Telecom in court bid over $20m Clear bill

High Court orders sought to confirm Clear's ability to pay disputed charges. By Richard Braddell


WELLINGTON - Telecom is seeking court orders that would confirm Clear Communications' ability to pay more than $20 million in disputed interconnection charges that are the subject of protracted litigation.

Telecom said yesterday that it had sought orders from the High Court in Wellington after a "leading corporate financial adviser" said it would be commercially imprudent for it to be an unsecured creditor of Clear for sums exceeding $20 million.

Those orders could include a court-appointed receiver who would hold the money outstanding in an interest-bearing bank account, or a suitably qualified person who would monitor monthly financial accounts and forecasts and report to the court should any doubts about Clear's financial position arise, Telecom's manager of external relations, Clive Litt, said.

Mr Litt said the debt, already exceeding $20 million, could rise to as much as $40 million by the time the dispute was ruled on in one or two years' time.

Because of Clear's reported declining profitability and speculation it could run at a loss in this year, there was real doubt Clear's ability to satisfy a judgment in Telecom's favour, he said. Last month, British Telecom took 100 per cent control of Clear.

Clear contends that a portion of interconnection charges levied in its agreement with Telecom are in breach of competition provisions in the Commerce Act. Since February 1997 it has been withholding around 15 per cent of amounts due.

A Court of Appeal decision last year reaffirmed that Clear could withhold payments until judgment was delivered.

However, the dispute has already produced some brinkmanship, with Telecom last year threatening to withhold billing information, a threat that was withdrawn only after Clear threatened to hold Telecom executives personally responsible for the chaos it said would result in its network.

Several months ago, Clear withdrew an accompanying action taken against the Government based on the latter's alleged failure to enforce Telecom undertakings with regard to the competitive environment.

A Clear spokesman, Clayton Cosgrove, reiterated Clear's contention that the charges withheld were illegal and observed that the High Court and Court of Appeal had held the Clear did not have to pay pending the outcome of the trial.