Media reports claim that company may have hidden Middle Eastern operating costs
A report by The Australian newspaper has claimed that the Hastie Group may have hidden costs relating to its Middle East operations before inviting investors to pump $160m into the company.
Earlier this week, TBP reported that the Australian contractor did not pay workers at its Middle East operation last month, leaving many stranded in the region as it entered into administration.
Hastie owes $500m to banks in Australia and has sold two of its subsidiaries to finance its debt.
Following a recapitalisation using the investment fund, former Leighton Holding executive and Wal King right hand man, Bill Wild was appointed by Lazard Australia Private Equity (which had taken a 25% share in the company) in October to turn the company around.
Lazard representative Lindsay Phillips told The Australian: “When we went into the Middle East in December and found some problems, from that point onwards we had significantly less faith in the integrity of the information we were getting.”
Wild told the newspaper that he spent January visiting the group’s overseas businesses uncovering costs that had not been obvious when the investment was razed.
“On January 1, I jumped on a plane and spent the whole of that month visiting our international businesses in the UK and the Middle East and I went through the whole business,” he said. “And that resulted in another $100m charge, which led to the $150m loss for the half year.
“For my own due diligence, I relied on the prospectus and a set of annual accounts and the fact that a number of reputable hard-nosed investors had put $160m into the business,” he says. “The simple fact is that there was a prospectus that was put out last year and there were annual accounts that were published in August and none of them showed this.”
Hastie Group operates in Australia, New Zealand, Singapore, the Middle East and the United Kingdom. Hastie International Middle East was established in 2005 as an MEP services provider. It also owns Rotary International which worked on Dubai’s Atlantis Hotel. Up to 1,500 jobs could be lost in the region.