Construction giant Leighton Holdings has hit back at further negative media reports about the company, claiming the reports are riddled with factual errors and represent a gross distortion of the truth.
Reports published in a range of articles this morning claimed Leighton faced a ‘huge financial hole’ with regard to its Middle Eastern joint venture, the Al Habtoor Leighton Group (HLG).
The reports claimed that:
- Leighton was sitting on internal advice warning it would struggle to recover all of the $1.1 billion it claims to be owed for construction work.
- The JV had reached settlements with owners of Middle Eastern developments which had not been publicly announced and would result in big losses, including a loss of $80 million on the $272 million Emerald Palace development on Dubai’s Palm Island
- The company had written down the value of its 45 percent stake in the HLG by $500 million after paying $870 million for this in 2007
- Leighton had provided $800 million in loans secured by HLG’s other borrowings to keep the JV afloat.
In an angry rebuttal, however, the company hit back accusing Fairfax of inaccurate and unbalanced reporting, and suggesting legal action would be a strong possibility.
“Leighton reiterates that Fairfax has once again been inaccurate and unbalanced in its representation of Leighton’s operations, governance, values and accounting policies in its more than 150 articles published since October 3 2013” the company said in a statement to the Australian Stock Exchange.
“Leighton has repeatedly advised Fairfax of the facts of Leighton’s position prior to publication of its articles. Leighton is considering all avenues of redress against the journalists and Fairfax.”
Leighton said the latest article contained significant factual errors. The company had written down the value of HLG by $357 million, not $500 million as reported, and had loans to HLG of $557.9 million (plus letters of credit and guarantees for $284.3 million), not $800 million – which were secured by assets rather than borrowings, it said.
The company also says the claim about the lost $80 million on Emerald Palace was false as is another claim the JV incurred big losses in a contract dispute with Dubai’s powerful Al-Ghurair family.
“Fairfax has chosen again to publish allegations attributed to unnamed sources” the company said.
Furthermore, Leighton claims Fairfax’s statement regarding the percentage of receivables yet to be recovered omits the fact that the total quantity has declined as HLG has successfully achieved, former company executive John Faulkner was not engaged as a consultant by HLG to recovery funds in the Middle East and contrary to suggestions otherwise, the company had repeatedly disclosed HLG’s focus on receivables to the market.
Acrimony between Fairfax and Leighton broke out last month when Fairfax published reports about a culture tolerant of corruption at the company over an Iraqi payments scandal and allegations a Malaysian based businessman had received kickbacks on projects across several countries and passed these on to Leighton executives.
Former company chief executive Wal King is suing the media outlet over claims he approved a bribe in Iraq.
Leighton shocked the market in February last year which it unveiled a possible legal breach of the law relating to payments made by one of its subsidiaries in connection with work in Iraq to expand offshore loading facilities for that country’s crude exports.