Forrest believed Chinese agreements were binding, High Court hears

Fortescue's Andrew Forrest had reasonable grounds to believe the agreements with the Chinese companies were ninding contracts, his lawyers told the High Court.

 Fortescue’s Andrew Forrest had reasonable grounds to believe the agreements with the Chinese companies were ninding contracts, his lawyers told the High Court.

It comes as Forrest against faces off ASIC claims that he deliberately misled investors of the state of deals signed with the Chinese.

The current case states that FMG had told the market it had secured contracts with Chinese interests to develop Fortescue’s Pilbara operations, but claimed that no such deal existed.

According to ASIC, FMG made a number of announcements about agreements with three Chinese companies to build and finance mining, rail and shipping infrastructure in the Pilbara, calling the deals “binding.”

The announcement of the deals is said to have led to Fortescue shares rising by as much as 35%.

ASIC said that when the contents of the deals were fully disclosed, it was revealed that they were framework agreements rather than binding.

The regulator claimed that Forrest and FMG failed to comply with continuous disclosure requirements, and failed to correct misleading statements.

“Mr. Forrest was well aware there was a significant and growing ‘gap’ between what the market had been told and what actually appeared in the agreements, but did nothing to correct the position and instead perpetuated the misleading statements,” ASIC said.

Courts today were told that judges in ASIC’s last appeal against the miner had "misread emails" relating to the deal’s status, the Sydney Morning Herald reported.

Forrest’s lawyer, David Jackson, said that the email drew a distinction between the framework agreements announced to the market, and "other fuller agreements.

It doesn’t lead to a conclusion that he well knew that the Chinese contractors were not obliged to build, finance, etc,” he said. ”The Full Court gave the document a meaning it doesn’t bear.”

Prior to signing the agreements, visitors from the Chinese companies were taken to the site, and did a flyover of the prospective mine, NineMSN reported.

After this an agreement was conferred upon, from which Forrest had ‘reasonable grounds to consider binding’, Jackson told the court.

"As a matter of law the agreements were binding agreements." 

The case continues today.

 

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