On Monday, April 6, Australian iron ore miner Fortescue Metals Group Ltd. (Fortescue) will face a suit from Australia's corporate regulator, which alleges the company made misleading statements about deals with Chinese companies.
According to the statement from the Australian Securities and Investments Commission (the commission) on proceedings against Fortescue, the case will focus on announcements made by Fortescue between August 23, 2004, and November 9, 2004, about "framework agreements" with three major state-owned Chinese companies.
The regulator alleged, "Fortescue engaged in misleading and deceptive conduct by overstating the substance and effect of agreements with the three Chinese companies, in announcements and media releases made to the market and investors."
The commission has also alleged that the company failed to comply with the Corporations Act and that Fortescue's CEO Andrew Forrest was involved in the alleged contravention and that he breached his duty as a company director.
Fortescue and Forrest may be ordered to pay a maximum of AU$6 million (US$4.3 million) and A$4.4 million (US$5.9 million) respectively, the commission said.