a sustainable business and continues to provide a
good return to shareholders;
(c) The board of Leighton had established an Ethics and Compliance Committee,
whose functions included, inter alia, to review and monitor Leighton Group
standards and practices related to tender approval probity;
(d) Each of Leighton’s main operating companies had their own well-established
Ethics Committees which supported Leighton’s Ethics and Compliance
Committee in monitoring and formulating the Leighton Group’s ethical policy
direction and reporting;
(e) In September 1995, the board of Leighton adopted a Code of Ethics that sets
out the principles and standards with which all Leighton Group officers and
14
employees were expected to comply in the performance of their respective
functions;
(f) Under the Code of Ethics, officers and employees were expected to, inter alia
comply with the law, and act honestly and with integrity; and
(g) Leighton and Leighton Group operating companies had implemented an Ethical
Dimension Reporting system which required each major operating company to
submit a quarterly report to the board of Leighton with a view to ensuring the
maintenance of ethical practices within the Leighton Group, and the continual
improvement in this area.
Particulars
FY2010 Annual Report, p.30
21. By the September 2010 Ethics Statements, Leighton represented to the Affected
Market that Leighton had in place effective systems for promoting ethical conduct by
Leighton’s officers and employees, and appropriately dealing with reports of unethical
conduct (First Ethics Compliance Representation).
Particulars
The First Ethics Compliance Representation is to be implied from the combination of the September 2010 Ethics Statements, and the absence of any qualification to them.
22. The First Ethics Compliance Representation was a continuing representation on and
from 29 September 2010 throughout the Relevant Period.
Particulars
The First Ethics Compliance Representation was of its nature likely to be continuing unless and until Leighton published to the Affected Market information which qualified it.
C.2 Leighton’s current and prospective Iraq contracts as at 23 November 2010
23. As at, and from, 23 November 2010, each of David Stewart and/or David Savage was
aware that Leighton had, or may have, obtained a $700 million contract in Iraq by
making an $87 million payment to a nominated subcontractor in circumstances where
the real value of the work was less than 50% of the payment.
15
Particulars
i) David Stewart was aware of this because he recorded it in the Stewart Memo as having been said to him by David Savage;
ii) David Savage was aware of this because:
A. he said it to David Stewart, as recorded in the Stewart Memo;
B. of the matters referred to in paragraph 25L below; and
C. further or alternatively, because of the matters in paragraph 24K below.
24. Prior to 23 November 2010, Leighton Offshore won, and commenced work on, a
contract for the first phase of the Iraq Crude Oil Export Expansion Project (Phase 1
Project) which was:
(a) a contract with Iraq’s South Oil Company (owned by the Government of Iraq)
(SOC) to install three export facility single point mooring (SPM) buoys and
associated subsea infrastructure, approximately 120 to 130km of 48” pipelines
in the Arabian Gulf, offshore Iraq;
(b) a contract relating to the Phase 1 Project, planned by the Iraqi Ministry of Oil;
and
(c) worth approximately US$733 million (Phase 1 Contract).
Particulars
i) http://www.leightonoffshore.com/history.html;
ii) http://www.hlgroup.com/en/news/media-centre/latest-news/leighton-offshore-awarded-iraq-project.html;
iii) the award of the Phase 1 Contract was announced by Leighton Offshore on 25 October 2010.
24A. Prior to bidding for and winning the Phase 1 Contract, Leighton Offshore entered into
an arrangement with Mr Oday al Quoraishi (or Quoreshi), Project Manager of SOC,
through an intermediary, Mr Ramjee Iyer of Oceanking Survey Services FZC (Ocean
King), to pay bribes to Mr al Quoraishi through Ocean King in return for his support
for the award by SOC of contracts to Leighton Offshore. Mr al Quoraishi was
sometimes identified in Leighton Offshore documents as “Friend”, “Our friend”, “Big
friend”, “Uday”, “OD” or “O”.
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24B. Pursuant to the arrangement referred to in paragraph 24A, Leighton Offshore agreed
that upon the successful award of the Phase 1 Contract to Leighton Offshore by
SOC, Leighton Offshore would pay 5% of the contact value up to US$500 million,
plus 3% of any contract value above US$500 million to Ocean King for on-payment to
Mr al Quoraishi as bribes.
24C. Pursuant to the arrangement referred to in paragraph 24A, Mr al Quoraishi provided
assistance to Leighton Offshore in tendering for contracts with SOC, by:
(a) providing confidential information to Leighton Offshore including:
i) details of the tenders lodged by rival tenderers, including pricing, technical
matters, and proposed subcontractors;
ii) the comparative assessments conducted by SOC (including by its
advisers, Foster Wheeler) of the various bids;
iii) details of the assessment process, including who was assessing Leighton
Offshore’s tenders and when, how they were being received, who should
be lobbied to improve Leighton Offshore’s chances, issues of concern that
had arisen, and information being provided by other tenderers about
Leighton Offshore tenders;
(b) soliciting from Leighton Offshore and providing to SOC and members of the
Iraqi Government disparaging and negative information about rival bidders;
(c) supporting the tenders from Leighton Offshore over the tenders from other
bidders, including by lobbying members of the Iraqi Government; and
(d) supporting the making of arrangements for Leighton Offshore to receive larger
amounts of money up front, and the speedy processing of payments.
Particulars
i) On or about 11 April 2010, Mr al Quoraishi provided a recommendation to Leighton Offshore to send a letter of request to the SOC asking for a meeting on 22 April 2010 at Basra, where the Director General of the SOC and other top people would be expected to be in the office, with Mr al Quoraishi promising to ensure that they were present.
ii) On or about 6 May 2010, Mr al Quoraishi provided information to Leighton Offshore (Mr Waugh) that Saipem (a rival bidder to Leighton
17
Offshore) was using the Italian Embassy to meet with the Minister of Petroleum, and suggested that Leighton Offshore do the same with the Australian Embassy or another government representative. Mr Waugh in turn passed this information to Mr Savage.
iii) On or about 17 May 2010, Mr Waugh indicated in internal Leighton Offshore correspondence that he would feed information that the barges Saipem intended to use were old and not up to specification to Mr al Quoraishi.
iv) On or about 18 May 2010, Mr Waugh emailed Mr al Quoraishi at a private gmail account and provided positive information about Leighton Offshore and the Leighton Group, and negative information about Saipem, for Mr al Quoraishi to use in lobbying for Leighton Offshore.
v) On or about 22 May 2010, Mr al Quoraishi provided Leighton Offshore (Mr Waugh) with a copy of a section of the bid evaluation of the Leighton Offshore and Saipem bids prepared by Foster Wheeler for SOC.
vi) On or about 18 June 2010, Mr al Quoraishi provided Leighton Offshore (Mr Waugh) with a copy of the Progress Report for the contract to carry out the Phase 3 Project, referred to in paragraph 25N below.
vii) On or about 28 July 2010, Mr al Quoraishi provided Leighton Offshore with information about the progress of the tender process.
viii) On or about 28 July 2010, Mr al Quoraishi arranged for SOC to agree to raise the advance to be paid to Leighton Offshore under the proposed Phase 1 Contract to 20%, and for the Letter of Credit arrangements to be a single Letter of Credit for the full contract value.
ix) On or about 3 August 2010, Mr Waugh provided to Mr al Quoraishi on Mr al Quoraishi’s private email address an indicative breakdown of Leighton Offshore’s bid.
x) On or about 4 and 5 August 2010, Mr al Quoraishi sought and Leighton Offshore (Mr Waugh) provided information for the benefit of Leighton Offshore in relation to the Sealine/JICA contract, which subsequently became the Phase 3 Project, referred to in paragraph 25N below.
xi) On or about 21 August 2010, Mr Iyer provided to Leighton Offshore (Mr Waugh) further confidential information of SOC concerning the total value of works on the Phase 1 Project.
xii) On or about 13 October 2010, Mr al Quoraishi corresponded with Mr Waugh using Mr al Quoraishi’s private email address to reach an in principle agreement (in a manner kept confidential from Foster Wheeler and from SOC) on certain outstanding matters concerning Leighton Offshore’s bid for the Phase 1 Project, and otherwise provided advice to Mr Waugh as to how to proceed in relation to the bid and confirmed that he would have Unaoil Ltd approved as a
18
subcontractor in spite of Foster Wheeler raising questions about Unaoil Ltd.
xiii) On or about 2 November 2010, Mr al Quoraishi passed on confidential information to Leighton Offshore (Mr Waugh) that Leighton Offshore’s competitor Saipem were resubmitting their offer and were cheaper and slightly ahead on schedule compared to Leighton Offshore. Mr Waugh in turn passed that confidential information on to Mr Savage.
xiv) Further particulars are provided in paragraph 28D below in relation to matters subsequent to the Stewart Memo.
24D. The arrangement referred to in paragraph 24A was subsequently partially
documented in an agreement titled “Project Support Services” entered into between
Leighton Offshore and Ocean King (as subcontractor) dated 1 April 2010.
Particulars
TRI.600.000903
24E. The agreement referred to in 24D was subsequently renegotiated on or before 24
October 2010 to replace the formula (being a percentage amount of 5% up to
US$500 million and 3% above US$500 million) with a fixed total of US$31,990,000,
being the application of the formula to a contract value of US$733 million (being the
value of the Phase 1 Contract), and also providing for a schedule of payments. This
was approximately 1 day before the announcement of the award of the Phase 1
Contract to Leighton Offshore.
Particulars
TRI.500.047316; TRI.500.047317
24F. Further to 24D and 24E, Leighton Offshore reached an arrangement with Mr Iyer to
disguise the arrangements with Mr al Quoraishi and the payments to Mr al Quoraishi
by entering into a series of subcontracts with various entities associated with Mr Iyer,
ostensibly for the provision of various technical services associated with the Phase 1
Project.
24G. Further to 24F, on or about 5 October 2010 Mr Iyer proposed a percentage
breakdown of the payments to split them amongst four entities, being Ocean King,
Gulf Petrocon FZC, Sea Star International FZC and Gulfex Trading FZC.
24H. Subsequently, Leighton Offshore entered into contracts with the entities referred to in
paragraph 24G.
19
Particulars
i) On or around 26 December 2010 Russell Waugh told Mr Iyer that he had “built the payments up under each contract [with Gulf Petrocon FZC, Sea Star International FZC and Gulfex Trading FZC respectively] exactly in line with our [previously agreed] schedule.”
ii) On or around 4 January 2011, Leighton Offshore signed the following:
(A) A contract between Leighton Offshore and Gulfex Trading FZC for “pre-contract project development services”, backdated to 1 May 2010, signed by Russell Waugh and Ramjee Iyer. The contract value was US$8,500,000;
(B) A contract between Leighton Offshore and Sea Star International FZC, backdated 18 December 2010, for a “charter party for offshore service vessels” signed by Mr Waugh and Sunil Giri of SeaStar International FZC. The contract value was US$5,580,000;
(C) A contract between Leighton Offshore and Gulf Petrocon FZC for “fabrication and installation services”, worth US$2,660,000;
iii) On or around 6 March 2011, Mr Iyer sent Peter Cox a pricing schedule confirming that there ‘were signed contracts’ between Leighton Offshore and each of Ocean King, Gulf Petrocon FZC, Sea Star International FZC and Gulfex Trading FZC, and that the amount payable to these entities totalled $US31,990,000.
24I. The entities referred to in paragraph 24G subsequently issued invoices whereby the
bribes to Mr al Quoraishi were disguised as payments for various services supplied
by those entities. Leighton Offshore was thus invoiced for, and paid, the bribes of
US$31,990,000 payable under the arrangements with Mr al Quoraishi referred to in
paragraphs 24A – 24H. One such invoice for $2.5 million issued by Ocean King on or
about 6 March 2011 was accompanied by an email from Mr Iyer stating that the
payment sought was “for friend” (i.e. Mr al Quoraishi).
24J. On or about 2 May 2011, Mr Iyer provided a reconciliation of the amounts invoiced by
the entities referred to in paragraph 24G, which recorded that certain payments were
for “Actual Survey Work” but that other payments were "For friend” (i.e. Mr al
Quoraishi). The payments that were not for “Actual Survey Work” totalled
US$32,990,000, which was said to include an additional payment of $US1 million
compared to the agreement first reached between Leighton Offshore and Ocean
King.
24K. Prior to 23 November 2010, Mr Savage was aware that:
20
(a) Leighton Offshore had bribed Mr al Quoraishi and that Mr al Quoraishi was
providing confidential information for the benefit of Leighton Offshore and
assisting Leighton Offshore to win the bid for the Phase 1 Contract; and
(b) the amount payable for this assistance was 5% of the value of the Phase 1
Contract up to US$500 million and 3% thereafter,
and approved the entry into the Phase 1 Contract with that knowledge.
Particulars
i) Mr Savage and Mr Waugh discussed the payment of bribes to Mr al Quoraishi and that Mr al Quoraishi would provide confidential information to Leighton Offshore and assist Leighton Offshore in the bidding process.
ii) On or about 30 March 2010, Mr Waugh told Mr Savage that the “fees” for the project in Iraq were 5% for up to $500 million and 3% beyond $500 million.
iii) On or about 6 April 2010, Mr Savage asked Mr Waugh for (and received) inside information about the bidding from “your guy” / “our man”.
iv) On or about 6 May 2010, Mr Waugh informed Mr Savage that “Oday” had provided the confidential information referred to in particular ii) to paragraph 24C above.
v) On or about 28 July 2010, Mr Waugh provided Mr Savage with confidential information he had received from “Oday”, and noted in other “good news” that “Oday seems to have been successful in getting our advance raised to 20% and the LC [Letter of Credit] back to one single LC for full CV [Contract Value].”
vi) On or about 18 October 2010, Mr Waugh provided further confidential information from “Oday” to Mr Savage about when contractual signing might be.
25. Prior to winning the Phase 1 Contract, Leighton Offshore agreed with Unaoil Ltd
(Unaoil) for Unaoil to be appointed as Leighton Offshore’s nominated subcontractor
for the execution of the onshore construction works in relation to the Phase 1
Contract (in the event it was awarded to Leighton) in exchange for payment by
Leighton to Unaoil of a significant sum which represented more than the real value of
the onshore construction work to be performed (First Unaoil Arrangement).
Particulars
i) The Stewart Memo recorded that the Phase 1 Contract had been won by a $87 million payment to a nominated subcontractor on the “same
21
terms” (i.e. where the payment is for more than the real value of the subcontract work).
ii) Leighton Offshore’s own price estimate for onshore works was “circa 40m.”
iii) Leighton Offshore and Unaoil entered into a Memorandum of Understanding (MOU) dated 31 May 2010 (TRI.600.003360), which required payments by Leighton Offshore to Unaoil in the amount of US$65 million, subsequently revised upwards to US$77.5 million in a Memorandum of Agreement (MOA) dated 26 June 2010 (TRI.500.027503), and then US$76.8 million in the subcontract dated 13 December 2010 (TRI.500.028794-002), to carry out the onshore works.
iv) Leighton Offshore’s rationale for engaging Unaoil in the MOU was that Unaoil was “strong in Baghdad” and would provide Leighton Offshore with “’assistance’ services”, “allied support” and “another alignment that will ultimately benefit us”.
v) Leighton Offshore entered the $65m MOU on 31 May 2010 even though senior Leighton Offshore staff believed it was not “worth our while taking the risk to lock them [Unaoil] in now” if the price offered by Unaoil was higher than $40m.
vi) Leighton Offshore agreed in the 26 June 2010 MOA to a contract price that was $12.5m higher than the fixed price agreed one month earlier, even though senior Leighton Offshore staff believed that “there are no real claimable price increases for Unaoil”.
vii) In the course of negotiations for the 26 June 2010 MOA, senior Leighton Offshore staff asked why, rather than entering a separate inflated contract with Unaoil, Leighton Offshore could “not just pay Unaoil $15m for these ‘assistance’ services and execute the project as planned.”
viii) Leighton Offshore management subsequently (in August 2011) described the Unaoil subcontract as including a fee of $24 million to “facilitate” the delivery of the Phase 1 Contract, which caused a subsequent adverse reaction from SOC who said (when they found out) that Unaoil was not in a position to “facilitate” SOC at all.
ix) The Applicant also relies on the matters pleaded in paragraphs 25A to 25K below.
25A. In mid April 2010, Unaoil made a proposal to Leighton Offshore for the provision of
two services in relation to the Phase 1 Project: an “onshore pipeline installation
package”, and a separate proposal to “assist with the award of the contract”.
Particulars
Email from Peter Willimont of Unaoil to Russel Waugh of 12 April 2010: TRI.311.016.4155
22
25B. Leighton Offshore was initially reluctant to commit to taking the second of the
services referred to in paragraph 25A, but over time became persuaded that Unaoil
could assist in securing the Phase 1 Contract.
Particulars
i) Email from Russell Waugh to Peter Willimont of 14 April 2010.
ii) An internal email within Unaoil of 14 April 2010 referred to Mr Waugh’s email, and said that “It is clear that he is waiting to see the level of support he gets from his existing source, obviously, if it is good he will not come to us, if not, we will get a call”.
iii) Email from Russell Waugh to Cyrus Ahsani of 19 April 2010, noting that Leighton Offshore was happy to receive an “onshore proposal”, but stating that he did not believe there was “an opportunity to avail your other services as this might create conflicts”.
iv) In an internal Leighton Offshore email of 25 April 2010, Mr Waugh stated that Unaoil “may be able to add some value” and that “Apparently they are strong in Baghdad [the location of the Oil Ministry]. We have Basra [the location of SOC] covered well”.
v) On or about 28 May 2010, Mr Waugh met with Mr Willimont in Perth and agreed to proceed with Unaoil, including both the onshore package and the package to assist with the award of the contract for the Phase 1 Project.
vi) In an internal Leighton Offshore email of 30 May 2010, Mr Waugh stated that entering into an arrangement with Unaoil was “all rather urgent and critical and tied to our success in getting them onboard and pushing in our direction”.
25C. On 31 May 2010, Leighton Offshore and Unaoil entered into the MOU, which
included a clause (clause 2.6) pursuant to which Leighton Offshore and Unaoil
agreed that the intention was to enter a subcontract for an all-inclusive price of
US$65 million, and included a clause (clause 8.1) which provided that if Leighton
Offshore was awarded the contract for the Phase 1 Project, but did not award a
subcontract to Unaoil, then Leighton Offshore would pay “liquidated damages” in the
amount of US$15 million.
25D. On 26 June 2010, the MOU was replaced with the MOA, which increased the
subcontract price to US$77.5 million.
25E. Prior to entering into the MOA, and on or before 14 June 2010, Leighton Offshore
and Unaoil executed a separate page of the proposed MOA whereby Unaoil agreed
to provide various forms of assistance separate to the onshore works whether or not
Unaoil obtained a subcontract for the onshore works.
23
Particulars
TRI.311.019.5473; TRI.311.019.5475
25F. By letter dated 31 July 2010 (which may have been backdated), Leighton Offshore
and Unaoil entered into an agreement for the provision of further services (additional
to those already provided for in the MOA), described as “general consultancy advice,
faciliatory liaison, arrangement of meetings with the Trade Bank of Iraq [TBI] and
SOC with the intention of ensuring that the initial Letter of Credit is put in place with
TBI/SOC, and that funds will be in place against the LC [Letter of Credit] to assure
drawdown of funds under the Letter of Credit for the first two milestones is achieved
no later than 31st December 2010”, with payment to be made upon physical
drawdown by Leighton Offshore of US$145m under the Letter of Credit before 31
December 2010, and with the amount payable to Unaoil being 0.75% of the “‘at
award’ Contract Price” between SOC and Leighton Offshore, or US$5.6m, whichever
is the greater.
Particulars
Letter dated 31 July 2010 from Mr Waugh to Mr Willimont: TRI.500.028156-001.
25G. The arrangements between Leighton Offshore and Unaoil reached prior to 23
November 2010 included arrangements for Unaoil to provide two services:
(a) onshore works for the purpose of the Phase 1 Project; and
(b) services to assist with the award of the Phase 1 Contract to Leighton Offshore,
including by securing assistance from Iraqi government officials and
representatives of SOC to favour Leighton Offshore and to provide confidential
information to Leighton Offshore, including by the use of improper and corrupt
relationships with those officials and representatives, and further or alternatively
by the payment of bribes (Assistance Services).
25H. Part of the consideration payable pursuant to the arrangements referred to in
paragraph 25G above was payable for the Assistance Services, including an amount
of US$15 million, and the further amount of US$5.6 million referred to in paragraph
25F.
25I. Unaoil provided Assistance Services in relation to the Phase 1 Contract.
Particulars
24
i) In or about the period 4 – 7 June 2010, representatives of Unaoil spoke to Mr al Quoraishi on a confidential basis, discussing means by which the Leighton Offshore bid could be preferred, and by which pricing on the Leighton Offshore bid could be improved.
ii) On or about 25 June 2010, Unaoil (Peter Willimont) responded to a statement from Russell Waugh that “it would be of value if the client [SOC] were supportive” of Leighton Offshore’s desire to receive a certain payment in 14 days rather than 26, by confirming that SOC agreed that this would be possible.
iii) On or about 21 July 2010, Unaoil (Basil al Jarah) provided information to Leighton Offshore (Sameh Ali) that the Phase 1 Contract would be awarded in mid to late August, but that there was some opposition amongst Iraqi officials to appointing Unaoil, partially due to the competitor Saipem’s greater experience.
iv) On or about 22 July 2010, Mr Peter Willimont of Unaoil, using his private email address of [email protected], provided Mr Waugh with a copy of the confidential draft contract prepared by SOC and Foster Wheeler for the Phase 1 Project, which Mr Waugh forwarded to a limited number of people within Leighton Offshore, noting that it was a “confidential copy” and should only be distributed as essential and “we should not let anyone know we have this”.
v) On or about 28 July 2010, Unaoil (Peter Willimont) provided Mr Waugh with confidential information about the progress of approval of the Leighton Offshore bid (including the approval of the Prime Minister).
vi) On or about 11 August 2010, Unaoil (Peter Willimont) provided Mr Waugh with confidential information from Iraqi Ministry level about the manner in which the Leighton Offshore bid was being received, and that Leighton Offshore would be asked for a discount and to provide references addressing its capabilities.
vii) By 14 August 2010, Unaoil had entered into an arrangement with an Iraqi company known as “Armada”, the principal of which was Mr Ahmed al Jibouri, a corrupt middleman involved in the channelling of bribes to Iraqi government officials, whereby Armada would be paid US$1 million upon Leighton Offshore winning the Phase 1 Contract, and a further US$3.5 million upon Leighton Offshore being paid sums due under the Phase 1 Contract, which sums were payable for obtaining influence in support of Leighton Offshore’s participation in the Phase 1 Project.
viii) On or about 30 August 2010, Unaoil (Peter Willimont) informed Mr Waugh about which Iraqi officials would attend an upcoming meeting and what strategy to adopt at that meeting.
ix) On 1 September 2010 Unaoil (Basil al Jarah) informed Mr Waugh that Iraqi officials had decided to proceed with Leighton’s bid and that Unaoil was working to have a payment that would otherwise be made in March/April 2011 brought forward to January 2011 and that Unaoil was working “at much higher level” than SOC to do so.
25
x) On or about 2 September 2010, Unaoil (Peter Willimont) informed Mr Waugh that the Iraqi Oil Ministry was seeking a larger discount from Leighton Offshore than previously foreshadowed in relation to the Phase 1 Contract.
xi) On or about 28 September 2010, Unaoil (Peter Willimont) informed Mr Waugh that the Iraqi Prime Minister had approved Leighton Offshore to win the Phase 1 Contract and that Unaoil would “keep pushing until you have it in your hand”.
25J. In the course of bidding for the Phase 1 Contract, Leighton Offshore prepared a
document known as a “Greensheet” (and associated supporting documents and
models) which specified the estimated revenues and costs associated with the Phase
1 Project for the purpose of obtaining relevant approval within the Leighton Group for
bidding for the Phase 1 Project and for the purpose of satisfying internal Leighton
Group financial controls relating to the entry into financial commitments.
25K. Representatives of Leighton Offshore, including Mr Waugh, took steps to disguise in
the Greensheet, and in the documents and models supporting the Greensheet:
(a) the payment of bribes to Mr al Quoraishi; and
(b) the payment of amounts to Unaoil for the provision of the Assistance Services.
Particulars
i) The payments to Mr al Quoraishi were disguised in the supporting models as:
(A) US$5.6m for “Materials & Cargo Logistics / Clearance costs”
(B) US$4.4m for “Vessels & Marine equipments clearance & Logistics costs”
(C) US$3.8m for “Construction Plants & Equipment Spread Mobilization”
(D) A further US$4.26m for “Construction Plants & Equipment Spread Mobilization”
(E) US$14m for “Post Installation / As Laid Survey – on & offshore”
ii) US$15 million of the payments to Unaoil for the Assistance Services was described as:
(A) US$5m “Import/Export & License Fees”
(B) US$10m “Heavy Lift Vessel”.
25L. Mr Savage was aware that Unaoil was providing Assistance Services to Leighton
Offshore and that the payment of bribes to Mr al Quoraishi and a US$15m payment
26
to Unaoil for Assistance Services was disguised in the Greensheet and supporting
documents and models for the Phase 1 Project, and approved the entry into the First
Unaoil Arrangement and the presentation of the Greensheet with that knowledge.
Particulars
i) Mr Savage was aware that significant payments would be made to Mr al Quoraishi as set out above, and that these were not recorded in the Greensheet and supporting documents and models as bribes or payments to an official from SOC.
ii) Mr Savage was aware that US$15m to be paid to Unaoil for Assistance Services was, to use his word, “buried” in the direct costs in the Greensheet and supporting documents and models.
25M. In or about July 2010, Leighton Offshore submitted a bid for the Iraq Crude Oil
Expansion Project Phase 2 EPC works (Phase 2 Project), but was ultimately
unsuccessful in that bid and the contract for those works was awarded to Saipem, an
Italian group, on or about 19 October 2011 following a competitive tender process
which was also managed by Foster Wheeler.
25N. Prior to 23 November 2010, Leighton Offshore was also contemplating performing
work on the “Crude Oil Export Facility Reconstruction Project (Phase 3 Project),
otherwise known as the “Sealine Project” or the “JICA Project”, and which was
ultimately the subject of the Phase 3 Contract referred to in paragraph 27 below. In
this regard:
(a) Leighton Offshore originally sought to persuade SOC, and the Iraqi
Government, that it be awarded a contract for the Phase 3 Project as an
extension to the Phase 1 Project and without the Phase 3 Project going to
competitive tender; and
(b) notwithstanding these efforts, the Phase 3 Project went to competitive tender in
a process managed, on SOC’s behalf, by Japan Oil Engineering Co. Ltd in
which Leighton Offshore was successful.
25O. Prior to 23 November 2010, Leighton Offshore had discussions with Unaoil in relation
to the provision by Unaoil of Assistance Services in relation to the Phase 3 Project,
including support for an attempt to circumvent the bid process for the Phase 3 Project
which was being managed by Japan Oil Engineering Co. Ltd.
Particulars
27
i) In the course of negotiating the First Unaoil Arrangement, Mr Willimont and Mr Waugh discussed the Phase 3 Project and the possibility of Leighton Offshore and Unaoil entering a single arrangement to cover both Phase 1 Project and the Phase 3 Project.
ii) On or about 11 and 12 November 2010, Mr Waugh and Mr Willimont exchanged emails about the preparation of a Memorandum of Agreement for the Phase 3 Project along the same lines as the arrangements for the Phase 1 Project.
iii) By 14 November 2010, Mr Willimont had commenced to assist Mr Waugh in relation to securing the Phase 3 Project as an extension to the Phase 1 Contract and communicated to Mr Waugh about the form of letter which should be sent to the Ministry of Oil.
iv) On or about 24 November 2010, Mr Willimont communicated with Mr Waugh about Leighton Offshore’s contemplated proposal for the Phase 3 Project.
v) The Applicant refers to the Stewart Memo.
26. As at, and from, 23 November 2010, each of David Stewart and/or David Savage was
aware that Leighton had, or may have, an opportunity to negotiate a $500 million
extension to a contract in Iraq by making a $50 to $60 million payment to a
nominated subcontractor in circumstances where the real value of the work was less
than 50% of the payment.
Particulars
i) The relevant extension was the contemplated extension to the Phase 1 Contract to include the Phase 3 Project as referred to in paragraph 25O above.
ii) David Stewart was aware of this because he recorded it in the Stewart Memo, as having been said to him by David Savage;
iii) David Savage was aware of this because:
(A) he said it to David Stewart, as recorded in the Stewart Memo;
(B) From November 2010 to March 2011, he was involved in and/or received updates about Leighton Offshore’s bid for the Phase 3 Contract.
27. After 23 November 2010, Leighton Offshore tendered for, and won:
(a) Two variation orders to the Phase 1 Contract, including:
(i) the First Variation Order; and
(ii) the Second Variation Order;
28
together, the Phase 1 Variation Orders.
Particulars
i) Leighton Offshore received the notification of award of the First Variation Order on 8 March 2011 (TRI.300.004394) and the contract between Leighton Offshore and SOC was signed on or about 5 April 2011 (TRI.311.013.0995; TRI.311.013.0997);
ii) Leighton Offshore received the notification of award of the Second Variation Order on 6 October 2011 and the contract between Leighton Offshore and SOC was signed on or about 13 October 2011 (TRI.311.019.3250);
iii) The Second Variation Order was announced by Leighton on 14 October 2011 by media release entitled “Leighton Offshore awarded $US 79 Million SPM contract in Iraq” (INA.500.007.0039).
(b) a contract for the Phase 3 Project known as the Engineering, Procurement,
Construction, Installation and Commissioning contract or the “EPCIC
contract”(Phase 3 Contract) which was:
(i) a contract with SOC to install an additional SPM, 75km of 48” pipelines,
offshore platforms and valve stations and oil management control systems
in the Arabian/Persian gulf offshore Iraq;
(ii) a contract relating to Phase 3 of the Iraq crude oil export pipeline
expansion, planned by the Iraqi Ministry of Oil; and
(iii) worth approximately US$518 million.
Particulars
i) http://www.leightonoffshore.com/leighton_awarded_us$518_million_iraq_crude_oil_project.html/section/10828;
ii) http://www.hydrocarbons-technology.com/projects/iraq-crude-oil-export-expansion-project/;
iii) The award of the Phase 3 Contract was announced by Leighton on 14 October 2011 by media release entitled “Leighton awarded US$518 Million Iraq Crude Oil Project”.
28. On or about 10 December 2010, Leighton Offshore and Unaoil entered into a
memorandum of agreement (December 2010 MOA) in relation to the potential for
Leighton Offshore and Unaoil to collaborate in relation to the Phase 3 Project in
exchange for payment by Leighton Offshore to Unaoil of a significant sum, which was
more than the real value of any onshore work, or other construction-related work, to
29
be performed by Unaoil and included payments for Assistance Services (Second
Unaoil Arrangement).
Particulars
i) Leighton Offshore entered into a MOA with Unaoil on 10 December 2010 for an all inclusive price of US$75 million (TRI.311.017.7233) which was according to Peter Willimont of Unaoil “identical to the previous one [the Phase 1 Contract] – apart from project name and values.”
ii) The MOA dated 10 December 2010 included a liquidated damages clause for US$40 million.
iii) Senior employees at Leighton Offshore and Unaoil were not aware that the MOA dated 10 December 2010 existed and/or were uncertain about its terms.
iv) Leighton Offshore and Unaoil entered into Supplementary Agreement No.2 on 13 April 2011, which superseded the MOA dated 10 December 2010. Supplementary Agreement No.2 was for an all inclusive price of US$55 million, which included a “marketing fee” of minimum US$25 million and an “additional marketing fee of 5% of any amount that Leighton receive on the Project above US$500,000,000” (TRI.100.002380).
v) Prior to entering Supplementary Agreement No.2, Unaoil provided Leighton Offshore with a revised price submission which totalled US$26.4 million (TRI.311.002.8662; TRI.311.001.7929).
28A. From late 2010, Leighton Offshore and Mr al Quoraishi had an arrangement whereby:
(a) Mr al Quoraishi assisted Leighton Offshore in securing the Phase 1 Variation
Orders in circumstances where this assistance was outside the scope of Mr al
Quoraishi’s official role as an SOC representative;
(b) Leighton Offshore paid Mr al Quoraishi a significant sum in exchange for this
assistance.
Particulars
i) The applicant repeats paragraph 24A.
ii) Mr al Quoraishi provided Leighton Offshore with confidential SOC information in relation to Leighton Offshore’s bids for the Phase 1 Variation Orders.
30
iii) Mr al Quoraishi indicated at various times that his assistance to Leighton Offshore in relation to the Phase 1 Variation Orders was contingent upon Leighton Offshore making payments to Ocean King.
28B. In August 2010, Leighton Offshore agreed to pay Mr Al Quoraishi, through Gulf
Petrocon FZC, a significant sum in exchange for services in relation to Leighton
Offshore’s bid for the Phase 2 Contract, which it ultimately did not win.
Particulars
i) In August 2010, Leighton Offshore entered into a “Project Support Services” agreement with Gulf Petrocon FZC, which Mr Iyer signed on behalf of Gulf Petrocon FZC (TRN.101.009.9357);
ii) Mr al Quoraishi provided Leighton Offshore with illegitimate “support services” that were brokered by Mr Iyer in relation to Leighton Offshore’s bid for the Phase 2 Contract, including that Mr al Quoraishi provided Leighton Offshore with confidential information about the tender for the Phase 2 Contract.
28C. From May 2011 to late 2011, Leighton Offshore discussed with Mr Iyer arrangements
for concealing bribes to Mr al Quoraishi in payments to Ocean King for services in
relation to the Phase 3 Contract.
Particulars
i) Between January and July 2011, Leighton Offshore and Ocean King contemplated entering into a series of agreements under which Leighton Offshore agreed to pay Ocean King for services in relation to Leighton Offshore’s bid for the Phase 3 Contract.
ii) In late 2011, Leighton Offshore and Ocean King entered into a subcontract under which Leighton Offshore agreed to pay Ocean King for “survey works, UXO management and geotech investigation” services in relation to the Phase 3 Contract (TRI.500.001.0708-001; TRI.100.002392).
iii) In the process of negotiating the subcontract, Leighton Offshore and/or Mr Iyer (who was acting on behalf of Ocean King) acknowledged that the subcontract was “more in line” with “alliance/partnering”, and included “amounts tied up in things other than survey works” and “a lot of other expenses”.
iv) Mr al Quoraishi “complained” to Mr Iyer that Leighton Offshore and Ocean King had not “sorted out” the subcontract.
v) Mr Iyer provided Leighton Offshore with confidential information from SOC (including Mr al Quoraishi) in relation to Leighton Offshore’s bid for the Phase 3 Contract.
28D. After 23 November 2010, Mr al Quoraishi continued to provide assistance to Leighton
Offshore in relation to the Phase 1 Project, the Phase 2 Project and the Phase 3
31
Project pursuant to the arrangements with Leighton Offshore and Leighton Offshore
continued to pay for those services through Ocean King and related entities.
Particulars
i) Mr al Quoraishi directly provided Leighton Offshore with confidential information from SOC in relation to Leighton Offshore’s bid for the Phase 3 Contract;
ii) Leighton Offshore provided Mr Iyer and/or Mr al Quoraishi with confidential information in relation to Leighton’s bid for the Phase 3 Contract through informal and inappropriate channels, including a bid criteria document that was ultimately adopted by SOC as the assessment criteria for the Phase 3 bid.
iii) On or about 4 February 2011, Mr Cox referred to Mr al Quoraishi as having made “a lot of enemies all the way up to the oil minister” over his push to award the Phase 2 Project to Leighton Offshore, and the Leighton Offshore needed him to stay in place as “we will not have the same leverage on a new guy”.
iv) On or about 17 February 2011, Mr Cox and Mr al Quoraishi communicated in relation to price reductions.
v) On 17 February 2011, Foster Wheeler learned that Leighton Offshore had been communicating directly with Mr al Quoraishi and demanded that communications be directed through Foster Wheeler. In response to this Peter Cox reminded staff that “Its better that meetings off site with the Client are not referred to in discussions or correspondence. In some cases we should not be discussing them widely internally.”
vi) On or about 6 March 2011, Mr Iyer presented Leighton Offshore with an invoice from Ocean King for US$2.5 million for “preconstruction, monitoring and surveillance services” for the Phase 1 Contract, which Mr Iyer said in a covering email was “for friend” (i.e. Mr al Quoraishi).
vii) In March 2011, Mr al Quoraishi had his responsibilities changed to include responsibility for the JICA Project (Phase 3 Project), which Mr Iyer described on or about 10 March 2011 as “the best thing to have happened… we got into JICA officially which is where the next big battle will happen”.
viii) On or about 9 April 2011, Mr Cox supplied Mr Iyer with damaging information about a rival bidder for the Phase 2 Project, which Mr Iyer recorded had “reached Iraq and is on the way up to ministry level”.
ix) On or about 16 April 2011, Mr al Quoraishi communicated with Mr Cox, through Mr Iyer, seeking confidential information as to how to get the price down for the Phase 2 Project, and also discussing manoeuvring carried out for the benefit of Leighton Offshore.
x) On or about 17 April 2011, Mr al Quoraishi, through Mr Iyer, sought further information from Mr Cox that could be used against Leighton
32
Offshore’s competitor Saipem and that would advantage Leighton Offshore in bidding.
xi) On or about 23 April 2011, Mr al Quoraishi provided confidential information which had been included in the sealed bids or rival bidders to Leighton Offshore for the Phase 2 Project.
xii) On or about 4 May 2011, Mr al Quoraishi provided Leighton Offshore with confidential information being the Saipem presentation for the Phase 2 Project.
xiii) On or about 17 May 2011, Mr al Quoraishi provided confidential information to Leighton Offshore (by telephone to Mr Cox) that Leighton Offshore was close to being disqualified for the Phase 3 Project due to criticism levelled at Leighton’s track record. Mr Cox noted in an internal email that there is so much money at stake that Leighton Offshore’s rivals can “buy an outcome easily”, had “penetrated” JICA, and that “Oday cannot stop it without some thing to push back with”.
xiv) On or about 18 May 2011, Mr al Quoraishi, through Mr Iyer, provided a confidential copy of Foster Wheeler’s assessment of the Phase 2 Project bids.
xv) On or around 5 June 2011 and again on or around 14 January 2012, Leighton Offshore fell behind with payments to Ocean King (and therefore to Mr al Quoraishi) and on both occasions Mr al Quoraishi delayed payments from SOC to Leighton Offshore and other processes needed by Leighton Offshore.
xvi) On or about 23 June 2011, Mr al Quoraishi provided a confidential breakdown of prices of the bidders for the Phase 3 Project.
xvii) On or about 2 July 2011, Mr al Quoraishi provided a confidential list of questions that “JICA” was intending to ask all tenderers for the Phase 3 Project.
28E. Mr Savage was aware of the arrangement or arrangements referred to in paragraphs
28A, 28B and 28C.
Particulars
i) On or about 6 December 2010, Tony Wright, Chief Financial Officer of LIL provided Mr Savage with a detailed travel itinerary of Mr al Quoraishi and indicated that Mr al Quoraishi was personally arranging for a payment to be made to Leighton Offshore under the Phase 1 Contract “even if there are discrepancies”.
ii) On or about 5 January 2011 Mr Savage asked Eric Wardle of Leighton Offshore for “the latest with SOC and the variations” to which Mr Wardle responded that “Peter and Russell need to have a discussion today with Unaoil/Uday, etc to better understand budget/strategy.”
33
iii) On or about 19 January 2011, Mr Cox wrote to Mr Savage that he would “press Oday and Ramjee tonight to get this thing [a variation to the Phase 1 Contract] approved next week.”
iv) On or about 24 January 2011, Mr Cox informed Mr Savage that Mr al Quoraishi was unhappy with Leighton Offshore, and that this was a problem because Leighton Offshore was relying on Mr al Quoraishi to push for approvals for the variations to the Phase 1 Contract. In response Mr Savage wrote to Mr Waugh asking “Can you speak to Oday on this? Will he really hold us to ransom? We need to be very careful with all this.”
v) On or about 26 January 2011, Mr Cox informed Mr Savage that Leighton Offshore had issued “an instruction to behave” to Mr al Quoraishi and that as a result Mr al Quoraishi was responding more positively to Leighton Offshore’s desire to make variation orders to the Phase 1 Contract. Cox told Mr Savage that “we may need to make an "allowance" in the 5th SBM variation”, in reference to the need for a further payment to Mr al Quoraishi.
vi) On or about 28 January 2011, Mr Savage asked Mr Waugh whether he had met with Oday. Waugh confirmed in response that he had “been with oday for last 3 hours” and then relayed confidential information about the status of project negotiations between Leighton Offshore and SOC.
vii) On or about 5 February 2011 Mr Savage was copied on an email from Mr Waugh to Mr Cox instructing Mr Cox to “call Peter W[illimont of Unaoil] and Oday and tell them to get this [a variation order sought by Leighton Offshore] sorted and accepted from a pricing perspective. They need to ensure FW [Foster Wheeler] process this and do so asap.”
viii) On or about 12 February 2011 Mr Cox told Mr Savage that “I am meeting with Oday tonight to try and close the VO's [Variation Orders] told him it is critical we have approval by Monday.”
28F. After 23 November 2010, Unaoil continued to provide Assistance Services to
Leighton Offshore in relation to the Phase 1 Project and the Phase 3 Project pursuant
to the arrangements with Leighton Offshore.
Particulars
i) On or about 24 November 2010, Mr Willimont provided Mr Waugh with confidential information about developments in relation to the Phase 1 Contract.
ii) On or about 24 January 2011, Unaoil (Cyrus Ahsani) and Leighton Offshore (Peter Cox) agreed that Leighton Offshore would send a further letter to the Iraqi Oil Minister seeking to have the Phase 3 Project delivered as an extension to the Phase 1 Contract. Unaoil obtained feedback on the contents of a draft letter from within the Iraqi decision-making apparatus and passed that information to Leighton Offshore before submitting the letter.
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iii) By 4 February 2011, Unaoil had negotiated a further arrangement with Armada (and Mr al Jibouri) to pay Armada US$16 million to provide services including to support Unaoil and “its clients with the aim of the [Phase 3 Project] being awarded to Leighton [Offshore]”, which Armada in turn would use to obtain corrupt support from Iraqi Government officials.
iv) The Iraqi Government officials who were bribed by Unaoil, including through Armada, to support Leighton Offshore were given code names by Unaoil including “Teacher”, “Little Teacher”, “M”, and “Lighthouse”.
v) On or about 10 February 2011, Unaoil (Cyrus Ahsani) passed on confidential information from his contacts in the Iraqi Government in Baghdad that, because Mr al Quoraishi was seen as being linked to Leighton Offshore, and related “issues/investigations” (being an investigation of Mr al Quoraishi for suspected corruption), Leighton Offshore should provide a 1% discount on the price of the First Variation Order.
vi) On or about 24 February 2011 Unaoil (Basil al Jarah) informed Leighton Offshore (Sameh Ali) that the letter sent by Leighton Offshore proposing that the Phase 3 Project be an extension of the Phase 1 Contract was being debated at the Iraqi Oil Ministry, but that the Ministry had asked that the letter be resent with corrections made.
vii) On or about 14 March 2011, Unaoil (Basil al Jarah) confirmed to Leighton Offshore (Sameh Ali) that it believed that pursuing the Phase 3 Contract was a superior strategy to seeking to influence Mr al Quoraishi.
viii) On or about 24 March 2011 Unaoil informed Leighton Offshore (Peter Cox) that Leighton Offshore’s Phase 3 Contract bid was supported by all relevant Iraqi parties other than the Oil Ministry which was yet to make its position known.
ix) On or about 1 April 2011, Unaoil (Ata Ahsani) informed Leighton Offshore (Peter Cox) that the Director-General of SOC was supporting the Leighton Offshore/Unaoil proposal for the Phase 3 Project to be awarded as a variation order to the Phase 1 Contract, but noted that opponents to the proposal remained, in particular decision-makers at Japan Oil Engineering Co Ltd.
x) On or about 20 April 2011, Unaoil (Ata Ahsani) sought, and Leighton Offshore (Peter Cox) agreed to provide, negative information about competing bidders for the Phase 3 Project that could be provided directly to the Oil Ministry.
xi) On or about 26 April 2011, Unaoil (Ata Ahsani) sought Leighton Offshore’s (Peter Cox) help in neutralising rumours about Leighton’s financial status that had been spread amongst “the very top level of the Client”.
28G. Mr Savage was aware of the arrangement or arrangements referred to in paragraphs
25O, 28 and 28F.
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Particulars
i) Mr Savage was aware that Unaoil was Leighton Offshore’s “agent” for dealing with the Iraqi Oil Minister, and on or about 30 November 2010 asked Mr Waugh to ensure that Unaoil was told about a meeting with the Oil Minister being arranged through “another agent” so that “no one gets upset”.
ii) On or about 5 January 2011 Mr Savage asked Mr Eric Wardle of Leighton Offshore for “the latest with SOC and the variations” to which Mr Wardle responded that “Peter and Russell need to have a discussion today with Unaoil/Uday, etc to better understand budget/strategy.”
iii) On or around 24 February 2011 Mr Cox wrote to Mr Iyer that, in internal discussions about whether to prefer bidding strategies for the Phase 3 Contract of Unaoil or Mr al Quoraishi, “Russell and Now David Savage [are] calling to support Unaoil [being Unaoil’s strategy to seek to have the Phase 3 Contract awarded as an extension to the Phase 1 Contract without a competitive tender]”.
C.3 Leighton’s knowledge that conduct in connexion with its Iraq contracts was
corrupt or potentially corrupt
29. As at, and from, 23 November 2010, each of David Stewart and/or David Savage was
aware that the concept of the making of payments as referred to in paragraphs 23
and/or 26 was exactly what got AWB Ltd (AWB) into trouble.
Particulars
i) David Stewart was aware of this because he recorded it in the Stewart Memo;
ii) David Savage was aware of this because David Stewart told him on 23 November 2010, as recorded in the Stewart Memo.
30. Prior to 23 November 2010, it was public knowledge that the trouble which AWB had
got into included that:
a) it had been alleged in 2005 that AWB had paid kickbacks to the Iraq
Government which may have been corrupt (AWB Allegations);
Particulars
i) The Report of the Independent Inquiry Committee, appointed by the United Nations and chaired by Paul Volcker was published on 27 October 2005;
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ii) AWB made an announcement to the ASX on 27 October 2005 entitled “Statement by AWB Limited – UN Oil For Food Program” and an announcement to the ASX on 28 October 2005 entitled “Further Statement by AWB Limited – UN Oil For Food Program”;
iii) Australian news media reported on the findings of the Independent Commission of Inquiry under the headline “AWB embroiled in food-for-oil scandal (”http://www.abc.net.au/lateline/content/2005/ s1493374.htm) in terms of corruption.
b) the AWB Allegations had resulted in the Australian government launching a
royal commission of inquiry into AWB to inquire and report on whether AWB’s
conduct might have constituted a breach of any law of the Commonwealth, a
State or Territory, and if so, whether the question of criminal or other legal
proceedings should be referred to the relevant Commonwealth, State or
Territory agency;
Particulars
i) the Inquiry into certain Australian companies in relation to the UN Oil-for-Food program was announced by the Australian Government on 31 October 2005;
ii) the Report of the Inquiry into certain Australian companies in relation to the UN Oil-for-Food program, was published on 29 November 2006.
c) the AWB Allegations resulted in a class action being filed against AWB, which
was settled for a substantial payment by AWB; and
Particulars
i) On 20 February 2006, Maurice Blackburn Cashman announced that it was investigating a class action against AWB on behalf of shareholders;
ii) On 17 April 2007, a class action (Watson v AWB Limited) was filed in the Federal Court of Australia against AWB;
iii) On 15 February 2010, it was announced that the class action had settled, and on 27 April 2010, the Federal Court of Australia approved the settlement of the class action for $39.5 million.
d) the AWB Allegations resulted in the Australian Securities and Investments
Commission (ASIC) commencing civil penalty proceedings against directors
and officers of AWB at the time of the conduct the subject of the AWB
Allegations.
37
Particulars
ASIC Media Release dated 19 December 2007 (07-332 ASIC launches civil penalty action against former officers of AWB).
31. As at, and from, 23 November 2010, by reason of the matters pleaded in paragraphs
23, 24, 25 and 26 and 29 to 30 each of David Stewart and/or David Savage was, or
ought reasonably to have become, aware that:
(a) the making of payments of the kind referred to in paragraphs 23 and/or 26
was conduct which was corrupt or potentially corrupt;
(b) in the event that the contracts referred to in paragraphs 24, 25M and/or 27
had been or would be procured by the making of payments of the kind
referred to in paragraphs 23 and/or 26 then those contracts had been or
would be procured by conduct which was corrupt or potentially corrupt; and/or
(c) the entry into arrangements with a nominated subcontractor of the kind
referred to in paragraph 25 was conduct which was corrupt or potentially
corrupt, and the entry into any future arrangements of a similar kind would be
conduct which was corrupt or potentially corrupt.
32. As at, and from, 23 November 2010, each of David Stewart and/or David Savage was
aware that Senior Leighton Executives were, or may have been, involved in:
(a) approving of the making of payments of the kind referred to in paragraphs 23
and/or 26; and/or
(b) procuring, or seeking to procure, contracts to be awarded to Leighton
subsidiaries by engaging in corrupt or potentially corrupt conduct.
Particulars
i) David Stewart was aware that:
A. David Savage was involved in:
1) approving the transaction referred to in paragraph 23, because the Stewart Memo recorded that David Savage was in a position to inform David Stewart as to how that contract was won by making such a payment;
2) procuring the Phase 1 Contract by entering the First Unaoil Arrangement because the Stewart Memo recorded that David Savage was in a position to inform David Stewart that that contract was won in that way;
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B. Wal King may have been involved in:
1) approving the transaction referred to in paragraph 23, because the Stewart Memo recorded that David Savage advised David Stewart that Wal King approved it;
2) procuring the Phase 1 Contract by entering the First Unaoil Arrangement because the Stewart Memo recorded that David Savage advised David Stewart that Wal King approved it;
C. David Savage was involved in:
1) approving the potential transaction referred to in paragraph 26;
2) seeking to procure the potential transaction referred to in paragraph 26 (and/or the Phase 3 Contract) by entering into the Second Unaoil Arrangement
because the Stewart Memo recorded that David Savage advised David Stewart of the opportunity to win that contract by making a payment to a third party NSC for onshore work of more than double what the work was worth (without any suggestion that David Savage disapproved of that conduct), and David Savage was seeking approval for this;
D. Wal King may be involved in:
1) approving the potential transaction referred to in paragraph 26;
2) seeking to procure the potential transaction referred to in paragraph 26 (and/or the Phase 3 Contract) by entering into the Second Unaoil Arrangement,
because the Stewart Memo recorded that David Stewart advised David Savage to “go for it” if Wal King was “OK with it”;
ii) David Savage was aware that:
A. he (David Savage) was involved in:
1) approving the transaction referred to in paragraph 23, because the Stewart Memo recorded that David Savage was in a position to inform David Stewart as to how that contract was won by making such a payment;
2) procuring the Phase 1 Contract by entering the First Unaoil Arrangement because the Stewart Memo recorded that David Savage advised David Stewart that Wal King approved it;
B. Wal King may have been involved in:
1) approving the transaction referred to in paragraph 23, because the Stewart Memo recorded that David Savage advised David Stewart that Wal King did approve it;
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2) procuring the Phase 1 Contract by entering the First Unaoil Arrangement because the Stewart Memo recorded that David Savage advised David Stewart that Wal King approved it;
C. he (David Savage) was involved in:
1) approving the potential transaction referred to in paragraph 26;
2) seeking to procure the potential transaction referred to in paragraph 26 (and/or the Phase 3 Contract) by entering into the Second Unaoil Arrangement, or an arrangement similar to the First Unaoil Arrangement
because the Stewart Memo recorded that David Savage advised David Stewart of the opportunity to negotiate an extension to the current contract in Iraq, but this would require a payment to a third party NSC for onshore work of more than double what the work was worth, and he (David Savage) was seeking approval for this (without any suggestion that he disapproved of that conduct);
D. Wal King may be involved in:
1) approving the potential transaction referred to in paragraph 26;
2) seeking to procure the potential transaction referred to in paragraph 26 (and/or the Phase 3 Contract) by entering into the Second Unaoil Arrangement
because the Stewart Memo recorded that David Stewart advised David Savage to “go for it” if Wal King was “OK with it”.
32A. Further or in the alternative to paragraphs 29 to 32, by reason of the matters pleaded
in paragraphs 23 to 28G, as at, and from, 23 November 2010:
(a) Leighton Offshore had paid significant bribes and had otherwise been
engaged in corrupt business practices in order to win, or seek to win,
contracts in Iraq.
(b) The payment of bribes, and the corrupt activity, had been orchestrated and
carried out by successive Chief Executive Officers of Leighton Offshore, being
Mr Waugh and Mr Cox.
(c) The conduct referred to in (a) had been concealed from financial and
management reporting processes within the Leighton Group.
(d) Mr David Savage was aware of the facts set out in (a), (b) and (c), and
authorised and encouraged those matters.
33. As at, and from, 23 November 2010, there existed a material risk that:
40
(a) by reason of the matters pleaded in paragraphs 31 to 32A, Senior
Leighton Executives were, or may have been, aware of conduct which
was corrupt or potentially corrupt, and further or alternatively involved in:
i) approving conduct which was corrupt or potentially corrupt; and/or
ii) procuring contracts to be awarded to Leighton subsidiaries by
approving conduct which was corrupt or potentially corrupt,
(Senior Executive Corruption Taint Risk Information); and/or
Particulars
The Applicant repeats paragraphs 31 to 32A.
(b) Leighton’s international business had been conducted on the basis that
engaging in, or approving engaging in, corrupt or potentially corrupt
conduct was an acceptable way of doing business, in particular in relation
to obtaining, or seeking to obtain, new contracts (Corrupt Business
Practices Risk Information).
Particulars
i) The Applicant repeats paragraphs 31 to 32A and says that as at 23 November 2010, there was a material risk that:
(A) The Phase 1 Contract was procured by corrupt or potentially corrupt conduct (and subpara (a)(i) is repeated);
(B) Steps had been and would continue to be taken to seek to
procure the Phase 3 Contract by corrupt or potentially corrupt conduct (and subpara (a)(ii) is repeated); and
(C) steps would be taken to procure other contracts for the Phase 1
Project and the Phase 2 Project by corrupt or potentially corrupt conduct.
ii) The applicant repeats paragraphs 23 to 28G, and says that:
(A) As at and from 23 November 2010, Leighton Offshore had corrupt or potentially corrupt arrangements with Unaoil, Mr Iyer (and his associated entities) and Mr al Quoraishi;
(B) As at and from January 2010, Bill Wild acknowledged and expressed concern to other senior management of Leighton that LIL’s compliance with Leighton’s ethics, corporate governance and compliance policies was “inconsistent at best” and that “in some particular respects, LIL operates with clear disregard to the Rules of Racing.”
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(C) As at and from April 2011, Bill Wild acknowledged that “corruption
and/or incompetence” were systemic problems at LIL.
34. Further, or alternatively, as at, and from, 23 November 2010:
(a) by reason of the matters pleaded in paragraphs 23, 24, 24K, 25, 25L, 25O,
26, 28E, 28G and 29 to 32A, Senior Leighton Executives:
i) had been involved in approving corrupt or potentially corrupt conduct,
namely procuring the award of the Phase 1 Contract to Leighton
Offshore by entering into the First Unaoil Arrangement;
ii) had been, and were continuing to be involved in corrupt or potentially
corrupt conduct, namely negotiating to procure the award of the Phase
3 Contract to Leighton Offshore by entering into an arrangement with
similar features as the First Unaoil Arrangement;
iii) had been, and were continuing to be, aware of corrupt conduct in
winning, or seeking to win, contracts for Leighton Offshore in Iraq, and
further or alternatively had authorised and endorsed such corrupt
conduct;
(Senior Executive Corrupt Contract Procurement Information); and/or
Particulars
The Applicant repeats paragraphs 23 to 28G
(b) Leighton’s international business had been conducted on the basis that
engaging in, or approving engaging in, corrupt or potentially corrupt conduct
was an acceptable way of doing business, in particular in relation to obtaining,
or seeking to obtain, new contracts (Corrupt Business Practices
Information).
Particulars
i) The Applicant repeats paragraphs 23 to 26 and 31 to 32A and says that as at 23 November 2010:
(A) the Phase 1 Contract was procured by corrupt or potentially corrupt conduct (and subpara (a)(i) is repeated); and
42
(B) it was likely at 23 November 2010 that steps would be taken to seek to procure the Phase 3 Contract by corrupt or potentially corrupt conduct (and subpara (a)(ii) is repeated);
(C) The Phase 3 Contract was subsequently procured by corrupt or potentially corrupt conduct.
ii) The Applicant repeats particular (ii) to subparagraph 33(b).
C.4 Leighton’s knowledge of the cover-up of potentially corrupt practices
35. As at, and from, 23 November 2010, each of David Stewart and/or David Savage was
aware that Senior Leighton Executives were, or may have been, involved in covering-
up the nature of the payments as referred to in paragraphs 23 and/or 26.
Particulars
i) David Stewart was aware that:
A. David Savage was involved in covering-up the transaction referred to in paragraph 23 because the Stewart Memo recorded that David Savage informed David Stewart that Wal King approved it, but would “now deny it and have ‘forgotten it’” (and did not suggest that the transaction had been, or should be, reported to anyone, including Leighton’s Ethics and Compliance Committee, or appropriate law enforcement authorities);
B. Wal King may have been involved in covering-up the transaction referred to in paragraph 23, because the Stewart Memo recorded that David Savage informed David Stewart that Wal King approved it, but would “now deny it and have ‘forgotten it’”;
C. he (David Stewart) was involved in covering-up the transaction referred to in paragraph 23 because the Stewart Memo recorded that David Stewart advised David Savage that he would “not ask Wal about the current job” (and did not suggest that the transaction had been, or should be, reported to anyone, including Leighton’s Ethics and Compliance Committee, or appropriate law enforcement authorities);
D. he and David Savage were involved in covering-up the potential transaction referred to in paragraph 26 because the Stewart Memo implicitly suggested that it was acceptable for that potential transaction to proceed on the same basis as the transaction referred to in paragraph 23 (see A to C above) if Wal King approved it (and did not suggest that the potential transaction had been, or should be, reported to anyone, including Leighton’s Ethics and Compliance Committee, or appropriate law enforcement authorities);
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ii) David Savage was aware that:
A. David Stewart was involved in covering-up the transaction referred to in paragraph 23 because the Stewart Memo recorded that David Stewart advised David Savage that he would “not ask Wal about the current job” (and did not suggest that the transaction had been, or should be, reported to anyone, including Leighton’s Ethics and Compliance Committee, or appropriate law enforcement authorities);
B. Wal King may have been involved in covering-up the transaction referred to in paragraph 23, because the Stewart Memo recorded that David Savage informed David Stewart that Wal King approved it, but would “now deny it and have ‘forgotten it’”;
C. he (David Savage) was involved in covering-up the transaction referred to in paragraph 23 because the Stewart Memo recorded that David Savage informed David Stewart that Wal King approved it, but would “now deny it and have ‘forgotten it’” (and did not suggest that the transaction had been, or should be, reported to anyone, including Leighton’s Ethics and Compliance Committee, or appropriate law enforcement authorities);
D. he (David Savage) was involved in covering-up the transaction referred to in paragraph 23 because he was aware, and approved of and endorsed the position, that corrupt payments would be buried and mis-described in financial and managerial reporting within the Leighton Group;
E. he and David Stewart were involved in covering-up the potential transaction referred to in paragraph 26 because the Stewart Memo implicitly suggested that it was acceptable for that potential transaction to proceed on the same basis as the transaction referred to in paragraph 23 (see A to C above) if Wal King approved it (and did not suggest that the potential transaction had been, or should be, reported to anyone, including Leighton’s Ethics and Compliance Committee, or appropriate law enforcement authorities).
36. As at, and from, 23 November 2010, each of David Stewart and/or David Savage was
aware that Senior Leighton Executives were, or may have been, involved in covering-
up:
(a) the procurement of the award of the Phase 1 Contract to Leighton Offshore by
entering into the First Unaoil Arrangement (as pleaded in paragraphs 24 and
25; and/or
Particulars
The Applicant says that this transaction was the transaction referred to in paragraph 23, and on this basis:
44
i) As to David Stewart, paragraph (i)(A)-(C) of the Particulars to paragraph 35 are repeated; and
ii) As to David Savage, paragraph (ii)(A)-(D) of the Particulars to paragraph 35 are repeated.
(b) the potential procurement of the award of the Phase 3 Contract to Leighton
Offshore by entering into the Second Unaoil Arrangement (as pleaded in
paragraphs 27 to 28).
Particulars
The Applicant says that this potential transaction was the potential transaction referred to in paragraph 26, and on this basis:
i) As to David Stewart, paragraph (i)(D) of the Particulars to paragraph 35 are repeated; and
ii) As to David Savage, paragraph (ii)(E) of the Particulars to paragraph 35 are repeated.
37. As at, and from, 23 November 2010, by reason of the matters pleaded in paragraphs
31, 32A and 35, there existed a material risk that Senior Leighton Executives were, or
may have been, involved in covering up:
(a) conduct which was corrupt or potentially corrupt, and/or
(b) the procurement of contracts to be awarded to Leighton subsidiaries by
conduct which was corrupt or potentially corrupt,
(Corruption Cover-up Risk Information).
38. Further, or alternatively, as at, and from, 23 November 2010, by reason of the
matters pleaded in paragraphs 31, 32A and 36, Senior Leighton Executives were
involved in covering up:
(a) conduct which was corrupt or potentially corrupt, and/or
(b) the actual or potential procurement of contracts to be awarded to Leighton
subsidiaries by conduct which was corrupt or potentially corrupt,
(Corruption Cover-up Information).
45
C.5 Leighton’s knowledge of the deficiencies in its ethical monitoring practices
39. Neither David Stewart nor David Savage took steps on, or reasonably promptly after,
23 November 2010 to report to Leighton’s Ethics and Compliance Committee, or
appropriate law enforcement authorities:
(a) the matters the subject of the Stewart Memo; and/or
(b) what they were, or ought reasonably to have been, aware of, as pleaded in
paragraphs 31, 32, 32A and/or 35 and/or 36 above.
Particulars
These matters were only discovered accidentally by external lawyers engaged by Leighton: Paragraph 16(f) is repeated.
40. Leighton’s internal ethics compliance systems did not otherwise, at any time prior to
November 2011, detect and report to appropriate law enforcement authorities:
(a) the matters the subject of the Stewart Memo; and/or
(b) what Senior Leighton Executives were, or ought reasonably to have been,
aware of, as pleaded in paragraphs 31, 32, 32A and/or 35 and/or 36 above.
Particulars
These matters were only discovered accidentally by external lawyers engaged by Leighton: Paragraph 16(f) is repeated.
41. As at, and from, 23 November 2010, by reason of the matters pleaded in paragraphs
39 and/or 40, Leighton’s corporate governance structures and ethics compliance
systems (including its Ethics and Compliance Committee) were insufficiently rigorous
and effective to:
(a) detect that Senior Leighton Executives were, or may have been, involved in
approving conduct which was corrupt or potentially corrupt and/or procuring or
seeking to procure contracts to be awarded to Leighton subsidiaries by
engaging in conduct which was corrupt or potentially corrupt; and/or
(b) ensure that Senior Leighton Executives promptly reported to Leighton’s Ethics
and Compliance Committee (or appropriate law enforcement authorities)
instances of which they were aware where Senior Leighton Executives were,
46
or may have been, involved in approving conduct which was corrupt or
potentially corrupt.
(Ineffective Ethics Compliance Processes Information).
42. David Stewart and/or David Savage ought reasonably to have been aware of the
Ineffective Ethics Compliance Processes Information.
Particulars
i) David Stewart was, or ought to have been, aware that neither he nor David Savage had reported these matters in accordance with Leighton’s Ethical Dimension Reporting system, and that there was no adequate system for monitoring compliance with the Ethics Code of Conduct by Senior Leighton Executives.
ii) David Savage was, or ought to have been, aware that neither he nor David Stewart had reported these matters in accordance with Leighton’s Ethical Dimension Reporting system, and that there was no adequate system for monitoring compliance with the Ethics Code of Conduct by Senior Leighton Executives.
D. LEIGHTON’S CONTRAVENING CONDUCT (23 NOVEMBER 2010 ONWARDS)
D.1 Continuous Disclosure Contraventions
43. As at, and from, 23 November 2010, each of:
(a) by reason of the matters pleaded in paragraphs 31 to 33:
i) the Senior Executive Corruption Taint Risk Information; and/or
ii) the Corrupt Business Practices Risk Information; and/or
(b) by reason of the matters pleaded in paragraphs 35 and 37, the Corruption
Cover-up Risk Information;
was information of which David Stewart and/or David Savage was, or ought to have
been aware.
44. By reason of the matters pleaded in paragraph 43, each of:
(a) the Senior Executive Corruption Taint Risk Information
(b) the Corrupt Business Practices Risk Information; and/or
47
(c) the Corruption Cover-up Risk Information;
was information of which Leighton was aware within the meaning of ASX Listing Rule
3.1 (having regard to the definitions in ASX Listing Rule 19.12).
45. As at, and from, 23 November 2010 each of:
(a) the Senior Executive Corruption Taint Risk Information;
(b) the Corrupt Business Practices Risk Information; and/or
(c) the Corruption Cover-up Risk Information;
was not generally available within the meaning of s 676 of the Corporations Act.
46. As at, and from, 23 November 2010 each of:
(a) the Senior Executive Corruption Taint Risk Information;
(b) the Corrupt Business Practices Risk Information; and/or
(c) the Corruption Cover-up Risk Information;
was information that a reasonable person would expect to have a material effect on
the price or value of LEI Shares within the meaning of ASX Listing Rule 3.1 and
s 674(2)(c)(ii) of the Corporations Act.
46A. As at, and from, 23 November 2010 each of:
(a) the Senior Executive Corruption Taint Risk Information;
(b) the Corrupt Business Practices Risk Information; and/or
(c) the Corruption Cover-up Risk Information;
was information to which none of the situations listed in Listing Rule 3.1A.1 applied,
and information that a reasonable person would expect to be disclosed.
47. By reason of Leighton’s Continuous Disclosure Obligations and the matters pleaded
in paragraphs 43 to 46A, on, and from, 23 November 2010, Leighton became obliged
immediately to tell the ASX:
(a) the Senior Executive Corruption Taint Risk Information;
48
(b) the Corrupt Business Practices Risk Information; and/or
(c) the Corruption Cover-up Risk Information.
48. Leighton did not inform the ASX of:
(a) the Senior Executive Corruption Taint Risk Information;
(b) the Corrupt Business Practices Risk Information; and/or
(c) the Corruption Cover-up Risk Information;
immediately on 23 November 2010, or at all.
49. By reason of the matters pleaded in paragraphs 43 to 48, Leighton contravened ASX
Listing Rule 3.1 and s 674(2) of the Corporations Act (Continuous Disclosure
Contraventions).
D.2 Alternative Continuous Disclosure Contraventions
50. As at, and from, 23 November 2010, each of:
(a) by reason of the matters pleaded in paragraphs 23 to 26, 28A, 28B, 28E, 28G
and 34:
i. the Senior Executive Corrupt Contract Procurement Information;
and/or
ii. the Corrupt Business Practices Information;
(b) by reason of the matters pleaded in paragraphs 36 and 38, the Corruption
Cover-up Information,
was information of which David Stewart and/or David Savage was, or ought to have
been, aware.
51. By reason of the matters pleaded in paragraph 50, each of:
(a) the Senior Executive Corrupt Contract Procurement Information;
(b) the Corrupt Business Practices Information; and/or
(c) the Corruption Cover-up Information,
49
was information of which Leighton was aware within the meaning of ASX Listing Rule
3.1 (having regard to the definitions in ASX Listing Rule 19.12).
52. As at, and from, 23 November 2010 each of:
(a) the Senior Executive Corrupt Contract Procurement Information;
(b) the Corrupt Business Practices Information; and/or
(c) the Corruption Cover-up Information,
was not generally available within the meaning of s 676 of the Corporations Act.
53. As at, and from, 23 November 2010 each of:
(a) the Senior Executive Corrupt Contract Procurement Information;
(b) the Corrupt Business Practices Information; and/or
(c) the Corruption Cover-up Information,
was information that a reasonable person would expect to have a material effect on
the price or value of LEI Shares within the meaning of ASX Listing Rule 3.1 and
s 674(2)(c)(ii) of the Corporations Act.
53A. As at, and from, 23 November 2010 each of:
(a) the Senior Executive Corrupt Contract Procurement Information;
(b) the Corrupt Business Practices Information; and/or
(c) the Corruption Cover-up Information,
was information to which none of the situations listed in Listing Rule 3.1A.1 applied,
and information that a reasonable person would expect to be disclosed.
54. By reason of Leighton’s Continuous Disclosure Obligations and the matters pleaded
in paragraphs 50 to 53A, on, and from, 23 November 2010, Leighton became obliged
immediately to tell the ASX:
(a) the Senior Executive Corrupt Contract Procurement Information;
(b) the Corrupt Business Practices Information; and/or
50
(c) the Corruption Cover-up Information.
55. Leighton did not inform the ASX of:
(a) the Senior Executive Corrupt Contract Procurement Information;
(b) the Corrupt Business Practices Information; and/or
(c) the Corruption Cover-up Information,
immediately on 23 November 2010, or at all.
56. By reason of the matters pleaded in paragraphs 50 to 55, Leighton contravened ASX
Listing Rule 3.1 and s 674(2) of the Corporations Act (Alternative Continuous
Disclosure Contraventions).
D.3 Further Continuous Disclosure Contravention – Ineffective Ethics Compliance
57. As at, and from, 23 November 2010, by reason of the matters pleaded in paragraphs
39 to 41, the Ineffective Ethics Compliance Processes Information was information of
which David Stewart and/or David Savage was, or ought to have been, aware.
58. By reason of the matters pleaded in paragraph 57, the Ineffective Ethics Compliance
Processes Information, was information of which Leighton was aware within the
meaning of ASX Listing Rule 3.1 (having regard to the definitions in ASX Listing Rule
19.12).
59. As at, and from, 23 November 2010 the Ineffective Ethics Compliance Processes
Information was not generally available within the meaning of s 676 of the
Corporations Act.
60. As at, and from, 23 November 2010 the Ineffective Ethics Compliance Processes
Information, was information that a reasonable person would expect to have a
material effect on the price or value of LEI Shares within the meaning of ASX Listing
Rule 3.1 and s 674(2)(c)(ii) of the Corporations Act.
60A. As at, and from, 23 November 2010 the Ineffective Ethics Compliance Processes
Information was information to which none of the situations listed in Listing Rule
3.1A.1 applied, and information that a reasonable person would expect to be
disclosed.
51
61. By reason of Leighton’s Continuous Disclosure Obligations and the matters pleaded
in paragraphs 57 to 60A, on, and from, 23 November 2010, Leighton became obliged
immediately to tell the ASX the Ineffective Ethics Compliance Processes Information.
62. Leighton did not inform the ASX of the Ineffective Ethics Compliance Processes
Information immediately on 23 November 2010, or at all.
63. By reason of the matters pleaded in paragraphs 57 to 62, Leighton contravened ASX
Listing Rule 3.1 and s 674(2) of the Corporations Act (Further Continuous
Disclosure Contravention).
D.4 Misleading or deceptive conduct
64. The conduct pleaded in paragraphs 19 to 21, including the making of the First Ethics
Compliance Representation was conduct engaged in by Leighton:
(a) in relation to financial products (being LEI Shares), within the meaning of
subsections 1041H(1) and 1041H(2)(b) of the Corporations Act;
(b) in trade or commerce, in relation to financial services within the meaning of
section 12DA(1) of the ASIC Act; and
(c) in trade or commerce, within the meaning of s 12 of the FT Act (as in force
prior to 1 January 2011) and/or s 18 of the ACL (as in force from 1 January
2011).
65. By reason of the matters pleaded in paragraphs 23 to 41, on and from 23 November
2010, in maintaining and failing to qualify the First Ethics Compliance Representation,
Leighton engaged in conduct which was misleading or deceptive, or likely to mislead
or deceive.
66. By reason of the matters pleaded in paragraphs 64 to 65:
(a) on and from 23 November 2010 Leighton contravened s 1041H of the
Corporations Act, s 12DA(1) of the ASIC Act and/or s 12 of the FT Act (as in
force prior to 1 January 2011); and/or
(b) on and from 1 January 2011, Leighton contravened s 18 of the ACL (as in
force from 1 January 2011).
(First Ethics Compliance Misleading Conduct Contravention.
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D.5 Continuing nature of the 2010 contraventions
67. Each of the Continuous Disclosure Contraventions, the Alternative Continuous
Disclosure Contraventions and the Further Continuous Disclosure Contravention and
the First Ethics Compliance Misleading Conduct Contraventions was a continuing
contravention, which of its nature continued from and after 23 November 2010 during
the Relevant Period:
(a) in the case of the Continuous Disclosure Contravention, the Alternative
Continuous Disclosure Contraventions and the Further Continuous Disclosure
Contravention, until such time as the undisclosed information was disclosed
to the Affected Market; and
(b) in the case of the First Ethics Compliance Misleading Conduct Contravention,
until such time as the misleading nature of the representations was revealed
to the Affected Market.
Particulars
i) The Continuous Disclosure Contraventions, the Alternative Continuous Disclosure Contraventions and the Further Continuous Disclosure Contravention continued until the 3 October 2013 Articles were published;
ii) The First Ethics Compliance Misleading Conduct Contravention continued (as augmented by the repetition of the First Ethics Compliance Representation as pleaded in paragraphs 73(a), 77 and 80) until the 3 October 2013 Articles were published.
E. LEIGHTON’S CONDUCT AFTER 23 NOVEMBER 2010
E.1 Publications in 2011 about Leighton’s ethical practices
68. On 29 September 2011, Leighton published and lodged with the ASX its Concise
Annual Report for the financial year ended 30 June 2011 (namely, the FY2011
Annual Report).
69. In the 2011 Annual Report, Leighton made the following statements (September
2011 Ethics Statements):
(a) Leighton was firmly of the view that the reputation and integrity of the
Leighton Group would only be maintained if all its officers and employees
53
observe the highest standard of corporate conduct when engaging in
corporate activity;
(b) Leighton’s commitment to ethical and responsible decision-making and its
shared values were promoted throughout the Leighton Group which helps to
ensure that Leighton has a sustainable business and continues to provide a
good return to shareholders;
(c) The board of Leighton had an Ethics and Compliance Committee, whose
principal functions included, inter alia, to review and monitor Leighton Group
standards and practices related to tender approval probity; and
(d) Each of Leighton’s main operating companies had their own well-established
Ethics Committees which supported Leighton’s Ethics and Compliance
Committee in monitoring and formulating the Leighton Group’s ethical policy
direction and reporting;
(e) In October 2010, the board of Leighton adopted a revised Code of Ethics
which set out the principles and standards which all Leighton Group officers
were expected to comply in the performance of their duties, the revised code
being built on the Leighton Group’s values and principles and set out the
Leighton Group’s core values of discipline, integrity, safety and success;
(f) Under the revised Code of Ethics, the obligations of Leighton Group and
Leighton employees included, inter alia, to act with honesty, integrity and
fairness; and
(g) Leighton and Leighton Group operating companies had implemented an
Ethical Dimension Reporting system which:
i) required each major operating company to submit a quarterly report to
the board of Leighton with a view to ensuring the maintenance of
ethical practices within the Leighton Group, and the continual
improvement in this area; and
ii) was regularly reviewed and monitored by Leighton’s Ethics and
Compliance Committee.
Particulars
FY2011 Annual Report, pp.37-38.
54
70. By the September 2011 Ethics Statements, Leighton repeated the First Ethics
Compliance Representation.
Particulars
The repetition of the First Ethics Compliance Representation is to be implied from the combination of the matters pleaded in paragraph 69, in a context where Leighton had made the September 2010 Ethics Statements.
E.2 Leighton’s 13 February Announcement
71. On 13 February 2012, Leighton published and lodged with the ASX:
(a) a bundle of three documents (which were marked price sensitive), comprising:
i) Leighton’s preliminary final report for the transitional financial year
ended 31 December 2011;
ii) a media release entitled “underlying strength puts Leighton back on
track”; and
iii) an Investor Presentation entitled “Preliminary Final Report”; and
(b) an announcement entitled “Leighton cooperating fully with AFP on possible
breach of Code of Ethics” (13 February Announcement).
72. In the 13 February Announcement, Leighton stated:
(a) Leighton had reported to the Australian Federal Police (AFP) a possible
breach of its Code of Ethics that, if substantiated, may contravene Australian
laws;
(b) the possible breach related to payments that may have been made by
Leighton’s subsidiary Leighton Offshore Pte Limited, in connection with work
to expand offshore loading facilities for Iraq’s crude oil exports;
(c) Leighton had volunteered the information to the AFP after becoming aware of
a possible breach, and was cooperating fully with the AFP as they conduct an
investigation into these matters; and
55
(d) Leighton’s Code of Ethics and values have been, and will continue to be,
critical to Leighton’s culture. Leighton’s values are consistently applied across
the Leighton Group and deviations from those values are not tolerated.
73. By the 13 February Announcement and the matters pleaded in paragraph 72,
Leighton:
(a) repeated the First Ethics Compliance Representation; and/or
(b) represented to the Affected Market that Leighton’s systems for promoting
ethical conduct by Leighton’s officers and employees, and appropriately
dealing with reports of corrupt, unethical and/or illegal conduct had resulted in
Leighton promptly and voluntarily taking steps to report possible corrupt,
unethical and/or illegal conduct to the AFP (Second Ethics Compliance
Representation).
Particulars
i) The repetition of the First Ethics Compliance Representation is to be implied from the combination of the matters pleaded in sub-paragraphs 72(a)-(c), in a context where Leighton had made the September 2010 Ethics Statements and the September 2011 Ethics Statements;
ii) The Second Ethics Compliance Representation is to be implied from the combination of the matters pleaded in sub-paragraphs 72(c) and (d).
74. The Second Ethics Compliance Representation was a continuing representation on
and from 13 February 2012 throughout the Relevant Period.
Particulars
The Second Ethics Compliance Representation was of its nature likely to be continuing unless and until Leighton published to the Affected Market information which qualified it.
E.3 Publications in 2012 about Leighton’s ethical practices
75. On 30 March 2012, Leighton published and lodged with the ASX its Concise Annual
Report for the transitional financial year ended 31 December 2011 (namely, the
FY2011 2nd Annual Report).
76. The FY2011 2nd Annual Report contained the following statements (March 2012
Ethics Statements):
56
(a) the Chairman of Leighton stated in the Chairman’s letter:
(i) the board of Leighton was firmly of the view that the reputation and
integrity of the Leighton Group would only be maintained if all its
officers and employees observe the highest standard of corporate
conduct, and these were set out in the Code of Ethics;
(ii) it was extremely disappointing that, as set out in the 13 February
Announcement, Leighton had reported to the Australian Federal Police
a possible breach of Leighton’s Code of Ethics in relation to payments
that may have been made in connexion with work to expand the
offshore loading facilities for Iraq’s crude oil exports; and
(iii) the board of Leighton did not tolerate anything other than the strictest
adherence to Leighton’s Code of Ethics;
(b) Leighton stated that Leighton’s success over many years had been built on a
foundation of values – discipline, integrity (“Do what’s right and ethical”),
safety and success – and Leighton had revisited these values to ensure they
were aligned with the needs of shareholders, clients and employees, and had
recommitted to Leighton’s four values which had been consistently applied
across the Leighton Group;
(c) Leighton was firmly of the view that the reputation and integrity of the
Leighton Group would only be maintained if all its officers and employees
observe the highest standard of corporate conduct when engaging in
corporate activity;
(d) Leighton’s commitment to ethical and responsible decision-making and its
shared values were promoted throughout the Leighton Group which helps to
ensure that Leighton has a sustainable business and continues to provide a
good return to shareholders;
(e) The board of Leighton had an Ethics and Compliance Committee, whose
principal functions included, inter alia, to review and monitor Leighton Group
standards and practices related to tender approval probity; and
(f) Each of Leighton’s main operating companies had their own well-established
Ethics Committees which supported Leighton’s Ethics and Compliance
57
Committee in monitoring and formulating the Leighton Group’s ethical policy
direction and reporting;
(g) In October 2010, the board of Leighton had adopted a revised Code of Ethics
which set out the principles and standards with which all Leighton Group
officers were expected to comply in the performance of their duties, the
revised code being built on the Leighton Group’s values and principles and
set out the Leighton Group’s core values of discipline, integrity, safety and
success;
(h) Under the revised Code of Ethics, the obligations of Leighton Group and
Leighton employees included, inter alia, to act with honesty, integrity and
fairness;
(i) Leighton and Leighton Group operating companies had implemented an
Ethical Dimension Reporting system which:
(i) required each major operating company to submit a quarterly report to
the board of Leighton with a view to ensuring the maintenance of
ethical practices within the Leighton Group, and the continual
improvement in this area; and
(ii) was regularly reviewed and monitored by Leighton’s Ethics and
Compliance Committee; and
(j) Leighton had recently established a “Leighton Ethics Line” in order to ensure
that Leighton’s employees remain well equipped to identify potentially
unethical practices and encourage a culture of openness where concerns can
be voiced and addressed.
Particulars
FY2011 2nd Annual Report, pp.11, 13 – 15, 51 – 52.
77. By the March 2012 Ethics Statements, Leighton repeated the First Ethics Compliance
Representation and the Second Ethics Compliance Representation.
Particulars
i) The repetition of the First Ethics Compliance Representation is to be implied from the combination of the matters pleaded in paragraph 76, in a context where Leighton had made the September 2010 Ethics Statements and the September 2011 Ethics Statements;
58
ii) The repetition of the Second Ethics Compliance Representation is to be implied from the matters pleaded in subparagraphs 76(a)(ii)-(iii).
E.4 Publications in 2013 about Leighton’s ethical practices
78. On 27 March 2013, Leighton published and lodged with the ASX its Concise Annual
Report for the financial year ended 31 December 2012 (FY2012 Annual Report).
79. The FY2012 Annual Report contained the following statements (March 2013 Ethics
Statements):
(a) Bob Humphris (as Chairman of Leighton) stated in the Chairman’s review
that:
(i) the board of Leighton had recognised the need to develop a uniform
and more comprehensive set of guidelines to ensure the consistent
application of the principles of Leighton’s existing Code of Ethics, and
had developed a new Code of Business Conduct which clearly set out
the behaviours that were expected of all Leighton’s people, regardless
of where they operate;
(ii) Leighton was currently in the process of rolling out the new Code of
Business Conduct which was adopted in August 2012, and was
undertaking an education campaign throughout the Leighton Group,
starting with the CEO and senior management, which demonstrated
Leighton’s absolute commitment to the code; and
(iii) In Leighton’s last concise annual report, Leighton reported that it was
fully cooperating with the AFP as they investigated a possible breach
of Leighton’s Code of Ethics in relation to contracts in Iraq; the
investigations were ongoing and Leighton was continuing to cooperate
as required;
(b) Leighton had an Ethics and Compliance Committee, the charter of which
provided that the objective and purpose of the Committee was to assist the
board of Leighton in fulfilling its corporate governance and oversight by, inter
alia, monitoring and reviewing:
(i) Leighton’s ethical standards and practices generally within the
Leighton Group and compliance with Leighton’s Codes of Ethics and
Business Conduct; and
59
(ii) compliance with applicable legal and regulatory requirements and
internal policies and procedures in, inter alia, business conduct;
(c) Leighton’s board believed that the reputation and integrity of the Leighton
Group demanded that senior executives and all employees observe the
highest standards of conduct;
(d) Leighton expected its employees and business partners to:
(i) always act with honesty, integrity and fairness in accordance with
Leighton’s Code of Ethics and Code of Business Conduct and
Leighton’s core values;
(ii) comply with the Leighton Group Governance System;
(iii) comply with all policies and procedures implemented by Leighton or
operating company as relevant; and
(iv) comply with all applicable laws wherever Leighton operates;
(e) Leighton’s commitment to ethical and responsible decision-making was
encapsulated in Leighton’s Code of Ethics and Code of Business Conduct
which set out the principles and values that guide Leighton’s decisions and
actions, being a framework which aims to promote an organisational culture
that enables Leighton’s employees to respond appropriately to situations and
to be accountable for their decisions;
(f) Leighton’s Code of Ethics was built on the Leighton Group’s values of
discipline, integrity, safety and success, which acted as guiding principles for
Leighton’s operating companies which embed these values whilst embracing
their unique cultures and operating environments in the formulation of their
own core values;
(g) In August 2012, Leighton’s board had adopted the Code of Business Conduct
to reflect Leighton’s values of discipline, integrity, safety and success;
(h) The Code of Business Conduct:
(i) provided a decision-making framework by establishing the principles
and values that guide Leighton’s decisions and actions and promotes
an organisational culture that enables Leighton’s employees to
60
respond appropriately to situations and to be accountable for their
decisions. It clearly outlines the responsibilities of those working for
the Group, whether that be in Australia or overseas, and includes
matters such as, inter alia, ethical business practices to consider
bribery and corruption risk; and
(ii) applies to all people who work for the Leighton Group as an employee
or officer, or people working under contract; and
(i) Leighton Group had implemented an Ethical Dimension Reporting system
which:
(i) required Leighton and each operating company to submit a quarterly
report to the board’s Ethics and Compliance Committee with the
objective of maintaining ethical practices within the Leighton Group,
and the continual improvement in this area; and
(ii) was regularly reviewed and monitored by Leighton’s Ethics and
Compliance Committee.
Particulars
FY2012 Annual Report, pp.8 – 9, 34, 36-37.
80. By the March 2013 Ethics Statements, Leighton repeated the First Ethics Compliance
Representation and the Second Ethics Compliance Representation.
Particulars
i) The repetition of the First Ethics Compliance Representation is to be implied from the combination of the matters pleaded in paragraph 79, in a context where Leighton had made the September 2010 Ethics Statements, the September 2011 Ethics Statements, the 13 February 2012 Announcement and the March 2012 Ethics Statements.
ii) The repetition of the Second Ethics Compliance Representation is to be implied from the matters pleaded in subparagraphs 79(a)(iii).
61
F. LEIGHTON’S FURTHER CONTRAVENING CONDUCT (13 FEBRUARY 2012
ONWARDS)
F.1 Misleading Conduct Contraventions
81. The conduct pleaded in paragraphs 71 to 73, including the repetition of the First
Ethics Compliance Representation and the making (and repetition) of the Second
Ethics Compliance Representation was conduct engaged in by Leighton:
(a) in relation to financial products (being LEI Shares), within the meaning of
subsections 1041H(1) and 1041H(2)(b) of the Corporations Act;
(b) in trade or commerce, in relation to financial services within the meaning of
section 12DA(1) of the ASIC Act; and
(c) in trade or commerce, within the meaning of section 2 of the ACL.
82. As at 13 February 2012:
(a) Leighton’s internal corporate governance structures and ethics compliance
systems had not detected the Stewart Memo (or the conduct described in the
Stewart Memo), but instead it had been accidentally discovered by external
lawyers engaged by Leighton; and/or
(b) Leighton had not promptly and voluntarily taken steps to report the possible
unethical conduct described in the Stewart Memo to the AFP, but had waited
almost twelve months from 23 November 2010 before doing so (and only did
so after prompting by its external lawyers).
83. By reason of the matters pleaded in paragraphs 23 to 41 and 82(a), on and from 13
February 2012, in maintaining and failing to qualify the First Ethics Compliance
Representation, Leighton engaged in conduct which was misleading or deceptive, or
likely to mislead or deceive.
84. By reason of the matters pleaded in paragraph 82, on and from 13 February 2012, in
making, maintaining and failing to qualify the Second Ethics Compliance
Representation, Leighton engaged in conduct which was misleading or deceptive, or
likely to mislead or deceive.
85. By reason of the matters pleaded in:
62
(a) paragraphs 81 and 83; and/or
(b) paragraphs 81 and 84, on and from 13 February 2012 Leighton contravened s
1041H of the Corporations Act, s 12DA(1) of the ASIC Act and/or s 18 of the
ACL (Further Ethics Compliance Misleading Conduct Contraventions).
F.2 Continuing nature of the 2012 contraventions
86. Each of the Further Ethics Compliance Misleading Conduct Contraventions was a
continuing contravention, which of its nature continued from and after 13 February
2012 during the Relevant Period, until such time as the misleading nature of the
representations was revealed to the Affected Market.
Particulars
i) The First Ethics Compliance Misleading Conduct Contravention continued (as augmented by the repetition of the First Ethics Compliance Representation as pleaded in paragraphs 77 and 80 above) until the 3 October 2013 Articles were published;
ii) The Second Ethics Compliance Misleading Conduct Contravention continued (as augmented by the repetition of the Second Ethics Compliance Representation as pleaded in paragraphs 77 and 80 above) until the 3 October 2013 Articles were published.
G. CONTRAVENING CONDUCT CAUSED LOSS
G.1 Market-based causation
87. The Applicant and some Group Members acquired an interest in LEI Shares in a
market of investors or potential investors in LEI Shares:
(a) operated by the ASX;
(b) regulated by, inter alia, sections 674(2) of the Corporations Act and ASX
Listing Rule 3.1;
(c) where the price or value of LEI Shares would reasonably be expected to have
been informed or affected by information disclosed in accordance with
sections 674(2) of the Corporations Act and ASX Listing Rule 3.1;
(d) where material information had not been disclosed, which a reasonable
person would expect, had it been disclosed, would have had a material
63
adverse effect on the price or value of LEI Shares (namely the information the
subject of the contraventions of s 674(2) of the Corporations Act pleaded in
this Statement of Claim (or any of them) (together, the Contravening
Omissions);
(e) where misleading or deceptive statements had been made, namely the
statements the subject of ss 1041H of the Corporations Act, s 12DA of the
ASIC Act, s 12 of the FT Act and/or s 18 of the ACL pleaded in this Statement
of Claim (or any of them) (together Contravening Representations), that a
reasonable person would expect to have a material effect on the price or
value of LEI Shares, in that if they had not been made no investors or
potential investors in LEI Shares would have been in a position to read or rely
upon them; and
(f) in which during the Relevant Period each or a combination of:
(i) the Continuous Disclosure Contraventions, Alternative Continuous
Disclosure Contraventions and Further Continuous Disclosure
Contravention (or any of them);
(ii) the First Ethics Compliance Misleading Conduct Contraventions (or
any of them); and/or
(iii) the Further Ethics Compliance Misleading Conduct Contraventions (or
any of them);
(each being a Market Contravention) caused or materially contributed to the
market price of LEI Shares to be substantially greater than their true value
and/or the market price that would have prevailed but for the Market
Contraventions, from the respective dates that those Market Contraventions
commenced, as pleaded in this Statement of Claim.
Particulars
The extent to which the Market Contraventions caused the market price for LEI Shares to be substantially greater than their true value and/or the market price that would otherwise have prevailed (that is, inflated) during the Relevant Period is a matter for evidence, particulars of which will be served immediately following the Applicant filing opinion evidence in the proceeding.
88. The decline in the price of LEI Shares pleaded in paragraph 18 above:
64
(a) was caused or materially contributed to by:
(i) the market’s reaction to the information communicated to the Affected
Market in the 3 October 2013 Articles (as pleaded in paragraph 16), in
the context of what had been communicated to the Affected Market
prior to those announcements; and
(ii) the Market Contraventions;
(b) would, to the extent it removed inflation from the price of LEI Shares, have
occurred, or substantially occurred, earlier if:
(i) LEI had disclosed to the Affected Market the information that was the
subject of Contravening Omissions; and/or
(ii) LEI had not made the Contravening Representations to the Affected
Market.
Particulars
The extent to which inflation was removed from the price of LEI Shares, and would have been removed at earlier points in time during the Relevant Period is a matter for evidence, particulars of which will be served immediately following the Applicant filing expert evidence.
G.2 Reliance
89. Further, or in the alternative to paragraph 88, in the decision to acquire an interest in
LEI Shares:
(a) the Applicant and some Group Members would not have acquired interests in
LEI Shares if they had known the information the subject of Contravening
Omissions; and/or
(b) the Applicant and some Group Members relied directly on some or all of the
Contravening Representations:
Particulars
i) The Applicant would not have acquired an interest in LEI Shares had he known the information the subject of the Contravening Omissions and, he relied upon each of the Contravening Representations.
ii) The identities of all those Group Members which or who would not have acquired an interest in LEI Shares had they known of any or all of the
65
information that was the subject of the Contravening Omissions and/or which or who relied directly on any or all of the Contravening Representations are not known within the current state of the Applicant’s knowledge and cannot be ascertained unless and until those advising the Applicant take detailed instructions from all Group Members on individual issues relevant to the determination of those individual Group Members’ claims; those instructions will be obtained (and particulars of the identity of those Group Members will be provided) following opt out, the determination of the Applicant’s claim and identified common issues at an initial trial and if and when it is necessary for a determination to be made of the individual claims of those Group Members.
G.3 Loss or damage suffered by the Applicant and Group Members
90. By reason of the matters pleaded in paragraphs 87 to 88 and/or 89, the Applicant and
Group Members have suffered loss and damage by and resulting from the Market
Contraventions (or any one or combination of them).
Particulars
i) The loss suffered by the Applicant will be calculated by reference to:
A. the difference between the price at which LEI Shares were
acquired by the Applicant during the Relevant Period and the true
value of that interest; or
B. the difference between the price at which the Applicant acquired
an interest in LEI Shares and the market price that would have
prevailed had the Market Contraventions not occurred; or
C. alternatively, the days during the Relevant Period where the
traded price of LEI Shares fell as a result of the disclosure
information which had not previously been disclosed because of
the Market Contraventions, and the quantum of that fall; or
D. alternatively, the days after the Relevant Period when the traded
price of LEI Shares fell as a result of the disclosure of information
which had not previously been disclosed because of the Market
Contraventions, and the quantum of that fall.
ii) Further particulars in relation to the Applicant’s losses will be provided after the service of evidence in chief.
iii) Particulars of the losses of Group Members are not known within the current state of the Applicant’s knowledge and cannot be ascertained
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unless and until those advising the Applicant take detailed instructions from all Group Members on individual issues relevant to the determination of those individual Group Member’s claims; those instructions will be obtained (and particulars of the losses of those Group Members will be provided) following opt out, the determination of the Applicant’s claim and identified common issues at an initial trial and if and when it is necessary for a determination to be made of the individual claims of those Group Members.
This pleading was prepared by W.A.D. Edwards of counsel and settled by C. Moore of senior
counsel.
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Certificate of lawyer
I Rebecca Gilsenan certify to the Court that, in relation to the statement of claim filed on
behalf of the Applicant, the factual and legal material available to me at present provides a
proper basis for each allegation in the pleading.
Date: 7 August 2018
Signed by Rebecca Gilsenan Lawyer for the Applicant
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SCHEDULE A (DEFINED TERMS)
1
13 February Announcement ......................... 54
2
2nd FY2011 Report ............................................. 8
3
3 October 2013 Articles ................................. 11
A
ACL ....................................................................... 5 Affected Market .................................................. 5 AFP ..................................................................... 54 Alternative Continuous Disclosure
Contraventions ............................................ 50 ASIC .................................................................... 36 ASIC Act .............................................................. 4 Assistance Services ....................................... 23 ASX ....................................................................... 5 ASX Listing Rules ............................................. 5 AWB .................................................................... 35 AWB Allegations ............................................. 35
B
Bill Wild ................................................................ 9 Bob Humphris .................................................. 10
C
Continuous Disclosure Contraventions .... 48 Continuous Disclosure Obligations ............. 6 Contravening Omissions .............................. 63 Contravening Representations .................... 63 Corporations Act ............................................... 3 Corrupt Business Practices Information .. 41 Corrupt Business Practices Risk
Information ................................................... 40 Corruption Cover-up Information ............... 44 Corruption Cover-up Risk Information ...... 44
D
David Savage ...................................................... 9 David Stewart ..................................................... 9 December 2010 MOA ...................................... 28
F
First Ethics Compliance Misleading
Conduct Contravention ............................. 51 First Ethics Compliance Representation .. 14 First Unaoil Arrangement .............................. 20 Further Continuous Disclosure
Contravention .............................................. 51 Further Ethics Compliance Misleading
Conduct Contraventions ........................... 62 FY2010 Annual Report ................................... 13
FY2011 Report .................................................... 7 FY2012 Annual Report ................................... 58
G
Group Members ................................................. 3
H
HLG ....................................................................... 7
J
JHG ....................................................................... 6
L
LAIO ...................................................................... 8 LAL ........................................................................ 6 LCL ........................................................................ 6 LEI Shares ........................................................... 3 Leighton ............................................................... 3 Leighton Group .................................................. 6 LIL .......................................................................... 7 LMEA .................................................................... 8 LPL ........................................................................ 6
M
March 2012 Ethics Statements .................... 55 March 2013 Ethics Statements .................... 58 Market Contravention ..................................... 63
O
Ocean King ....................................................... 15
P
Peter Cox ........................................................... 10 Phase 1 Contract ............................................. 15 Phase 1 Project ................................................ 15 Phase 1 Variation Orders .............................. 28 Phase 2 Project ................................................ 26 Phase 3 Contract ............................................. 28 Phase 3 Project ................................................ 26
R
Relevant Period.................................................. 3 Russell Waugh ................................................. 10
S
Second Ethics Compliance Representation
......................................................................... 55 Second Unaoil Arrangement ........................ 29 Senior Executive Corrupt Contract
Procurement Information .......................... 41 Senior Executive Corruption Taint Risk
Information ................................................... 40 Senior Leighton Executive ............................ 10 September 2010 Ethics Statements ............ 13
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September 2011 Ethics Statements ........... 52 SOC ..................................................................... 15 SPM ..................................................................... 15 Stewart Memo .................................................. 11
T
Thiess ................................................................... 6
U
Unaoil ................................................................. 20
W
Wal King ............................................................... 8