Castle Harlan bid-rigging case goes before Australian court
A deal involving a Canadian mining services company that was bought and sold by US private equity firm Castle Harlan on the same day has gone before an Australian court.
Castle Harlan and Australian engineering firm Bradken were accused of taking part in "bid-rigging" at hearing before the Federal Court in Melbourne on Monday.
It will be the first test of an Australian law introduced in 2010 that broadened competition legislation to include bid rigging. According to Reuters, the case was brought against Bradken by Swiss based private equity group Pala investments, controlled by Russian oligarch Vladimir Iorich.
Pala had sold mining service company Norcast Wear Solutions to New York-based Castle Harlan for $190million in July 2011. Just seven hours later, Castle Harlan sold the company to Bradken, a competitor of Norcast, for $209 million.
In arguments before the federal court, lawyers for Pala alleged that Bradken engaged in "misleading and deceptive conduct" and "bid-rigging" that breached cartel provisions of the law. Lawyers for Bradken argued there had been no agreement with Castle Harlan to on-sell Norcast.
Pala is seeking at least A$25 million ($25.95 million) in damages,
Lawyers for Pala told the court that there was contact between Castle Harlan and Bradken as early as March 2011 when a plan was made in which Bradken would not bid for the asset, but Castle Harlan would.
"There is ample evidence to infer they did make that arrangement. Numerous documents implicated Castle Harlan in this deal," lawyer Charles Scerri, acting for Pala, told the court.
Prominent businessman Nick Greiner was both the chairman of Bradken at the time and deputy chairman of Castle Harlan's Australian affiliate, CHAMP Private Equity. Castle Harlan owns 25% of CHAMP. Both Greiner and Bradken CEO Brian Hodges have been named personally as co-defendants in the case.
Pala has also filed suit against Castle Harlan in the New York Supreme Court. Bradken argues it was excluded from the sale process, which was conducted by inviting interested firms to bid.
The judge is expected to rule on the case in several months.
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