Doubts over Lib chief's shares
Liberal Party state treasurer and one of Australia's richest businessmen, Andrew Abercrombie, bought shares in a public company at the same time it was in secret takeover talks with a firm he controlled, documents reveal.
Liberal Party state treasurer and one of Australia's richest businessmen, Andrew Abercrombie, bought shares in a public company at the same time it was in secret takeover talks with a firm he controlled, documents reveal. LIBERAL Party state treasurer and one of Australia's richest businessmen, Andrew Abercrombie, bought shares in a public company at the same time it was in secret takeover talks with a firm he controlled, documents reveal.The confidential company documents obtained by The Age show that Mr Abercrombie's 2008 share purchases in Perth communications firm Amcom occurred while the firm was having confidential discussions with Mr Abercrombie about buying a company he directed and majority owned, Digital River Networks.Mr Abercrombie was appointed treasurer of the Liberal Party's Victorian branch in May, with the support of Premier Ted Baillieu. BRW magazine recently estimated his wealth at more than $400 million, with the bulk of it coming from the listed leasing and finance company he founded, FlexiGroup.Documents obtained by The Age regarding his Amcom share trade show:?A July 2008 email he sent his fellow Digital River directors shortly before he bought Amcom shares warned them not to trade in Amcom stocks because the directors were privy to information about the private negotiations?Confidential draft legal advice obtained by Digital River states that Mr Abercrombie may have breached his director's duties and Australian laws by buying the Amcom shares.In the July 23, 2008 email, Mr Abercrombie warned his fellow directors not to buy shares in Amcom because of the secret takeover discussions between the Perth firm and Digital River.''Hi guys ? now is the time [for Digital River] to engage seriously with Amcom. It was made clear to me by Amcom chairman Tony Grist, that knowledge of what is happening here makes us insiders, so trading in Amcom shares/options now would be illegal.''Five weeks later, on September 1, as takeover talkscontinued, Amcom announced to the ASX that a company solely owned and directed by Mr Abercrombie, AJA Super IW, bought a 6.55 per cent stake in Amcom.AJA Super IW bought more Amcom shares on December 15, 2008, bringing Mr Abercrombie's total holding in the firm to 8.5 per cent, worth about $4.6 million at the time.Amcom has never alerted the market about its private dealings with Mr Abercrombie and Digital River. The discussions ultimately collapsed in the second half of 2009 and the takeover did not go ahead.Mr Abercrombie declined to answer a list of detailed questions sent by The Age to explain his trading in Amcom shares. Instead, his lawyer sent The Age a letter threatening to sue the paper for defamation if the story was published.''It is not for Mr Abercrombie to establish, either to The Age or elsewhere, that he did not breach the provisions of the Corporations Act. He is in no different a position to any other person in the community in this regard,'' the letter says.''On the basis of our instructions, it is our advice to Mr Abercrombie that there has been no breach of the Corporations Act in his dealings with Amcom Telecommunications Limited or Digital River Network Pty Ltd.''A communication stock analyst told The Age that if Amcom had told the market that an acquisition was being discussed, it is likely it would have resulted in a rise in Amcom shares because the takeover would give the Perth firm control of Digital River's valuable east coast broadband infrastructure.A confidential Digital River letter to the federal government in March 2009 also disclosed that takeover discussions with an ASX company - which The Age has confirmed was Amcom - were serious and ongoing and, if realised, would be ''beneficial'' to Amcom.Mr Abercrombie unsuccessfully attempted last year to gain preselection for former federal treasurer Peter Costello's seat of Higgins. He was elected unopposed as treasurer of the Liberal Party's state branch in May.As treasurer, Mr Abercrombie has ultimate responsibility for the party's fund-raising activities and compliance with electoral laws relating to such activities.The leaked company documents show that at least four months before Mr Abercrombie made his Amcom share purchases, the secret discussions between Digital River and Amcom were well afoot and Mr Abercrombie was deeply involved in them. The discussions continued for many months after his share purchases.Private company emails sent in November 2008 show that between Mr Abercrombie's first and second purchase of Amcom shares, Amcom had made an ''informal'' offer to take over Digital River.An email sent on November 26, 2008, to Mr Abercrombie by Amcom chief executive Clive Stein states: ''Gents, please find attached a document which summarises the key commercial points of discussion to date. Our main driver is to maintain an accretive transaction, as well as not to try to delay the transaction due to shareholder approval.''The leaked emails also reveal that when Mr Abercrombie's share purchases were uncovered by other Digital River executives, they immediately sought legal advice about the legality of his dealings.The draft external legal advice from Shiff & Company lawyer Julia Adams to the Digital River board concluded Mr Abercrombie's Amcom share dealings had presented him with ''a conflict of interest'' that ''increased the possibility'' that he had broken laws which require company directors to never use their position to gain an advantage for themselves. ''This is particularly the case given we are instructed that the director [Mr Abercrombie] has been instrumental in negotiating with Amcom,'' she said.During a brief conversation with The Age last month, Mr Abercrombie denied Digital River was involved in secret takeover talks with Amcom. ''There were no confidential acquisition talks. Amcom had expressed interest in expanding to the east coast, they were talking to lots of people,'' he said.However, the March 2009 letter from Digital River to the federal government states that the firm had been ''approached by an ASX listed telecommunications company for a potential merger and while we are approached regularly, the company engaged with this particular entity due to the natural synergy between the two organisations.''''Whilst Digital River has taken several steps towards a potential merger with the ASX-listed telecommunications company, including the execution of a non-binding indicative offer and providing due diligence material to the party, at this stage the transaction has stalled, mainly due to differences in valuation.'' Digital River was sold three months ago to another listed telecommunications operator, Vocus Communications, for nearly $4 million.