Worley still pursued for $317m in Ecuador contracts dispute
Worley has admitted the ongoing legal claims in response to questions from the Australian Securities Exchange.
The Ecuadorian government continues to pursue Worley for $US209m ($317m) in the courts over corruption-tainted contracts with state-owned enterprises, the engineering services company has been forced to admit.
Worley made the disclosure that it was still mired in 19 Ecuadorian lawsuits against it in the footnotes of an eight-page letter responding to detailed questions from stock exchange compliance staff that were prompted by The Australian’s reporting.
The company also defended its failure to disclose findings of illegality and corruption made against it on December 27, when it first announced it had lost an international arbitration tribunal case over the contracts.
It repeated previous statements that it rejected the tribunal’s findings and was considering its legal options.
Wednesday’s announcement was the company’s third attempt to explain the result of an international arbitration claim it lodged against Ecuador in 2019.
On Wednesday, it for the first time attempted to reconcile the headline figure of its arbitration claim, $US470m, with the $A58m in “receivables” it claimed the dispute was about in an announcement issued last week.
It said its claim was made up of $US83m for unpaid work, $US59m in interest and $US327.2m in civil liability and tax claims the Ecuadorians were pursuing the company over in the country’s courts.
“In the arbitration, Worley asked the tribunal to order Ecuador to desist from such baseless claims,” the company said in its ASX statement.
“In Worley’s view, asserted in submissions which are referred to in the decision, these claims were part of a pattern of harassment. Worley considers the claims to be without merit, and to date, all of the claims which have been decided have been resolved in Worley’s favour.”
In a footnote, the company said that 17 civil claims, worth a total of $US182.2m and two tax claims, totalling $US26.8m, remain on foot.
It said it believed seven of the 17 civil cases were filed out of time and the remaining 10 “have other procedural and substantive defects that should result in the dismissal of these claims”.
The Australian sent detailed questions to Worley before publishing its initial story on January 9, including seeking clarification on the total figure being claimed and in dispute. Worley did not respond to those questions.
Last year the international tribunal dismissed Worley’s claims for unpaid bills “based on jurisdictional and admissibility grounds relating to corruption, illegality and bad faith by Worley and a subcontractor, including wilful blindness by Worley to the subcontractor’s corruption”.
“Worley strongly disputes the statements regarding corruption in the decision – in particular it did not breach anti-bribery and corruption laws, and takes its responsibility under such laws extremely seriously,” the company said on Wednesday.
Worley first mentioned the arbitration tribunal’s decision in an announcement on December 27, five days after the panel of three veteran lawyers handed down their reasons on December 22.
In its first announcement, it said that the tribunal dismissed its claim “on jurisdictional grounds”.
However, the tribunal found it lacked jurisdiction because of “the existence of a widespread pattern of illegality and bad faith” and Worley’s claims were also inadmissable due to its “corruption during the operation of its investment” and its “wilful blindness” towards the corruption of a key subcontractor, Tecnazul.
Following The Australian’s January 9 article, Worley went into a trading halt before making a second announcement about the tribunal decision the following day.
In this announcement, Worley admitted the tribunal findings were based “corruption, illegality and bad faith by Worley and a subcontractor, including wilful blindness by Worley to the subcontractor’s corruption”, and denied doing anything wrong.
It also falsely claimed that The Australian’s reporting “inaccurately reported the amount of the Worley receivables” when in fact the article made no reference to the company’s receivables.
The company said the net amount owed to it by Ecuador was $A58m – a number the ASX forced it to further explain on Wednesday.
On Wednesday, Worley said the gross amount receivable from Ecuador was $108m, which was offset by an amount it had to pay of $50m.
It had not raised a specific liability for the Ecuadorian government’s $317m in claims in its 2023 annual report against it because they were “evaluated at the time as being baseless”, the company said.
“The success Worley has had in defending these claims, as outlined above, supports the appropriateness of this approach,” it told the ASX.
Worley defended its initial one-page announcement of the tribunal result despite being forced to clarify it twice, in statements of two pages on January 10 and eight pages on Wednesday.
“The first announcement was accurate, and the fact that the first announcement omitted detail in relation to the updated grounds for decision did not render the first announcement misleading or incomplete,” it said.
This was because the arbitration ruling wasn’t financially material, “related to events which occurred many years ago”, wasn’t made “by a regulator or court in the context of a prosecution for corruption or illegality”, and because Worley disagreed with the corruption findings and was considering its legal options.
