Share case needs fraud file

By SIMON HENDERY

Fletcher Challenge says it will consider legal action against those involved in the Paul Hyslop affair if it can obtain the Serious Fraud Office's file on the matter.

Mr Hyslop and his brother-in-law, Keith Stewart, traded Fletcher Paper shares after receiving information supplied by another relative, Liz Corby, who was working for the company.

"The company is very concerned that such incidents can take place, but the law under which companies and investors operate makes it difficult to test the behaviour in court," Fletcher Challenge chairman Dr Roderick Deane said yesterday.

The Serious Fraud Office investigated the matter last year and decided not to prosecute.

A Securities Commission report into the affair took submissions from those involved and recommended insider trading laws be strengthened.

"Without that [SFO and Securities Commission] evidence, our advice is that any attempt at prosecution is likely to be inconclusive," Dr Deane said.

"However, should we be able to access this information, we would certainly review our position."

The director of the SFO, David Bradshaw, did not respond to a Business Herald request yesterday to discuss the issue.

A Fletcher Challenge spokeswoman, Ginny Radford, said the company had been rebuffed when it asked the SFO for the file last year but would consider making another formal request.

"Circumstances have changed. It's much higher profile now than it was."

Securities Commission chairman Euan Abernethy said that because the commission's report was primarily based on evidence gathered by the SFO, the release of the file was a matter for the fraud office.

A spokesman for Attorney-General Margaret Wilson said, by law, any action relating to a Serious Fraud Office investigation was to be independent of the cabinet.

Lawyer and Act MP Stephen Franks, who is spearheading a legal challenge against former Fletcher Challenge chairman Kerry Hoggard over an unrelated share-trading incident, said the Serious Fraud Office Act allowed the office to release much of the information it gathered.

"If Fletcher were going to prosecute, [the SFO] definitely have the power to give it to them. If they were going to bring proceedings under the Securities Amendment Act, it might be a little bit more problematic."

During a hearing in the High Court last week, when Mr Hyslop attempted to get an order preventing the Herald naming him, Herald lawyer Bruce Gray submitted that Mr Hyslop had acted illegally when he traded Fletcher Paper shares.

Mr Gray told Justice Robert Fisher that Mr Hyslop could have been prosecuted for using a document under the Crimes Act, for using property for personal gain as a shareholder under the Companies Act, or for deceptive or misleading conduct under the Fair Trading Act.

Mr Hyslop later dropped his legal attempt to gag the Herald because other media also knew his identity.

In an affidavit filed by the Herald, Independent publisher Warren Berryman said his weekly business paper planned to print Mr Hyslop's name.

Mr Hyslop resigned last week as executive director of Wilson Neill.