The business pages are full of the news of the corporate plod finally
lumbering Fortescue Metals and its colourful CEO, Andrew “Twiggy” Forrest over
alleged “misleading and deceptive” conduct – but where’s the outrage of the
exceedingly slow pace of justice?
After an unfortunate history with nickel in
the Wild West, Twiggy jumped on the iron ore bandwagon. The desert has been thick
with folks talking up iron ore prospects ever since the stock market discovered
China in October, 2003. The problem for all the wannabes, aside from having the right
mineral, has been the massive funding needed to develop projects and infrastructure.
Twiggy struck stock market gold in late 2004
by announcing he had “binding” agreements with various major Chinese entities
to finance building the required mine, railway and port. That’s a lot of money.
With the market in promises running hot, Twiggy sold $13.5 million worth of his
Fortescue shares in February last year, but one month later the world twigged
to the fact that the deals were not in fact binding. The share price plummeted
and there hasn’t been any good news since.
Those with any knowledge of the China
trade understand that memoranda of understanding (MOUs) with big Chinese
companies are sixpence a dozen and don’t mean anything. Twiggy’s “framework
agreements” seem to be not much more than MOUs.
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The question now though is why it has taken
ASIC nearly a full year to seek $3 million in damages from Fortescue and
$600,000 from Twiggy? (And in light of that $13.5 million share sale, the $600K
doesn’t seem like much of an ask if the charges are proven.)
Plod’s speed cannot be considered flash
when just about everything of relevance to this matter is on the table and the
dogs have been not just barking, but sending detailed correspondence carved in
bone. One can easily form the opinion that this cannot have been a difficult
investigation. If it takes a year for ASIC to turn up in Federal Court for
this, how many decades would something tricky take? Investors might feel a
little more confident if they saw the watchpuppies move sharply.
But I guess that’s why Plod is called Plod.