Chiefs sacked after cartel probe

Amcor, the world's biggest maker of plastic bottles, ousted its chief executive after finding some staff may have acted illegally to drive up cardboard box prices, knocking 10 per cent off its shares.

The packaging firm said yesterday that its board had accepted the resignations of chief executive Russell Jones and Australasian head Peter Sutton.

They will receive only the minimum termination payments required under their contracts, with no accrued performance bonuses.

Amcor said an internal investigation had revealed that "certain of its officers and employees" appeared to have been involved in "cartel conduct" - colluding with competitors to fix prices - at its corrugated box business.

It did not name any individuals

"It is a bit of a shock," said Shaw Stockbroking analyst Brent Mitchell. "Certainly the resignations will have a major short-term effect on the group."

The company said it was not yet able to assess the financial implications of the announcement, but performance was in line with its forecast for 20 per cent earnings growth in the two years to June 2006.

Amcor stock fell 10.21 per cent, or 77 cents, to A$6.77 after its shares came off a trading halt, their weakest since mid-August.

Amcor said chairman Chris Roberts would become executive chairman, and general manager of operations Louis Lachal, who has been at Amcor for 24 years, would become acting chief operating officer while the company searched for new leaders.

"Paramount to the board is the performance of the company going forward, and at the same time obviously protecting Amcor's fine reputation as a great Australian company," Roberts said in a statement.

Amcor said its investigation into collusion began after it filed a lawsuit seeking the return and preventing the use of confidential information taken from the company by five top people who had quit its Australian cardboard box division.

The Federal Court ordered the former executives to return any such confidential information.

On November 19, lawyers for the former executives delivered material to the company's lawyers "which suggested that the company may have been involved in breaches of competition laws", Amcor said.

The board handed the material to the Australian Competition and Consumer Commission on November 22 and launched its own investigation.

Amcor said its probe was at an early stage and it had yet to determine the full nature and extent of the cartel conduct.

"At this stage, the board is not aware of any anti-competitive arrangements affecting any other part of the company's operations," Amcor said.

The corrugated box division accounted for about 9 per cent of the group's A$10.4 billion in sales in fiscal 2004 and about 8 per cent of its A$831 million in operating profit.

"There could be some negative impact on the corrugated box business, with customers shifting," said Ken West, a partner with fund manager Perennial Growth.

Amcor and its biggest local packaging rival, privately owned Visy Industries, supply about 90 per cent of the market for corrugated boxes in Australia, with the remainder supplied by Carter Holt Harvey and smaller companies.

A Visy spokesman said Visy was unable to shed any light on the announcement by Amcor but would co-operate in any investigation by the competition commission.

He did not know whether the company had launched its own probe.

A Carter Holt Harvey spokesman said the company had not been approached by the commission on the cartel probe.

"We're not aware of any related practices or issues that may involve Carter Holt," spokesman David Jamieson said.

Ousted CEO Jones is highly regarded by investors and analysts.

Since taking the helm in 1998, he led Amcor's transformation into one of the world's top four packaging groups next to US group Ball Corp, Britain's Rexam and Canada's Alcan, expanding in Europe and the Americas via a $3.2 billion takeover spree.

"I am very surprised at the story unfolding," said Perennial Growth's West.

"He has set a high standard for a very positive culture and financial discipline in the group and was so focused on growing the international business."

Standard & Poor's said it was considering downgrading its credit rating for Amcor because of the uncertainty over market reaction to the resignations.

- REUTERS