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Proposed investigation into Elders IXL takeover offer of Harlin Holdings

PETER MURPHY: The Hawke Government might make John Elliott's bid for Elders IXL the subject of a parliamentary inquiry. The issue was raised earlier this week by the Finance Minister Peter Walsh, and picked up by the chairperson of a House of Representatives Standing Committee on Legal and Constitutional Affairs, Alan Griffiths.

Mr Griffiths' Insider Trading and the Share Manipulation Committee would look at the takeover of Elders by John Elliott's private company Harlin, and the issue of one cent paid shares by Elders to Mr Elliott's company which has enabled the controversial takeover to go ahead.

Mr Griffiths says he'll make a statement about his intentions next week, but Ian Mannix in Melbourne reports senior Opposition members say it's nothing more than a blatant political move.

IAN MANNIX: Concern about the bid comes from the fact that it's been brought about after Elders issued shares to Mr Elliott's company at one cent, but they were subject to bonus issues and Mr Elliott has been able to build up effective control of the company without actually buying it. It raises the question of the responsibility of directors of a company to work in the best interests of both the company and its shareholders. In this case, when the shareholders were offered $3 a share by Mr Elliott and his friends who want to buy Elders, they saw fit to approve the offer.

The matter was taken up by Alan Griffiths who's chairing a House of Representative inquiry into insider trading and share manipulation. Mr Griffiths was reportedly very concerned about the Harlin bid, but he backed away from attacking Elders or Mr Elliott, when he talked to reporters at Canberra Airport this morning.

ALAN GRIFFITHS: The issue of management buyouts as I've indicated, is one that I've pursued for a very long time indeed; it pre-dates Harlin.

I think it's also worth noting that Senator Stone this morning effectively called for an independent inquiry but, nevertheless, did not demur from the prospect of the inquiry. It's important to note that Elders shareholders have corresponded with me, asking there to be some action in relation to the issue. It's also important to note that two members of the Liberal Party in the House of Reps, have also privately contacted me, seeking the same sort of response. Now, in taking all those things together, it would be remiss of the Parliament not to give the Elders executives the opportunity on a voluntary basis, of coming before the Committee and putting their views.

IAN MANNIX: The only Opposition Member who's serving on the insider trading committee is Warwick Smith, who's also been on the Corporate Legislation and Mergers and Takeovers Committee. Mr Smith says the issue of Elders won't be taken any further, but the broader issues of directors' relationships with shareholders during takeovers, probably will.

WARWICK SMITH: What he wants to do is talk about management buyouts in the context of our current inquiry into insider trading. The actual call for a separate inquiry, I think, doesn't have any merit at all if that, in fact, is what he would be calling for, but I don't understand that that is what he's asking for.

IAN MANNIX: Yes. Well, you said you spoke to him earlier today. Did you clear up that matter?

WARWICK SMITH: Well, yes. As I understand it, he's not actually going to be calling for a separate inquiry and neither he should be, because it's not appropriate that there be one in any event. The Committee may look in the broad at the whole question of insider trading as it relates to management buyouts; that's been an issue that we've touched on during the course of the inquiry. But so far as I'm concerned as a committee member, and an active committee member, the issue of the Elders buy-out, the Harlin share transactions, ought not be the subject of any special scrutiny.

IAN MANNIX: Well, what are the other issues?

WARWICK SMITH: To have a political witch hunt, which this could amount to, is something that I think all of us in the Parliament could well do without, and it ought not to be encouraged.

IAN MANNIX: Would you expect that directors should stand aside when they make a bid for their company?

WARWICK SMITH: Well, at the present time the law doesn't require it, and without hearing evidence and taking expert opinion on it, I don't think someone in my position, even though I have spent considerable time looking at these issues, ought to make any off the cuff remark. I mean, these are detailed, commercially important matters of law that need to be decided, and I think that if they were to be the subject of some inquiry, based on broad principle - fine, but I don't think anything is gained by pursuing any one individual.

PAUL MURPHY: Warwick Smith, who's the Liberal member on the insider trading committee, talking there to our reporter, Ian Mannix.