Pratt Prosecution Puts Several Reputations At Risk

The Age

Tuesday June 24, 2008

Leonie Wood

Until now, the ACCC has only allowed the existence of the punitive measures at its disposal to scare people into co-operating, writes Leonie Wood.

Until now, the ACCC has only allowed the existence of the punitive measures at its disposal to scare people into co-operating, writes Leonie Wood.

AS THE Australian Competition and Consumer Commission prepares for yet another courtroom battle with packaging billionaire Richard Pratt, there is a slim yet tantalising prospect that the public may finally learn details of deals the regulator struck four years ago with Pratt's price-fixing mates at Amcor.

Pratt on Thursday was charged with four counts of knowingly giving false or misleading evidence to ACCC investigators in a formal interview on July 26, 2005. He must appear before Federal Court judge Donnell Ryan for a directions hearing on July 7.

It is not yet clear if Pratt will plead at that hearing, but the tycoon and his legal team, led by Arnold Bloch Leibler's Leon Zwier, have already signalled they will run a vigorous and high-profile "not guilty" case. Batten down the hatches, Graeme Samuel. This could get lively.

When Pratt's criminal prosecution eventually gets under way (and there is not even a tentative timetable yet), he will no doubt challenge the credibility of prosecution witnesses, in particular the man who is likely to be a key ACCC witness, Amcor's former chief executive, Russell Jones.

Jones resigned from Amcor in disgrace after the company's lawyers in November 2004 gave the ACCC evidence incriminating Amcor and Visy in a

long-running cartel.

Unlike Pratt, and his two most senior executives, Amcor and its senior executives avoided ACCC prosecution because they invoked the protection afforded to whistleblowers who co-operate with the regulator. In itself, the fact that the immunity deals exist doesn't get Pratt off the hook. But in the hands of a clever counsel, perhaps, these deals might be used to smear the characters of those whom the ACCC believes are truthtellers.

It was Jones' evidence that ultimately roped in Pratt. He told ACCC investigators about a cosy meeting with Pratt in May 2004 when they shared lunch at the All Nations Hotel in suburban Richmond, and how at that meeting the pair - the most senior decision-makers in their respective organisations - agreed to protect and retain the illegal cartel.

This was crucial stuff. What Jones' evidence confirmed to the ACCC was that the cartel was highly engineered and totally approved from the top.

It was not an accident of some pathetically ambitious executives greedy for annual performance bonuses who struck illegal deals in car parks, motels and Glen Iris kitchens. It was a scheme engineered by the underlings but sanctioned by the men who were ultimately responsible for the profit performances of each company.

When Pratt was confronted with Jones' version of events during his interview in July 2005, Pratt replied: "He's lying." The Visy boss denied having any such conversation with Jones, and denied knowing anything about the cartel.

Visy's formal defence in the ACCC civil case was that it merely tried to trick Amcor into believing, falsely, that its rival was co-operative in a cartel. And this convoluted defence continued right up until October 16, 2007, when Pratt and his team settled out of court, averting a six-month trial. At that time, Pratt claimed Visy had only "sought to outmanoeuvre" Amcor.

Pratt was not personally fined, but he stumped up

$36 million to pay the penalties levied against his company.

At the time, he agreed with the ACCC's allegation that he had known about the cartel.

The ACCC's criminal prosecution of Pratt is not for perjury; it alleges that Pratt purposely tried to defeat ACCC investigators in their official duties. And by prosecuting Pratt, the ACCC is showing that it is fully prepared to use the might of the Trade Practices Act when chasing cheats.

It shows the regulator can, and will, exploit the punitive measures of section 155 of the Trade Practices Act, which makes it a jailable offence to mislead or lie to investigators. Until recently, these powers in the hands of the ACCC were considered little more than a psychological threat only, designed to scare someone into co-operating but never likely to be used.

© 2008 The Age

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