Fortescue accused of immoral, unethical, unscrupulous conduct by US billionaire’s family company

The lawsuit alleges Fortescue reneged on a deal to buy coal assets with a company owned by US hedge fund billionaire Paul Tudor Jones.

Fortescue executive chairman Andrew Forrest speaks at the company’s AGM on Tuesday. Picture: SoCo Studios

Fortescue chairman Andrew Forrest has dismissed a lawsuit against the company’s US arm by American billionaire Paul Tudor Jones as a “total non-event”, despite legal claims Fortescue’s decision to renege on a business agreement was “immoral, unethical and unscrupulous”.

Mr Tudor Jones’ company, Kid Shelleen, is claiming $US6.25m ($9.5m) in unpaid costs from Fortescue’s US energy arm, claiming Fortescue Future Industries (FFI) tried to cut it out of a series of deals to buy and mothball fossil-fuel power plants in the US in 2022, as Fortescue was trying to get a foothold in the US energy market for its green hydrogen ambitions.

Dr Forrest went public with his plans to buy US coal plants and convert them into hydrogen production facilities in April 2022, telling The Australian he was looking at up to 22 coal plants in West Virginia, after meeting influential Democrat senator Joe Manchin, along with workers at one of the facilities, the Pleasant Valley power station in the state.

Dr Forrest did not say so at the time, but court documents filed by Kid Shelleen reveal that Fortescue had been working with Mr Tudor Jones’ company on deals to buy coal-fired power stations for five months ahead of the revelation, using Kid Shelleen to conduct due diligence on the assets with a plan to buy them jointly and convert them to hydrogen production.

Paul Tudor Jones.

In addition to Pleasant Valley, the two companies considered bids for gas-fired power stations in Texas owned by TexGen, and a coal-fired power station in Ohio – like Pleasant Valley, owned by US utility Energy Harbor. The lawsuit filed by Kid Shelleen alleges that Fortescue initially tried the switch the deal from its initial conception, in which Fortescue would buy the assets and then allow the US company to buy in, to asking Mr Tudor Jones’ company to front the purchase with Fortescue as a silent partner.

“FFI and its representatives were not keen on the optics of FFI, an entity ostensibly seeking to produce green energy, purchasing and running coal energy plants,” the documents say.

Despite agreeing to make a $US135m non-binding offer for the power stations, Fortescue then completely reneged on the deal by making a separate offer for the Energy Harbor plans in August 2022, the documents say.

Kid Shelleen then alleges Fortescue reneged on a verbal agreement to reimburse its time and costs for conducting due diligence investigations on the assets, worth about $US6.25m.

Dr Forrest dismissed the legal fight as a “total non-event” on Tuesday, telling reporters on the sidelines it was a “boring” story.

“Someone low down in his chain somewhere has made an accusation against someone who doesn’t even work for us anymore,” he said.

Originally published as Fortescue accused of immoral, unethical, unscrupulous conduct by US billionaire’s family company