Law firm Maurice Blackburn served a legal letter notifying Leighton of its proposal to begin a class action, which has been about 18 months in the making, as disgruntled shareholders seek to recover $A1.1 billion in losses suffered as a result of Leighton’s alleged non-disclosure and misleading conduct.
The law firm said Leighton announced a projected $427 million full year loss for the 2011 financial year, on April 11 2011, driven by more than $1.1 billion in write-downs relating to the Brisbane Airport Link project, the Victorian Desalination Plant project and a Dubai-based joint venture, the Al Habtoor Leighton Group.
The announcement signalled the worst annual loss in the company's history. Only two months earlier, on February 14 2011, Leighton had forecast a FY11 full year net profit after tax of $A480 million.
“Therefore, the result announced on April 11 2011 was $907 million less than what was forecast two months earlier,” the law firm says.
“On the first trading day after the April 11 2011 profit write-down, Leighton's share price fell by about 13.9% between August 16 2010 and April 11 2011.”
Shareholders who purchased shares between this period will claim in court that by at least August 16 2010, Leighton knew there were substantial cost increases on the Brisbane Airport Link project.
Similarly, they will accuse the company of its prior knowledge of a likely impairment loss in respect to the AHL Group that would substantially reduce Leighton's forecast FY11 NPAT.
“It will also be claimed that by at least March 18 2011, Leighton knew that substantial cost increases on the VDP [Victorian Desalination Plant] project would also have a substantial impact on Leighton's FY11 NPAT,” Maurice Blackburn said.
The class action comes on top of a writ issued last Friday by the Supreme Court of Victoria against Leighton, following revelations made by Fairfax Media last week that Leighton directors approved a culture of bribery at the company’s international operations in order to win contracts.
The writ alleges Leighton breached its continuous disclosure obligations in section 674(2) of the Corporations Act through its failure to disclose:
- allegations of bribery and corruption involving senior officers responsible for a project in Iraq
- an investigation of misbehaviour involving senior officers including, misbehaviour the subject of a claim by Leighton against former employee for $5.6 million.
Leighton Holdings issued a statement this morning denying the basis for the alleged claims and said it would “vigorously” defend the class action.
Shares at Leighton Holdings were at $17.31 in morning trade – a slight recovery from Friday’s dive to $16.74 from $19.58.
