SYDNEY — Australian mining magnate Andrew Forrest on Tuesday won a High Court appeal against a ruling that he misled investors on Chinese deals that could have seen him banned as a company director.
The billionaire founder of iron ore giant Fortescue Metals Group was also facing a multi-million-dollar fine after the Federal Court ruled last year that he misled the market about a project in 2004.
Forrest told investors Fortescue had secured "binding" agreements with three state-owned Chinese contractors to build a mine, railway and port in Western Australia's Pilbara region when only framework documents had been signed.
News of the deals drove a massive spike in Fortescue's share price before speculation that they were not binding sent the stock tumbling.
They ultimately failed to come to fruition and the Australian Securities and Investments Commission (ASIC) launched legal action alleging misrepresentation.
The corporate watchdog lost a Federal Court case in 2009 but successfully appealed that decision in 2011.
However, the High Court on Tuesday ruled unanimously that the statements made by Fortescue and Forrest were "neither false nor misleading" and did not contravene the Corporations Act.
"There was no evidential basis for assuming that a person hearing or reading these statements would understand that the parties had entered into agreements that would be enforced by an Australian court according to Australian law should a dispute ever arise between them," it said.
The company welcomed the ruling, calling the long-running case an "expensive distraction".
Deputy chairman Herb Elliott said it brought "an end to an eight-year long process that ASIC thought was appropriate but was ultimately determined to be wrong".
"ASIC's allegations have been an expensive distraction," he said in a statement to the market.
"We can now focus our full attention to ensuring the continued success of Fortescue Metals Group for many years to come."
Fortescue, which has grown from a small explorer to one of the world's largest iron ore producers in the space of a decade, was awarded full costs from each of three court proceedings.
ASIC said it brought the case because it raised issues of integrity in the capital markets and it would review the judgement's implications for disclosure requirements.
"That is something we will be carefully considering, in conjunction with the Australian Stock Exchange," said deputy chairman Belinda Gibson.
The Western Australia-based company has grown thanks to a sharp rise in demand from China, but is currently struggling with a commodities slowdown. Last month it deferred two planned expansions and said it would cut jobs.
Forrest, one of Australia's highest-profile entrepreneurs, stepped down as chief executive of the company last year but remains its chairman.
Fortescue shares closed 1.43 percent higher at Aus$3.55.
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