Previously secret communications between Gunns and Forestry Tasmania, obtained by the Liberals under Right to Information laws, blows a massive hole in Lara Giddings’ claim that she had no option but to pay Gunns $34.5* million in compensation for exiting native forestry.
A letter, dated 18 April 2011, from Gunns Chairman Chris Newman, to Forestry Tasmania Chairman Adrian Kloeden, reveals that Gunns not only wrote to Forestry Tasmania to formally terminate their native wood supply contracts (917 and 918) in April this year, they also offered to terminate the contracts on a “full release and indemnity basis.”
In part, the letter reads:
“Gunns therefore wishes to terminate CoS 917 and 918…To the extent that FT requires formal notice, please treat this letter as notice of termination under clauses 3.3(b)(i) of Cos917 and 3.3(b)(ii) of CoS918.
“While Gunns remains ready, willing and able to perform its contractual obligations under CoS 917 and 918 during the notice period, we consider than an immediate separation would be in the interests of Gunns, FT and the Tasmanian forestry industry generally…
“I therefore propose CoS 917 and 918 be terminated on a full release and indemnity basis in respect of any and all outstanding issues.”
Mr Newman also offered to help Forestry Tasmania gain access into the Chinese woodchip market, including introducing FT to Gunns’ customers and also offered to hand over roading infrastructure to the value of $200 million over to Forestry Tasmania.
The significance of this letter cannot be under-estimated. Under the hand of Gunns’ chairman, Gunns voluntarily wrote to Forestry Tasmania to terminate its contracts ‘immediately’ on the 18th of April 2011 requesting an ‘immediate separation’ which clearly would have extinguished the Premier’s so-called “residual rights”.
This is supported by the advice of Forestry Tasmania Managing Director Bob Gordon In a subsequent Ministerial Brief dated 10 May 2011 from to Bryan Green, where Mr Gordon informs the Minister that this offer to terminate on a “full release and indemnity basis” from Gunns would “extinguish” the need to negotiate in good faith new terms of agreement for supply, the so-called “residual rights” that Ms Giddings has claimed as the reason for the $34.5* million in compensation.
Given this correspondence, it appears inconceivable that Lara Giddings could have been advised by the Solicitor-General that the Government was obliged to pay Gunns to extinguish the contracts.
Ms Giddings now has no option but to release the Solicitor-General’s advice on the matter.
*34.5 million = 23m for Gunns residual rights and $11.5m to settle the dispute with FT.
Download the letter from Mr Newman and subsequent Ministerial Brief:
Gunns_letter_and_Ministerial_briefing.pdf
The full RTI docs requested by Peter Gutwein are available in 2 parts on the FT website:
here –
http://www.forestrytas.com.au/uploads/File/pdf/rti2011/rti_11_16_gutwein_part1.pdf
and here –
http://www.forestrytas.com.au/uploads/File/pdf/rti2011/rti_11_16_gutwein_part2.pdf
First published: 2011-10-03 05:11 PM
• ABC Online: More questions over Gunns’ rights buyout
Updated October 04, 2011 09:01:58
Tasmania’s Resources Minister has played down correspondence between Gunns and Forestry Tasmania, which the Opposition says raises questions about Gunns’ right to government compensation for pulling out of state forests.
The Opposition obtained a letter between Gunns and FT under Freedom of Information Laws, which shows Gunns offered to terminate its contracts.
Liberal spokesman Peter Gutwein says it contradicts the Premier’s argument, that she had no choice but to pay Gunns.
“The Premier now has no leg to stand on,” he said.
But the Resources Minister says it proves the opposite.
Bryan Green rejected says it confirms Gunns had a residual right to compensation.
“What it does is in fact confirm what we’ve said the whole way through this process that there are residual rights,” he said.
“It’s not about information when it comes to the Liberals, it’s about politics and it’s about trying to tear up an agreement that provides for assistance and workers and for the economic development of Tasmania.”
“They just want to do it for political reasons.”
The Prime Minister Julia Gillard refused to weigh into the debate.
“All of those processes and issues were a question for the State Government,” she said.
Gunns was paid $23 million and Forestry Tasmania $11.5 million.
New low
Gunns shares will resume trading this morning at a historic low of 13.5 cents.
The timber company’s shares plunged 10 per cent in yesterday’s trade, while the ASX 200 dropped almost 3 per cent.
Gunns’ yearly financial report released last week shows the company is carrying almost $630 million of debt, with the majority due to be paid within the next year.
Financial adviser Chris Elliott says the company’s share performance reflects a correction in the market.
“Due to its position in the market, being what you call a risk stock, it’s falls are more greater than the general market, but overall its probably performed in line with many speculative-type investments.”
