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Nov 25, 2004

James Packer and director's duties

The Sydney Morning Herald'sCBD column wrote yesterday: ASIC big

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The Sydney Morning Herald’sCBD column wrote yesterday:

ASIC big cheese Jan Redfern was thrust into the spotlight yesterday as
the corporate watchdog continued its battle against One.Tel founder
Jodee Rich and his scorer Mark Silbermann.

Under questioning in the Supreme Court by David Williams, SC, for the
One.Tel boys, the head of enforcement recalled reports prepared by her
team on the talents of non-executive director James Packer.

Williams: The authors of the consolidation report had expressed the view
that Mr Packer didn’t seem to have a good understanding of directors’
duties, hadn’t they? Redfern: Yes. Williams: And had expressed the view
that he didn’t have a good understanding of what the role of a director
entails nor what directors’ duties are? Redfern: Yes. Williams: And the
authors of the report had raised the question whether Mr Packer was
suitable to be a director at that time? Redfern: Can you just refer me
to where – Williams: Under the heading “Conclusion” in the middle of the
page. Redfern: Yes.

CBD had a taste of the court transcript and we’ve got some more highlights:

MR WILLIAMS: Q. Would you turn to page 155. Do you
see that’s an email from Mr Howell to you dated 13 October 2001?
A. Yes.

Q. You received that and read it on your return from Noosa, didn’t you?
A. Yes.

Q. And Mr Howell reported to you that, in his view, Mr
Murdoch’s interview had just confirmed his view that all directors were
negligent?
A. Yes.

Q. And Mr Howell reported to you that Mr Pembroke agreed with his view about that matter?
A. Sorry, I’m not sure whether – where it says that.

Q. It says it under the heading “Privileged” in another version that we’ve been given.
A. Oh, okay. I don’t know.

Q. I’ll have to find the other version for you. In any event, it accords with your recollection, doesn’t it?
A. No, I can’t recall that one way or the other, a conversation – what Mr Howell reported to me.

Q. Would you turn to MFI# 36, please.
A. Yes.

Q. Would you turn to page 268. There is a cc to
yourself halfway down the page in respect of the email from Ms Rees to
Mr Ryan; do you see that?
A. Yes.

Q. There was an issue that you had as to whether ASIC had
received everything that it should have received from PBL at the time,
wasn’t there?
A. Yes.

Q. Do you see in the email from Mr Staples to Mr Ryan that
Mr Staples makes reference to putting to the Packer camp a list of
documents that ASIC says should be but weren’t provided under the
notices?
A. Yes.

Q. And then he says:

There may or may not be something in this, but I know Jan is keen given JP — being Mr James Packer?
A. Yes.

Q. — almost certainly will be a defendant in any civil
proceedings and we’re still trying to flush out his level of knowledge.
A. Yes.

Q. As at October of 2001 you had decided that you wanted to
bring civil penalty proceedings against some or all of the directors of
One.Tel for breaches of section 180 of the Corporations Law or
Act?
A. No.

Q. Didn’t you?
A. No. It was one of the options and we needed to
explore that option to put provision – put the position to the
Commission.

=======================

Q. Can you turn to page 245 under the heading “Investigation
focus”. Do you see that it is stated that the investigation is
focusing on breaches of duties by directors?
A. Yes.

Q. Rich, Keeling, Silbermann, Beck, Packer, Murdoch, Adler and Greaves, between January and May 2001?
A. Yes.

Q. Do you see that in the paragraph thereafter there’s
reference to that focus being discussed in detail at the NECC meeting
on 16 October 2001?
A. Including allowing false and misleading statements to be
made to the market. That was the focus referred to in the
previous paragraph.

Q. Yes, but they were said to be aspects of breaches of duties by the directors; correct?
A. I don’t know how you would read that in. That’s – that’s —

Q. All right. The question I just asked you was about
the focus that’s referred to in the bottom two lines on page 245 and
the need to identify two appropriate board experts; do you see that?
A. Yes, but, sorry, are you saying the focus relates to the
breaches of duties of directors? Are you saying that’s what that
refers to?

Q. Well, the words speak for themselves, Ms Redfern, but
I’m suggesting to you that the focus that’s referred to in the last
sentence is the same as the focus that’s referred to in the paragraph
before?
A. Yes.

Q. There was discussion
that day about the need to obtain the assistance of Messrs Packer and Murdoch so
as to prove the damages case, wasn’t there?

A. There was certainly discussion at some stage
about the need to get their assistance and cooperation for evidence in the
proceedings, yes —

Q You’re aware, aren’t you, that the
lawyers for Mr Packer and PBL have provided ASIC with access to many volumes of
material that they collected overseas?
A. I don’t know if it’s many volumes, but I know we’ve certainly
been provided with documents that they collected, but I just don’t know the
detail of how many documents.

Q. You’ve been provided with CD-ROMs from overseas —
A. I’m not aware —

Q. — by lawyers for Mr Packer?
A. I’m not aware of that.

Q. Has ASIC provided the lawyers for Mr Packer and PBL with a copy
of the tender bundle?
A. I don’t know. The tender bundle in these proceedings?

Q. Yes.
A. I don’t know.

Q. Mr Elliott has made suggestions to ASIC as to further documentation
that should be included in the tender bundle, hasn’t he?
A. I don’t know.

Q. ASIC has provided the reports of Mr Carter to the lawyers for Mr
Packer and Mr Murdoch, hasn’t it?
A. I’m not aware of that.

Q. ASIC has asked for comments on those documents from those
lawyers, hasn’t it?
A. I’m not aware of that.

Q. Copies of the defendants’ defences have been provided to the
lawyers for Messrs Packer and Murdoch, haven’t they?
A. I’m not aware of that.

Q. You perceived that joining those
directors – that is, Messrs Packer and Murdoch – would undermine that case, didn’t
you?
A. The issue is that our case would really have undermined any
possibility of a disqualification order against the other directors, against
the directors you’re talking about, Mr Packer or Mr Murdoch. If you’re arguing
they were misled, it is hard to then argue they should be disqualified.

=======================

November 30

Yet more evidence of emerged during Williams’scross-examination ofASIC’s Jan Redfern yesterday:

Q. You took the view in late 2001, didn’t you, that it would
potentially damage the ASIC case against the other directors if Messrs Packer
and Murdoch were added as defendants?
A. I took the view that we didn’t have sufficient to warrant
commencing proceedings against them.

Q. You took the view that joining them as defendants would damage
the case against the other directors, didn’t you?
A. We were seeking disqualification proceedings and the issue was
that we were saying as part of our case that the executive directors had misled
or not informed the board about a whole number of things.

Q. You perceived that joining those directors – that is, Messrs
Packer and Murdoch – would undermine that case, didn’t you?
A. The issue is that our case would really have undermined any
possibility of a disqualification order against the other directors, against
the directors you’re talking about, Mr Packer or Mr Murdoch. If you’re arguing
they were misled, it is hard to then argue they should be disqualified.

Q. You had taken the view that they had been acting negligently,
hadn’t you – that is, Messrs Packer and Murdoch?
A. We’d taken the view they should have done more to discover the
true position, certainly.

Q. And that that constituted a breach of their duties under section
180 of the Corporations Act or Law, didn’t you?
A. Yes, there was certainly that possibility.

Q. That was the view that you had at the time, wasn’t it?
A. Our view was that they could have done more to uncover the truth.

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