One of the movers of an injunction brought against the sale of map-making former state-owned enterprise Terralink claims the way the deal was conducted was unethical, possibly illegal and a poor advertisement for this country’s business practices among prospective overseas buyers of the company’s assets.
Roger Barry, head of Auckland company Ocilla Investments, was helping to handle a bid from South African survey company Geospace International.
Terralink was originally intended to be sold by impartial tender, but a consortium involving Animation Research of Dunedin and New Zealand Aerial Mapping -- founded in Hastings but now with bases also in Auckland, Wellington and Sydney -- successfully put in an advance bid at a premium price. That was on condition that the tendering process not proceed. The companies were concerned that the bidders would see information about Terralink’s plans that would be more useful in their hands only (see Terralink could have been a rival: buyers).
It is this aspect of the deal that Ocilla and Geospace have called into question.
Their injunction application is scheduled to be heard in Auckland today.
Barry says the legal basis of the complaint lies in the Fair Trading Act, but would not give any further details of the specific provision of the act that reflects on the process of the Terralink sale.
“Let me, rather, give you an analogy,” he says. “Someone offers you a car, but puts it in a building so you can’t see it, and requires you to price it. You spend a lot of time and money arriving at an indicative price, and the day before they’re supposed to let you in the building, they say 'sorry; it’s already been sold'.
Barry agrees pre-emptive bids are regularly taken on, for example house auctions. “Yes, it’s done,” he says, “but not by receivers. They can’t do that under the Fair Trading Act.
“You can’t invite people from all over the globe and ask them to invest about $100,000 each in bidding and due diligence and then turn them down,” other than as the outcome of a fair tendering process, he says. The prospective bidders for the tender never actually got to conduct due diligence.
“I’m a partner with Geospace,” he says, "I invest in them and the CEO is a good friend of mine. They’re the biggest company in the business in the whole of Africa, and if you just look at their web page, you’ll appreciate their size and how advanced they are in comparison with Terralink. They would have been a perfect match.”
Barry declines to discuss the strength of the companies’ legal point any further, saying “it will all come out in court on Friday,” and later pleading ignorance of the legal niceties. “That’s what I pay people like [Richard Phillips, the lawyer acting on Ocilla’s and Geospace’s behalf] for.”
But Phillips declined to comment on the legal points involved - not even confirming that they revolve around the Fair Trading Act - until the court appearance.
Receiver Gary Traveller also refused comment on any aspect of the proposed injunction.