Maurice Blackburn alleged in a Federal Court class action that Leighton Holdings was aware of the losses months before it announced the write-down. Photo: Eddie Jim
Leighton Holdings has paid out almost $ 70 million in compensation to settle one of several investor class action lawsuits facing the company.
Fairfax Media can reveal that the company has finalised a deal to settle the action brought by law firm Maurice Blackburn on behalf of about 2400 investors.
The investors are seeking compensation in connection to the company’s April 2011 decision to announce more than $ 1.1 billion in write-downs, a move that caused Leighton Holdings’ share price to fall almost 14 per cent.
Last year, Maurice Blackburn alleged in a Federal Court class action that Leighton Holdings was aware of the losses months before it announced the write-down.
The law suit alleged that the company had engaged in misleading and deceptive conduct and should have disclosed the adverse news in 2010, well before the April 2011 announcement.
The write-downs were connected to the company’s troubled construction of Victoria’s desalination plant and Brisbane’s Airport Link toll road.
In 2010, Leighton Holdings also faced significant losses in its Middle East business ventures that contributed to the later write-down.
Leighton Holdings chief executive Marcelino Fernandez Verdes said in a statement: ”Whilst we continue to deny the claim, the decision to settle the class action was a commercial one, taken in the interests of our shareholders. Resolving these matters permits management to focus on the operations of the business. It is important to note that the settlement is not an admission of any liability or a finding of any breach of law against Leighton or any of our executives.”
Maurice Blackburn class actions principal, Rebecca Gilsenan, said the settlement would compensate thousands of investors who claimed that Leighton failed to disclose problems on some of the company’s key infrastructure projects.
”This settlement has occurred efficiently and early in the litigation process, which is a great outcome for the shareholders affected,” Ms Gilsenan said.
David Sloper, the director of Inabu, which was the lead applicant in the case, said he was relieved to see justice done. ”People lost money they invested in good faith, and I’m grateful that this class action has given me and others the opportunity to recover compensation for our losses,” Mr Sloper said.
The move to settle the class action does not spell the end of legal troubles for the company.
The Australian Federal Police and the corporate watchdog, the Australian Securities and Investments Commission, are investigating the company over allegedly corrupt practices connected to some of its overseas business activities.
In 2013, Fairfax Media revealed that significant governance failures in Leighton Holdings’ international empire had allowed alleged corruption to occur across Asia and in Iraq, where the firm paid an alleged bribe to secure an oil pipeline project in 2011.
The company is also facing other unresolved legal actions, with Maurice Blackburn still considering whether to launch another class action in connection to the hit suffered by shareholders over the company’s allegedly corrupt overseas activities.
A small group of Melbourne investors have launched their own class action in connection to the company’s handling of the overseas corruption affair.