Former Amcor executive set up secret companies to buy Amcor assets at less than true value, Amcor counsel tells Victorian Supreme Court in Melbourne, Australia
May 18, 2011
– A former Amcor executive set up secret companies to buy Amcor assets at less than their true value, the Victorian Supreme Court in Melbourne, Australia, was told on Monday.
Judge Peter Vickery heard that Jim Hodgson, who was group general manager of cardboard box producer Amcor Fibre Packaging Australasia at the time, allegedly arranged for two Amcor businesses to be sold on "uncommercial terms" to companies he controlled with four colleagues, The Australian reported on May 17.
Hodgson is suing Amcor for entitlements following his sacking in September 2004.
Amcor counsel Will Houghton QC said the businesses were a packaging accessories operation sold in February 2002 and a corrugated box business sold in June 2003. They were bought by companies controlled by third parties unconnected with Amcor, but the new owners of the businesses actually controlled just 20% of the companies, the court was told. The remaining 80% was held in trust for the real owners, Hodgson and four Amcor executives reporting to him.
Houghton said the sales were negotiated by Australian cardboard division head Trevor Barnes. Barnes reported directly to Hodgson and held a 20% stake in the companies buying the assets.
Houghton said the sale included "unusual and certainly uncommercial" conditions requiring Amcor to continue to supply raw materials to the cardboard business at cost price for nine years, lend the purchaser AU$30,000 to cover legal fees at zero interest, and provide working capital by paying all of the purchaser's business accounts for the first 12 months, with repayment after 59 days.
Houghton said the executives sought to disguise their involvement in the purchases by using shelf companies, adding: "The level of cloak-and-dagger involved was really quite amazing."
Hodgson was sacked in September 2004. Barnes and fellow Amcor executives Albert Mihelic, Ian Sangster and Christopher Bayley also left the company that month and set up a business with Hodgson providing consulting services to Amcor competitor Carter Holt Harvey.
In 2004, the executives were sued by Amcor for the return of confidential material. Tape recordings made by Hodgson were discovered during raids sanctioned by the court in connection with that case.
The recordings were of conversations between Hodgson and Amcor and Visy executives which revealed a cardboard price-fixing cartel between the two companies. Visy executive chairman Richard Pratt was eventually fined AU$36m for price fixing.
Amcor and all staff including Hodgson were given immunity from prosecution in return for co-operating with the Australian Competition & Consumer Commission investigation.
The case continues.
The primary source of this article is The Australian, Surry Hills, Australia, on May 17, 2011.