Mark Weldon argues he was misled in the acquisition of the grain exchange companies as CEO of NZX.
Mark Weldon argues he was misled in the acquisition of the grain exchange companies as CEO of NZX.
The Clear Grain Exchange was not as flexible as NZX had been told it was before acquiring the business, former chief executive Mark Weldon told Wellington's High Court yesterday.
Weldon, who recently resigned his job as chief executive of MediaWorks, appeared for the first time in week three of thelawsuit between NZX and Ralec, the former owners of the grain exchange. The trial, which is expected to last nine weeks, is over NZX's purchase of Australia's Clear Grain Exchange in 2009. NZX is suing for between A$20.7-37.6 million ($22.2-40.4 million) and Ralec has countered with a suit totalling A$14 million plus bonuses.
Ralec's QC Tim North has painted Weldon as having been fixated on building Clear into a global commodities powerhouse, ignoring Ralec's advice on the outlook for the business and keeping his own board in the dark, while NZX claims Grant Thomas and Dominic Pym, and their companies, Ralec Commodities and Ralec Interactive, misled NZX when it bought the commodities trading platform with "wildly inaccurate" forecasts.
Weldon said basic changes to the grain exchange platform proved more difficult than expected since NZX had been given the impression it was a modular system.
Weldon said that these "relatively simple changes", along with branding changes to ensure Clear was always referred to using the longer name, Clear Grain Exchange, "required a significant workload from the IT team", contrary to what he had been led to believe.
"I had been assured the system was flexible and modular at the time of acquisition." Weldon added that NZX retained Thomas and Pym on annual salaries of between $500,000 and $600,000, which he said was high compared to other NZX executives, and reflected "both their seniority, their expertise, and the expectations [NZX had]".
That detail provoked objections from Ralec's lawyer, who will likely cross-examine Weldon today.
Earlier yesterday, Weldon, who is represented by Alan Galbraith, QC, said Ralec had played up the relationship between the Clear Grain Exchange and Graincorp and concealed internal opposition within Australia's largest bulk grain handler to using the Clear platform.
Weldon also denied Thomas had told him, at a meeting on July 17, 2009, that NZX would need to invest A$5 million in marketing and development for Clear. And he said Thomas had emphasised Clear's positive relationships within the grain industry.
