The Parliamentary Secretary to the Prime
Minister, Malcolm Turnbull, may have found an extra cost in holding public
office – that of fighting a legal suit that otherwise could be quietly
settled less expensively.
Liz Sexton broke in the Smage
this morning, HIH liquidator Tony McGrath is going ahead with legal action
against Turnbull, four other individuals and three international companies,
seeking $500 million in damages for their roles in HIH’s ill-fated takeover of
The other star defendant is Warren Buffet’s
General Re – one of the companies that provided a sham reinsurance contract for
FAI to paper over its haemorrhaging accounts. Rodney Adler gets another run,
along with two other FAI executives and an insurance broker.
Turnbull, as chairman of Goldman Sachs Australia,
was FAI’s financial adviser during the takeover. Goldman Sachs and another of
its executives, Russel
Pillemer, are also being sued by McGrath. Reports the Smage: A spokeswoman for Mr Turnbull, Mr
Pillemer and Goldman Sachs described the claim as “baseless”, saying
it “aims to revisit matters rejected by the royal commission in
A General Re spokesman noted that
a version of the claim had been filed with the NSW Supreme Court in 2004, but
had not been served until yesterday. “General Reinsurance
Australia will vigorously defend the claim”, he said.
The big difference between General Re and
Turnbull, though, is that the insurance company at some stage can make a
commercial decision about the cost of defending itself compared with the cost
of reaching a commercial settlement – that’s what often happens with these
things, irrespective of the rights or wrongs of the case.
As a politician with greater ambitions,
Turnbull doesn’t have that option. Any commercial settlement could be used
against him in the future by his political opponents – of whatever party. And with Turnbull in a position of having
to fight the suit to the end, Goldman Sachs will have little option but to go
along with him.
There’s not much to be read into the gap
between the claim being filed and the writs finally served – McGrath has simply
been working through the HIH mountain and now it’s time to see what might be
recovered from the FAI part of the mess.
Turnbull escaped censure from the Royal Commission
into HIH – but that was a different game to the one he now faces. As always,
plenty of lawyers will win whatever