Santos chief Kevin Gallagher is set to take the stand in a long-running legal battle between collapsed contractor Forge Group and engineering giant Clough over insider trading claims.
But his three-day stint in the witness box could be deferred until 2026.
Santos chief executive Kevin Gallagher.Credit: Ben Searcy
For almost six years, Forge Group’s administrators have been pursuing Clough, its wholly owned subsidiary Clough Operations, its former managing director Gallagher and executive Neil Siford for compensation over alleged breaches of the Corporations Act.
No criminal case has been brought.
Forge Group’s administrators claim Gallagher and Siford — both of whom served as directors of all three entities — knew statements the company had made about its risk management strategy were “unreliable” and “incorrect” when Clough sold off its 35.9 per cent stake in the contractor.
The March 2013 share sale occurred as Forge Group’s share price climbed to near record highs of $6.05 and netted Clough just shy of $187 million.
But lawyers for Forge Group claim the shares would have sold for “substantially less” had the information Gallagher and Siford were equipped with been made publicly available.
By the end of the year, Forge’s share price was plunging amid concerns around potential underperformance on two power station projects it inherited after acquiring contractor CTEC.
In February 2014, Forge Group announced a profit write down which led to the appointment of administrators from insolvency firm Ferrier Hodgson — collapsing with $800 million worth of debt.
After several years of document swaps and interim judgments, the WA Supreme Court had reserved dates for a civil trial which was due to run in Perth from May 1 until mid-June.
But there were fresh doubts about whether that trial would proceed as planned on Monday, with the company’s lawyer Patricia Cahill, SC, seeking to push the matter back to allow more time for pre-trial expert evidence.
Cahill proposed splitting the trial — which the parties anticipate could run for between four and six weeks — over several months.
But Gallagher and Siford’s lawyer Anthony Willage lobbied against the move, claiming the defendants risked being prejudiced by splitting the trial and proposing that if the variation was granted the entire trial should be pushed back to November or deferred until 2026.
Justice Matthew Howard said the dates proposed presented a conflict that would force him to hand over carriage of the matter to another judge.
Both parties are now expected to present new potential trial dates before another hearing on Wednesday.
Lawyers for Forge Group and the defendants have set aside four weeks to embark on a privately-funded mediation ahead of the trial.
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