Conflict of Interest


As we have already explained on the front page of on 24 June 1997 see:- pages 36 and 38 Senate – Parliament of Australia/from an ex-Telstra employee and then-Whistle-blower, Lindsay White, that, while he was assessing the relevance of the technical information which had been requested by the COT claimants, he advised the Committee that:

“In the first induction – and I was one of the early ones, and probably the earliest in the Freehill’s (Telstra’s Lawyers) area – there were five complaints. They were Garms, Gill and Smith, and Dawson and Schorer. My induction briefing was that we – we being Telecom – had to stop these people to stop the floodgates being opened.”

One of the named Peter’s on page 38 of this Senate – Parliament of Australia/ Hansard is the same Gamble who was dealing with Mr Schorer’s previous 1990 to 1993 Federal Court action as the following information shows.  

It is clear from Telstra FOI folio C04550/1 GS-Conflict of interest 1-to 5– (that the Australian Government Solicitors (AGS) was writing to COT Spokesperson Graham Schorer’s legal team during his previous Telstra Federal Court Action between, 1990 and 1992.

A letter from Michael Shand barrister at Owen Dixon Chambers (Melbourne) to Landers & Rogers for the Attention of Mr Gordon Hughes or Mr Michael Champion’s secretary dated 15 June 1990 (see – File 4 to 5 GS-Conflict of interest 1-to 5 confirms Mr Gordon Hughes and a number of lawyers from Landers & Rogers were heavily involved in Graham’s Telstra court matters. This letter from Mr Michael Shand, confirms that Mr Gordon Hughes was one of the principal lawyers involved in Mr Schorer’s Telstra Federal Court action prior to accepting his role as the COT cases arbitrator in January 1994.

Why did Telstra ignore Dr Hughes’ conflict of interest associated with Graham’s previous Telstra-related Federal Court action addressing the same telecommunication issues less than four years later? Did they allow Dr Hughes to become the COT arbitrator aware that just four years previous damning evidence against Telstra had been withheld from Mr Schorer by his legal in which Dr Hughes was the Principal advisor and therefore he or his arbitration unit might be called upon during the COT arbitrations to withhold similar damning documents from being assessed during the COT arbitrations?

The fact that Dr Hughes’ arbitration resource unit has admitted withholding relevant Telstra related arbitration documents from being investigated during my arbitration (see Open letter File No/45-H and Open letter File No/46-F to 46-K) suggests there is more to Telstra allowing Dr Hughes to become the COT arbitrator than meets the eye.

23rd October 1990: Telstra’s F Jones, executive general manager of Telecom business services, writes to Mr L Tyrrell, executive general manager of Telecom residential and network services,(FOI folio 000506), stating:

“As discussed, enclosed is the Network Investigations Report concerning Golden Messenger.

“Counsel for Golden Messenger has sought a copy of this report from Telecom. Initial advice from the Telecom Solicitor’s office is that the report should be made available. …

“You might also like to consider what the implications would be if North Melbourne Exchange receives widespread bad publicity, or if an unfavourable judgment is made in this case.” (exhibit GS 41 file GS File 1 to 88) 

29th October 1990: This internal minute, FOI folio R20783, from Telstra’s chief engineer W Goudie to Mr P Reilly, general manager of TNE metropolitan, on the subject of Golden Messenger litigation, states:

“The report indicates that Telecom did contribute to the poor service experienced by Golden Messenger. What this means in a court of law is open to question; in no way can it be implied [sic] from the report that Telecom was negligent.” (exhibit GS 42 file GS File 1 to 88) 

This internal Telstra fax exhibit GS 448-A > GS File 448-A to 458) dated 2 November 1990 was a fax from Telstra’s Corporate Solicitors Office to Telstra’s then recognised chief technical engineer, regarding Telecom v Golden Messenger Federal Court Legal Proceedings, which notes, among other items:

(3)  Telecom will also need to inspect any documents lodged by Golden Messenger as part of its (GM’S) discovery obligations.

(4)   Telecom needs to examine those documents pertaining to the test carried out on North Melb Exchange to determine if any of those documents have been generated as a result of an “interception”. If so, then Telecom will be precluded from disclosing them under the discovery process. I intend to ask (name deleted) of network investigations to undertake this task.

(5)   The Australian Government Solicitor, on behalf of Telecom, has written to the solicitors acting for Golden Messenger seeking their undertaking not to disclose to their client or others the contents of the report on the North Melb Exchange. To date, there has been no response.    

A further internal Telstra minute dated 7 November 1990 that Telstra’s, Manager, Business Network Planning, sent Telstra’s Executive General Manager, Telecom Business Services (FOI Folio 001801), noting that:

“It would appear that any concerns over the disclosure of the adverse report on the North Melbourne Exchange can now be set to rest as it will not be released until point (5) has been complied with”. (exhibit GS 43 file GS File 1 to 88)

These two documents, in particular, relate to the North Melbourne telephone exchange issue, as well as show that, regardless of whether or not Graham’s solicitors, received a copy of the North Melbourne Telephone Exchange report during the early part of his Federal Court action, he is adamant that he did NOT see a copy of the letter from the Australian Government Solicitor (AGS) that is referred to in these faxes.

On 21 November 2012 Graham Schorer  produced a letter of understanding that included:

“During the period that I retained Landers & Rogers, at no stage was I informed by Gordon Hughes or any other member of Landers & Rogers staff, that Telecom or the Australian Government Solicitor contacted them with information regarding the North Melbourne exchange.

Furthermore, had I known that Gordon Hughes had concealed knowledge of such an important document from me, I would not have accepted his appointment as the arbitrator in my arbitration process”(exhibit 565 GS File 565 to 580)

This ‘Australian Government Solicitor’  letter is important because, when the arbitrator was appointed as the official arbitrator to the COT arbitrations, he did not advise Graham Schorer of this AGS letter or the fact that documents were concealed from Graham during his Federal Court action by his own legal firm to which Dr Hughes was a partner.

Worse, if that is at all possible concerning this conflict of interest issue is, that the person who received the 2 November 1990 letter then wrote his own interpretation of that matter was the same Peter Gamble which page 39 Senate – Parliament of Australia), was named by a Telstra whistleblower, Lindsay White, as the person who had told him that the first five COT Cases, including Graham Schorer, ‘had to be stopped at all cost’ from proving their 1994 arbitration claims.  It is therefore interesting to find that, four years earlier, in November 1990, this same person was already involved in concealing the same North Melbourne telephone exchange discovery documents from Mr Schorer and the then Mr Gordon Hughes, except that, back then, this deception occurred during a Federal Court action against Telstra where Dr Hughes was assisting Mr Schorer.

So, when Mr Hughes (now Dr Hughes) was first asked to arbitrate on the COT arbitrations of 1994, shouldn’t he have immediately:

  1. Declared his conflict of interest because of his involvement in Graham’s previous Federal Court action between 1990 and 1993, and then;
  2. Advised the government and the Telecommunications Industry Ombudsman (the official administrator of the forthcoming arbitrations) that he was already aware that Telstra had threatened his office, back when he was assisting Graham in that Telstra-related Federal Court action, which was connected to exactly the same Telstra technical issues he was now being asked to arbitrate on?

Why was this conflict of interest allowed to fester throughout all the COT arbitrations?   In most democratic countries – and Australia certainly professes to be democratic – any conflict of interest is simply not allowed in relation to legal processes like our arbitrations because they always create some level of damage for one side in the conflict or the other.  For the COTs, the ongoing conflict of interest created serious problems in relation to the AGS letter; in relation to the adverse findings that Graham never even saw; and because of Dr Hughes’ involvement in Graham’s earlier Federal Court action.

Although the Australian Government Solicitor (AGS) warned Telstra’s bureaucrats that Graham Schorer, of Golden Messenger Courier Services, had a valid claim against them for misleading and deceptive conduct under section 52 of the Australian Trade Practices Act and advised Telstra should settle with Mr Schorer, these bureaucrats ignored the AGS. For the next NINE years, these Bad Bureaucrats went on a deliberate campaign to destroy Mr Schorer’s credibility and his finances, even though they knew the AGS was right. (See 20111025143553046 and 20130627133948062)

On page 23 of the government communications regulatory draft findings on Golden Messenger (20130627133948062), is noted:

“Telecom Minute of 30/3/88 states that advice from Legal and Policy Headquarters indicate that Golden Messenger appeared to have a case against us…and…the Australian Government Solicitor had advised Telecom that Golden Messenger is likely to be successful in establishing that Telecom engaged in misleading and deceptive conduct contrary to the Trade Practice Act and that consequence of lost calls or calls not getting through was likely to lead to an immediate loss of business in relation to that call and potential loss of future business from the customer”.

Exhibits 20111025143553046 and 20130627133948062 were not released to Graham Schorer until October 2008, 14 years too late to be used in his arbitration or during the Senate estimates investigation into why relevant documents were being withheld from Graham during his arbitration. If AUSTEL (now the Australian Communications Media Authority – ACMA) had provided their adverse findings against Telstra to Graham and the Senate estimates committee, during the 1997/1999 committee investigation, it is likely the committee would have immediately ensured Telstra didn’t pressure Graham into accepting compensation of only 33 per cent of his arbitration claim: that 33 per cent did NOT include the thousands upon thousands of dollars Graham had wasted on legal fees to prove something that the government regulator had already proved.

This AGS letter is important because, when Dr Hughes was appointed as the official arbitrator to the COT arbitrations, he did not only not declare his conflict of interest in relation to Graham’s previous Federal Court action against Telstra the information in Scrooge – exhibit 4 shows Graham was not aware of the existence of the AGS letter which we will address further below.

It is important to look at this conflict of interest issue from the perspective of the other COT claimants. As Mr Scorer’s earlier legal advisor in both his business endeavours and his Federal Court/Telstra matters, Dr Hughes knew about the various discovery documents that his legal firm did receive from the AGS after 24 July 1990, just as he knew about the incorrectly installed and faulty Flexitel telephone equipment at Graham’s business premises. Dr Hughes may have thought he was helping Graham when he allowed an extra 36 months (that he allowed me) for Graham to prepare his claim and answer Telstra’s defence documents, even though this extra time was not permitted in the official arbitration rules. It appears as though Dr Hughes allowed his own integrity to be compromised, which left him open to Telstra possibly using this conflict of interest to their own advantage. Ultimately, Dr Hughes lost control over not just Graham’s arbitration but also over all the other COT arbitrations as well.

TIO John Pinnock (the second appointed administrator to the arbitrations ) confirmed this certainly WAS the case, in his address to a Senate estimates committee on 26 September 1997, when he stated:

“Firstly, and perhaps most significantly, the arbitrator had no control over that process, because it was a process conducted entirely outside the ambit of the arbitration procedures.” (See Arbitrator File No/71)

The questions arising out of this official statement are:

  • Did Dr Hughes lose control over the arbitrations – he was conducting at least seven – because Telstra knew he had not declared his conflict of interest?
  • Did the secret use of Ferrier Hodgson Corporate Advisory (FHCA) as the secondary arbitrator for Graham’s arbitration contribute to Dr Hughes losing control over the process?
  • When the TIO (as the administrator of the arbitration process) became aware that Dr Hughes had lost control over the process, did he not have a duty of care to request leave from the Supreme Court to appoint a new arbitrator immediately?

Telstra knew Dr Hughes had previously assisted Mr Schorer’s defence in the 1990-1993 Federal Court action. Why did they accept his appointment as an arbitrator for the COT arbitrations, knowing his previous involvement with Mr Schorer meant he had a serious conflict of interest? Mr Schorer has placed on record that he never saw this threatening AGS letter. His own legal team – a team that included Mr Gordon Hughes – deliberately concealed it from him. Perhaps Telstra accepted Dr Hughes’ previous association with Graham’s Telstra Federal Court action, without raising that it conflicted with his appointment as COT arbitrator because they knew the AGS letter never surfaced after it was sent. Could this be why they did not expose Dr Hughes’ conflict of interest as soon as he was proposed as the official arbitrator? Could it be that someone connected to Telstra, someone interested in helping Telstra to come out on top at the end of the COT arbitrations, could see a way to use that secret conflict of interest to benefit Telstra and destroy the COTs’ claims?


To be continued\

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