The corporate watchdog has launched a major investigation into allegations certain executives and directors at Leighton Holdings and its successor CIMIC breached their duties and failed to disclose to investors the existence of a multimillion-dollar bribery scandal.
The ASIC investigation was sparked by revelations in Fairfax Media this year that senior figures inside Leighton and CIMIC had for four years buried a scathing internal report which implicated mining subsidiary Thiess in an alleged multimillion-dollar bribery scandal in India. Leighton was renamed CIMIC in 2015 after being acquired by Spain's Grupo ACS in early 2014.
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The Fairfax Media reports also revealed how CIMIC director Dr Kirstin Ferguson, also an ABC board member, was under increasing pressure over her handling of a whistleblower who alerted her to the corruption scandal only to be sacked in 2014. His concerns were ignored.
Dr Ferguson, who joined CIMIC's board in July 2014, resigned from the construction group on Thursday, several weeks after ASIC launched its investigation. Dr Ferguson declined to comment yesterday.
![CIMIC executive chairman Marcelino Fernandez Verdes.](/web/20161115222822im_/http://www.theage.com.au/content/dam/images/g/m/8/t/g/n/image.related.articleLeadwide.620x349.gsmssp.png/1479011529848.jpg)
In its announcement to the ASX Thursday, CIMIC thanked her for her service and integrity.
The ASIC investigation has remained secret until now. Leaked documents show ASIC is examining if directors and officers of CIMIC or Leighton breached their duties by "failing to take reasonable steps, during the period 2 August 2012 and 7 April 2016, to deal with allegations of bribery made in respect of the Pakri Barwadih sub-contract [in India]."
High flyers
Former Leighton chief executive Hamish Tyrwhitt, who was replaced by CIMIC's new Spanish management team after the takeover in March 2014, is now chief executive at Dubai-based luxury design group Depa Ltd. His successor was ACS executive Marcelino Fernandez Verdes.
ASIC is also investigating if CIMIC – which is building dozens of projects around Australia including Sydney's $16.8 billion WestConnex motorway and has launched a hostile takeover of contractor UGL – breached its ASX continuous disclosure obligations by failing to tell investors about its internal investigation into the Thiess bribery allegations.
![Kirstin Ferguson held the top integrity role at CIMIC before resigning.](/web/20161115222822im_/http://www.theage.com.au/content/dam/images/g/r/2/i/f/c/image.related.articleLeadwide.620x349.gsmssp.png/1479011529848.jpg)
The internal investigation report, delivered to Leighton by external lawyers in 2012, detailed how senior Thiess executives failed to act on repeated warnings that Thiess's Indian partner, property developer Syam Reddy, was paying or promising to pay as much as $16 million in bribes to Indian politicians and officials to secure Thiess a $6.8 billion coal mining contract in 2008.
Whistleblower ignored
A whistleblower later urged Dr Ferguson and other directors and senior officers of Leighton and CIMIC to act on this report only to be forced out of the company.
![Former Thiess managing director Bruce Munro.](/web/20161115222822im_/http://www.theage.com.au/content/dam/images/1/3/f/e/o/z/image.related.articleLeadwide.620x349.gsmssp.png/1479011529848.jpg)
Among those likely to be grilled by ASIC as part of its recently launched investigation are former and serving senior executives and directors of Leighton and Thiess, including those who ignored internal advice from the whistleblower to disclose the Thiess internal report to the ASX. Thiess was run by Bruce Munro from September 2011 until May 2015.
It is understood the internal Thiess report was never given to ASIC or the federal police and its contents only became public after it was leaked to Fairfax Media this year.
Dr Ferguson faces questions about what action, if any, she took to protect the whistleblower after they urged her to help, as well as any steps she took to ensure the company's alleged corruption was dealt with properly rather than covered up.
Other former and serving Leighton and CIMIC senior figures face similar questions.
Mr Fernandez Verdes stepped aside as CIMIC's chief executive in October and was replaced by Adolfo Valderas, but remains executive chairman.
Dr Ferguson was appointed to the ABC board by the Coalition and is responsible for overseeing the national broadcaster's audit committee.
Shadow attorney-general Mark Dreyfus told Fairfax Media earlier this year that the scandal meant "it has to be asked if Dr Ferguson is an appropriate person for the ABC board and its audit and risk committee".
On Friday, Mr Dreyfus welcomed the ASIC probe but, in a week in which Rio Tinto has been embroiled in its own corruption scandal, said Australia was still mostly failing to prosecute companies implicated in alleged foreign bribery.
Mr Dreyfus also urged consideration of private sector whistleblower reforms. Financial Services Minister Kelly O'Dwyer has made similar comments recently.
The revelations of the cover-up of the India scandal come after Fairfax Media in March exposed intimate details of the offshore arm of Leighton's dealings with corrupt Monaco-based fixer Unaoil in relation to Iraqi oil pipeline contracts, as well as a questionable $15 million payment to a Dubai consultant in connection to steel supply.
The federal police has an ongoing investigation into Leighton for allegedly paying bribes in Iraq while ASIC is already investigating the steel supply payment over alleged accounting offences. The FBI, Department of Justice and UK Serious Fraud Office joined that investigation after the Unaoil scandal broke in March.
CIMIC declined to comment. Mr Munro and Mr Tyrwhitt could not be reached for comment.
Got a tip for our investigative team? Email: nmckenzie@fairfaxmedia.com.au or rbaker@fairfaxmedia.com.au