Kidman Resources boss ‘passed on takeover tips to brother in law’

A Melbourne judge is set to decide if there is enough evidence to commit Duncan Stewart, accused of insider trading, to a higher court next week.

Duncan Stewart, who has been charged by ASIC with insider trading, with his barrister Ruth Shann. Picture: Angelica Snowden

The former boss of Kidman Resources allegedly passed on “regular” updates about imminent takeover bids to his brother-in-law who stands accused of illegally using the insider information to buy shares for himself and give tips about the stock to a family member to settle a debt, the corporate regulator has claimed in court.

Around March 1, 2019 former Kidman managing director Martin Donohue had been discussing a potential takeover bid of his company by Chilean major SQM with his brother-in-law Duncan Stewart, who encouraged his brother Ashley Stewart to buy stock too, the barrister for the Australian Securities & Investments Commission, Patrick Doyle SC, said on the final day of a committal hearing at the Melbourne Magistrates’ Court.

“Having received this information Mr Stewart is motivated to pass it on to his brother as a tip,” Mr Doyle said.

“(Mr Stewart) owed Ashley a kind of debt and had a hope or expectation that by giving him a tip about Kidman and urging him to buy Kidman shares that some of that … may be forgiven,” he said.

ASIC has claimed that in a text message exchange on March 1, Mr Stewart “clearly (had) inside information obtained at about the time … relating to a potential takeover of Kidman by SQM”.

Mr Doyle conceded ASIC’s case was circumstantial. He acknowledged ASIC did not call Mr Donohue to give evidence but it was not obliged to and he was likely to deny the allegations.

“Someone in his position who is a suspect in relation to these matters wouldn’t necessarily be called by the Crown,” he said.

ASIC alleged that as soon as the SQM deal fell through, Mr Donohue started passing on inside information about other bids Kidman was receiving, including one from Wesfarmers. That deal did go ahead in September 2019 for $1.90 per share, all up worth $776m.

Mr Doyle alleged Mr Stewart also sent a message to Sam McCardle – who ASIC was also “interested in”, the court heard – to encourage him to “hold on” to Kidman shares, but that he could not say why.

The “sheer volume” of calls between Mr Donohue and Mr Stewart from about March 6 to May 3, when Kidman was negotiating with Wesfarmers, indicated they were not social calls, as Mr Stewart had previously told the regulator in a 2021 voluntary interview that he was not “particularly close” with Mr Donohue, Mr Doyle told the court. “(We) don’t say they are real time updates, (but) regular updates? Yes,” he said.

Representing Mr Stewart, barrister Ruth Shann SC argued there was “a dearth of evidence” in ASIC’s case.

“There is no evidence that Mr Donohue ever said anything to Mr Stewart about Wesfarmers,” she said.

“One could speculate Mr Stewart was told some information … about Wesfarmers. That’s a possibility, sure. But it’s not able to go beyond that. (It is) not enough for a jury … to convict a man of serious offending.”

Ms Shann said the level of contact between Mr Donohue and Mr Stewart could be explained by their family connections, and there was plenty of public information to encourage people to buy Kidman shares. Magistrate Rohan Lawrence adjourned the matter until next week, when he will deliver his decision about whether or not there is enough evidence against Mr Stewart – who has been accused of a serious criminal offence – to order him to face a trial in the County Court or Supreme Court. Ashley Stewart, Mr Donohue and Mr McCardle have not been charged.