A 2011 steel supply agreement with Dubai-based Asian Global Projects & Trading signed by former Leighton Holdings chief financial officer Peter Gregg was not “a sham” because emails showed Leighton executives tried to take advantage of the deal, Mr Gregg’s barrister has argued in closing statements in a criminal trial.
The Director of Public Prosecutions has alleged the agreement, which included a $US12.5 million payment by Leighton for marketing and advisory services as well as a $US2.5 million payment for a loan, was “false” because Asian Global never provided these services or steel to Leighton.
Mr Gregg, who has been charged with two counts of falsifying company records, has pleaded not guilty to both charges.
Hament Dhanji, SC, told the jury at Sydney’s Downing Centre Local Court on Tuesday as the month-long trial draws to a close that Mr Gregg had the “authority” to negotiate the agreement, and that it was “an acceptable risk” given that Leighton Holdings wanted to expand into India at the time.
Mr Dhanji acknowledged that no value had been obtained from the agreement by Leighton’s subsidiary companies, but said it could have been “made to work” and referred to emails exchanged between Leighton executives discussing whether to use steel supplied by Indian conglomerate Welspun.
The buy-and-sell agreement was made after Leighton International announced on December 29, 2010, that it had struck a deal to sell a 35 per cent stake in its Indian operations to Welspun Infrastructure Projects – which was majority-owned by Indian billionaire BK Goenka – for about $US104 million to build “a strategic partnership”.
The deal created a joint venture known as Leighton Welspun.
Mr Dhanji previously told the trial that Leighton had made the agreement with Asian Global because that was the company nominated by Mr Goenka, who owns the Welspun Group, a conglomerate.
The exact nature of the relationship between Asian Global and Mr Goenka is unclear.
Leighton sought ‘deal on steel’
Mr Dhanji argued that Mr Gregg had not attempted to hide the buy-and-sell agreement because he tried to arrange personal meetings with Mahesh Khemka, who had signed the agreement on behalf of Asian Global, and because he was willing to travel to the UAE for meetings.
The only thing that Leighton ever wanted from Mr Goenka was “a deal on steel”, Mr Dhanji said. “The evidence does not prove the Crown case beyond reasonable doubt.”
The barrister argued that “no attempt” had been made by the Crown to contact Mr Goenka and call him as a witness, and that there was “no evidence” to show that former Leighton Holdings chief executive Hamish Tyrwhitt, who now lives in Dubai, had been made aware of the attempts of the Australian Securities and Investments Commission to contact him.
The creation of the Leighton Welspun joint venture included a condition that required Leighton Holdings to provide a loan of up to $20 million in certain circumstances.
But due to Indian regulations, there was a possibility the loan would not be able to be paid, giving Welspun the opportunity to exit the joint venture and receive back the money it had paid for the 35 per cent stake, as well as an additional premium.
Welspun agreed to waive Leighton Holdings’ loan obligation so it could remain in the joint venture, and also sought a broader relationship with the Leighton group, according to Mr Dhanji.
Closing statements continue on Wednesday.