Iron ore miner Fortescue Metals Group Ltd
(ASX:FMG) CEO Andrew Forrest’s legal guidance has come under fire from the Australian Securities and Investments Commission. According to the Australian Financial Review, in a submission to the Federal Court in Perth, the corporate regulator alleges Mr Forrest did not receive specific legal advice when he mislead investors; overstating Chinese agreements as binding contracts, when they were in fact broad framework agreements for construction at Fortescue’s Pilbara operations.
While the initial case was dismissed last year, the paper reports that the commission’s latest claim is that the miner’s legal counsel Peter Huston did not review the framework agreements for enforceability before late January 2005, months after the initial revelations regarding the agreements were disclosed.
The AFR says that if found guilty Mr Forrest could be banned from being a director and face fines of $4.4 million, in addition to a $6 million fine for the mining company.
Both the commission and Mr Forrest have not commented ahead of the appeals process, but the paper says in a submission made in preparation for the appeal Mr Forrest accused the regulator of acting inappropriately by allegedly taking his words out of context.
In the year to 30 June, Fortescue Metals Group booked a $681.62 million profit.
