Wednesday 23rd of September 2020

shareholders engaged in bribery and corruption...

dirtyonpyne

Early in 2019, then-defence minister Christopher Pyne received a phone call from Khalid Al-Falih, who was the Saudi energy minister. What he was told in that conversation was staggering.


Mr Al-Falih said his government believed the biggest shareholder in giant Australian engineering firm Worley Parsons was "engaged in bribery and corruption".

That shareholder is Dar Group, an engineering, design and architecture conglomerate born in Beirut, based in Dubai.

Welcome to the extraordinary story of Worley and Dar: a cloak and dagger tale involving political intrigue, astonishing claims and a major Australian company at war with its largest shareholder.

Add to the mix Liberal Party luminaries in the various company camps — ex-NSW premier Nick Greiner and former federal minister Christopher Pyne among them.

Then throw in approaches to the highest ranks of the intelligence community, such as ex-ASIO boss Dennis Richardson and Australia's top intelligence official Nick Warner.

Here's the question: is the allegation made against Dar Group true, or simply part of a campaign to protect Worley from a company takeover?

The story of Worley and Dar is, at heart, a battle for corporate control.

But the way it's being waged gives a fascinating insight into the business of politics, the politics of business, and the shadowy world of political lobbying.

If this drama has passed you by, you're not alone. It's largely been played out in secret, behind closed doors, and the protagonists are hardly household names.

Even in corporate circles, few in Australia would know of Dar and, among the public, Worley (as Worley Parsons rebranded itself in May) lacks the recognition of a BHP or Rio Tinto.

Yet, in the realm of energy and resources, Worley is big.

The world's largest supplier of engineering, consulting, construction and project management services to the oil, gas, chemical and energy sectors, Worley operates in more than 60 countries and 250 locations, with a worldwide workforce in the tens of thousands.

It's listed on the Australian Stock Exchange with a market value in excess of $7 billion, and it has played a role in many of Australia's biggest resources and energy projects.

Humble beginnings are one thing the businesses have in common.

Dar was established in 1956 by professors of Lebanese, Jordanian and Palestinian origin from the American University of Beirut, under the name Dar Al-Handasah — Arabic for "the house of engineering".

Worley grew out of Wholohan Grill and Partners, a small consultancy set up in the 1970s in Sydney by a handful of engineers, including a man by the name of John Grill.

John Grill became the driving force at Worley, serving as its chief executive for decades until 2012.

He still straddles the company as its chairman and was Worley's number one shareholder – until Dar set its sights on the company.

Dar creeps up the register

For three years, Worley's board has been fighting to stop Dar Group gaining outright control — a stance the chairman maintains is in shareholders' best interests.

"To be very clear, the board is seeking to protect the value of the company … and to ensure that control is not transferred without our shareholders accessing the investment premium they deserve," John Grill told this year's annual general meeting.

He has a point: normally when a company tries to take over another company listed on the share market, it drives up the share price of the target to the benefit of shareholders.

But that wasn't Dar's approach.

In 2016, Dar Group made a "friendly" takeover approach to Worley. It was flatly rejected, but the knockback didn't dent Dar's determination.

Instead, it has gradually increased its shareholding through a practice known as "creep".

While the tactic irked the Worley board, it's perfectly legal in Australia — so Worley had to find other ways of trying to thwart Dar's ambitions.

Enter Tom Harley.

Mr Harley is managing director of Dragoman, a consultancy with offices on Melbourne's Collins Street.

He has an illustrious Liberal Party pedigree: the great-grandson of former Prime Minister Alfred Deakin, he is a past Liberal Party vice-president and current chairman of the Liberal Party-aligned think tank, the Menzies Research Centre.

He shuns the term lobbyist, preferring to be known as a political scientist, but there is no doubt that Tom Harley and Dragoman are in the business of influence peddling.

Worley hired Mr Harley's skills in "political science" to help defeat Dar Group's bid to further increase its stake in the Australian engineering giant.

On Worley's behalf, his firm met senior bureaucrats, including the then-head of the Department of Prime Minister and Cabinet, Martin Parkinson, and began lobbying the office of Treasurer Josh Frydenberg.

Worley also turned to some doyens of the intelligence community in an unsuccessful attempt to gather evidence against Dar.

The ABC has learned that Worley sought the advice of Dennis Richardson, a retired, highly respected former intelligence official, diplomat and mandarin, who headed ASIO for years before presiding over the Department of Defence.

It got short shrift.

It's understood that Dennis Richardson, who did not charge for his advice, looked at material Worley gave him after conducting due diligence on Dar Group.

He concluded that there was no credible evidence that Dar was corrupt or linked to Islamist groups such as Hezbollah.

The chief spy

The Worley camp also tried to enlist the help of the most senior intelligence official in the country: Nick Warner, director general of the Office of National Intelligence.

The agency he heads co-ordinates the efforts of the Australian intelligence community and is directly accountable to the Prime Minister.

According to a well-placed source, Tom Harley asked Nick Warner to find out whether the CIA or Mossad had raised any red flags about Dar Group.

Nick Warner declined to comment. The ABC has no evidence to suggest he acted inappropriately in response to Mr Harley's request.

If the CIA has held any concerns about Dar Group, they haven't stopped it landing high level contracts with the US military.

In the United States, Dar Group has been awarded multiple contracts for work on military facilities by the US Air Force and the US Army Engineering Corps, as well as working for US Customs and Border Protection and a US intelligence agency.

"Our work in the USA has included being awarded highly sensitive government contracts, and we were granted all necessary security clearances by the US Government in order to perform that work," Dar Group told the ABC in a written statement.

The Foreign Investment Review Board (FIRB) — which is headed by David Irvine, a former chief of Australia's domestic and foreign intelligence agencies ASIO and ASIS — was unconvinced by Worley's claims.

The Australian engineering company set out a series of alleged "probity issues" about Dar Group in a submission to FIRB aimed at convincing it to block Dar's application to increase its shareholding.

People in the Worley and Dar camps agree it got nowhere.

"Obviously FIRB investigated," said one. "They found nothing."

So, Worley changed tack, firing off a subsequent submission in August that argued it was "against the national interest" for Dar Group to gain control of the Australian engineering company.

This confidential 36-page submission — obtained by the ABC — maintained that Worley had a "crucial role in Australia's industrial and economic structure" and "is in or across every aspect of Australia's energy, major resource projects and sources of export revenue and transport infrastructure".

"It is unlikely that any other country would allow a change of control of a company that was at the centre of so many aspects of its economic structure," the submission argued.

"Any change in control would enable Dar Group to access sensitive engineering and operational data relevant to Australia's critical infrastructure assets."

It was in this submission that Worley outlined the Saudi energy minister's sensational claim to then-defence minister Christopher Pyne that Dar Group was "engaged in bribery and corruption".

The submission provided no evidence, no examples, and no other detail to back the allegation.

The Saudi connection

The ties between Worley, Tom Harley, and the Saudis run deep.

Mr Harley chairs the Australia Saudi Business Council.

Worley has connections to the Saudi Government via Andrew Liveris, the former global chairman and CEO of Dow Chemical.

Mr Liveris is a director of Worley. He developed close ties to Saudi rulers and politicians during his time at Dow Chemical, according to people who spoke to the ABC.

In September 2018, Andrew Liveris was appointed as special advisor to the Saudi Government's sovereign wealth fund, known as the Public Investment Fund.

He is a director of the oil and gas behemoth Saudi Aramco, the world's biggest oil and gas company and one of the world's largest companies by revenue.

Andrew Liveris also happens to be a close personal friend and business associate of Tom Harley.

In 2008, when Andrew Liveris was running Dow Chemical, Mr Harley was appointed as non-executive chairman of Dow Chemical Australia and a senior advisor to the Dow Chemical company's executive leadership team.

Khalid Al-Falih — the man who told Christopher Pyne his government believed Dar Group had engaged in bribery and corruption — also has a long association with Saudi Aramco.

He was Saudi Aramco's CEO between 2009 and 2015 and then, while he was energy minister, served as chairman of the state-owned oil and gas giant.

Khalid Al-Falih was removed from the chairmanship of Saudi Aramco in September this year as the Saudi Government floated a small part of the company on the local stock exchange.

In its confidential submission, Worley claimed the Saudi minister and company director had told Christopher Pyne that, should Dar Group acquire more shares in Worley, Saudi Aramco would "likely cease awarding work" to the Australian company.

That claim sits oddly with Dar's presence in Saudi Arabia.

According to Dar Group, it has about 3,000 employees in Saudi Arabia and it has worked on numerous projects there, including for Saudi Aramco.

Dar Group dismisses the allegations Worley made in its submission as part of a cynical attempt to get its application to the Foreign Investment Review Board declined.

"We are dismayed at the tactics … Worley have resorted to and see this more as corporate manoeuvring to protect their own interests rather than an expression of any legitimate concern for national or shareholder interests," the company said in a formal statement to the ABC.

"Dar Group prides itself on its well-earned global reputation and will protect it legally as necessary."

'It's wicked. It's bullshit'

People the ABC spoke to on background used stronger language.

"It's wicked. It's all bullshit. It's absolutely shocking quite frankly," said one player in the Dar camp.

What did the then-defence minister make of the claims put to him about Dar Group's alleged "bribery and corruption"?

Christopher Pyne declined to be interviewed for this article. However, the ABC has been told that he "did not believe a word of it".

His subsequent actions lend weight to this view.

Mr Pyne's lobbying firm GC Advisory now represents the Dar Group.

So, ironically, the man to whom the most salacious allegations against the Middle Eastern company were made now acts on its behalf.

Nick Greiner AC, the current Liberal Party national president and former NSW premier, has also represented Dar Group.

He's been assisting it as part of his role at the investment bank Rothschild, which was engaged by Dar Group for advice in its takeover bid for Worley.

Mr Greiner declined to be interviewed by the ABC.

Worley shared its confidential submission

Although Worley has stopped short of publicly airing the claims in its submission to the Foreign Investment Review Board, it has circulated the "confidential" document containing bribery and corruption claims to institutional investors.

While some are alarmed by the claims made about Dar Group, others are more sceptical, viewing the allegations as part of an elaborate defence against a company takeover. 

"Yes, they have operated in areas where giving favours to government officials is rife," said one observer. "But there is no credible evidence of wrongdoing.".

The parent company Dar Al-Handasah was mentioned in a report by the International Consortium of Investigative Journalists (ICIJ).

It listed Dar among a number of companies doing business in Angola that had an executive on the board of a "foundation" run by former Angolan president Jose Eduardo Dos Santos.

The ICIJ report said critics characterised the foundation as "a personal slush fund for Dos Santos that fortifies his myth by crediting him for projects such as building schools that should be funded by the state anyway

A slew of allegations

But this doesn't compare to allegations levelled against Australian companies such as construction giant Leighton Holdings, which was accused of paying multi-million-dollar bribes to gain work in Iraq as part of the Unaoil scandal, and, in an unrelated scandal, had its former chief financial officer Peter Gregg convicted for falsifying the company's books.

Worley was itself embroiled in the Unaoil affair, accused of using a corrupt middle man to secure contracts in oil-rich countries, though it steadfastly denied any wrongdoing and was not prosecuted.

Tom Harley has also featured as a witness at a royal commission into corporate conduct.

As president of corporate development at BHP, he was involved in a deal that was scrutinised at the 2006 Cole Inquiry into potential bribery and busting of UN sanctions by the Australian Wheat Board.

BHP made a "donation" of 20,000 tonnes of wheat to Iraq under Saddam Hussein's regime, which various parties later characterised as a $5 million loan repayable in cash or oil.

Although there were no adverse findings against BHP or Mr Harley, the royal commissioner was sceptical about some of his statements, refusing to accept a key part of his evidence.

None of this has dented Tom Harley's connections or his skill in the art of "political science"; Worley seems to have got results from his services.

Dar Group confirmed to the ABC that, in mid-September, it withdrew its application to the Foreign Investment Review Board to increase its shareholding in Worley.

It declined to say why.

"Dar may not have wanted to suffer potential reputational damage from all the mud being thrown," said one observer.

According to others, Dar Group understood there was a serious risk that its application to lift its stake in Worley would not be approved.

Treasurer Josh Frydenberg has absolute discretion to accept or reject applications to the Foreign Investment Review Board, no matter what the board recommends.

Unanswered questions

This leaves the situation in limbo.

Dar currently owns nearly 23 per cent of Worley's stock.

But, after withdrawing its FIRB application, it remains shy of the 26 per cent stake it wants, which Worley argues would hand Dar control.

 

 

Read more:

https://www.abc.net.au/news/2019-12-18/dar-worley-takeover-mired-in-poli...

 

 

It's how the game is played...

The ABC sought an interview with Mr Grill, which he declined, and sent a series of questions to Worley.

We asked:

  • Whether Worley had any evidence to substantiate the allegations it made in its FIRB submission;
  • How Worley was privy to the contents of a conversation between an Australian government minister and a minister from a foreign government;
  • Whether it was ethical to include details of this conversation in a document to FIRB — and circulate it among institutional investors;
  • How Worley responded to the argument that it was "throwing mud" at Dar Group in order to stop it gaining a controlling stake in Worley.

Worley declined to comment on the basis that the FIRB document was confidential, even though it's been circulated to institutional investors and its contents are being openly discussed.

The entire saga leaves plenty of questions unanswered.

If there are genuine concerns about Dar Group's conduct, then how did its previous applications to acquire shares in Worley sail through with the assent of the Foreign Investment Review Board and the then-treasurer, Scott Morrison? And should we be comfortable with it having such a major stake in an Australian business?

If there are no genuine reasons for concern, was it reasonable to include a hearsay allegation about the company in a submission to the Foreign Investment Review Board?

As in love and war, is it a case of all's fair in corporate takeover battles, or are there limits?

A player in the influence business seemed bemused when we raised these questions.

"It's how the game is played," he said. "That's what we do."

 

Read more:

https://www.abc.net.au/news/2019-12-18/dar-worley-takeover-mired-in-poli...