Fortescue Wins Court Case Against ASIC

3 January 2010 (Last Updated January 3rd, 2010 18:30)

Fortescue Metals has emerged a winner in a court case filed by the Australian Securities and Investments Commission (ASIC), which claimed the company misled stakeholders. ASIC filed a suit against Fortescue and its CEO Andrew Forrest in 2006, alleging he had misled stakeholders by stati

Fortescue Metals has emerged a winner in a court case filed by the Australian Securities and Investments Commission (ASIC), which claimed the company misled stakeholders.

ASIC filed a suit against Fortescue and its CEO Andrew Forrest in 2006, alleging he had misled stakeholders by stating framework agreements for construction work with three Chinese firms in 2004 were legally binding when they were actually only preliminary.

ASIC alleged the contracts were little more than “agreements to consider agreements” and not binding contracts, as Fortescue had portrayed them to be.

Fortescue refuted the claims, stating that all of its disclosures were accurate at the time and the deals would eventually be transformed to binding contracts.

The regulator sought $5.36m (A$6m) in civil penalties against the company and $3.93m (A$4.4m) against the CEO.

The Federal Court in Perth said Fortescue did not engage in any misleading and deceptive conduct or failed to follow their disclosure obligations and that the CEO did not breach his duties as the company director.

Forrest said that even though the case was a distraction, Fortescue's plans to strengthen its iron ore production and exports were not impacted by the case.

"We can now move on and continue to do what we do best, which is to develop and build iron ore projects for the benefit of our shareholders, staff, customers, the communities in which we operate, and Australia," Forrest said.

ASIC said it was considering whether to appeal the judgement.