Conflict of Interest

Conflict of Interest

Author Graham Schorer 

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 dated 15 June 1990 (see Exhibit 4 > GS-Conflict of interest 1-to 5) confirms Mr Gordon Hughes and a number of lawyers from Landers & Rogers were heavily involved in my Telstra Federal court action against Telstra from 1990 to 1992. This letter from Mr Michael Shand, confirms that Mr Gordon Hughes was one of the principal lawyers involved in my Telstra Federal Court action prior to accepting his role as the COT cases arbitrator in April 1994.

Why did Telstra ignore Dr Hughes’ conflict of interest associated with my 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 which would have assisted me in my Federal Court action against Telstra had been withheld from me by my legal team in which Dr Hughes was my 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 the COT arbitration process (see Open letter File No/45-H and Open letter File No/46-F to 46-K). This admission suggests there is more to Telstra allowing Dr Hughes to become the COT arbitrator than meets the eye.

Please Each entry in the download Evidence File (e.g. GS 1 etc.) refers to an Exhibit with the same number (e.g. Exhibit 1 supports entry CAV GS 1) and the Exhibits in the download are divided into separate folders called CAV-GS 1-88, CAV-GS 89154-b, CAV-GS 155-215 (website links) etc.

This internal Telstra fax (see the following link > Exhibit 1 > GS-Conflict of interest 1-to 5) 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” (see Exhibit GS 1 file > GS-Conflict of interest 1-to 5

On 21 November 2012 I produced a letter of understanding that included the wording:

“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”  (See Exhibt GS 2 file > GS-Conflict of interest 1-to 5)

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 me of this AGS letter or the fact that documents were concealed from me during my Federal Court action by my own legal firm to which Dr Hughes was a partner.

Worse, if that is at all possible concerning this issue is, that the person who received the 2 November 1990 letter link (see Exhibit GS 448-A file GS-CAV 448 to 458 and then wrote his own interpretation of that same matter (see GS 43), was also named by a Telstra whistleblower, Lindsay White, as the person who had told him (see pages 36 and 38 of Senate – Parliament of Australia), that the first five COT Cases, including me, ‘had to be stopped at all cost’ from proving our arbitration claims.  It is therefore interesting to find that, four years earlier, in November 1990, this same person was already aware that the adverse report on the North Melbourne Exchange’ had been concealed from me during my Federal Court action against Telstra.

So, when Mr Hughes (now Dr Hughes) was first asked to arbitrate on the COT arbitrations of 1994, shouldn’t he have immediately advised me that information had been withheld from me during my Federal Court matters?

These two documents  > GS-CAV 448 -A and  GS-Conflict of interest 1-to 5) are directly related to the adverse findings of Telstra’s own investigations into the North Melbourne Exchange servicing my Golden Messenger courier business. Had I seen this AGS letter, concerning these adverse findings, I would hardly have accepted (two hundred thousand dollars) paid by Telstra when my official claim was for (two million dollars). The acceptance of these two hundred thousand dollars included exonerating Telstra from all liability. No sound-minded person, sitting on evidence such as the Australian Government Solicitors’ letter saying Telstra was grossly negligent under Section 52 of the Trade Practices Act and recommending settlement with me, would have accepted only 10 per cent of his claim.

If my Court legal team did not withhold that AGS letter, then who did? It is clear from GS-CAV 448 -A and  GS-Conflict of interest 1-to 5) that Telstra sent this AGS letter to someone.

It is important to look at this conflict of interest issue from the perspective of the other COT claimants. As Graham’s earlier legal advisor in both his business endeavours and his Federal Court/Telstra matters, Dr Hughes knew about the various discovery documents that Landers& Rogers 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 (then he allowed me) for Graham to access his FOI documents from Telstra, 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 overall the other COT arbitrations as well as the following information (see Arbitrator File No/71) shows.

TIO John Pinnock 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 an 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?

The way the AGS letter was hidden from Graham is relevant to my story as it is directly linked to the failure of Graham’s Federal Court action against Telstra and the failure of Graham’s Fast Track Arbitration Procedure (FTAP) two years later. Dr Hughes again withheld similar reports or allowed them to be altered during my 1994/95 arbitration.

Telstra knew Dr Hughes helped with Graham’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 Graham meant he had a serious conflict of interest? Graham never saw this threatening AGS letter. His own legal team – a team that included Dr Hughes – deliberately concealed it from him. Perhaps Telstra accepted Dr Hughes’s previous association with Graham’s Telstra Federal Court action, without raising that it conflicted his appointment as COT arbitrator because they knew the AGS letter never surfaced after it was sent to Landers &Rogers. 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?

The collusive practices continued 

SENATE official Hansard – Parliament of Australia records dated 25 June 1997, show on pages 5163 to 5169, that at least some Telstra employees were being investigated for the apparently deliberate rorting of millions and millions of dollars from the public purse. Surely we were entitled to know about this conflict of interest issue before we even thought about agreeing to his appointment as the COT arbitrator?  If we had been notified about this conflict of interest we would certainly never have accepted him – under any circumstances.  Likewise, it was not until after we had signed our individual agreements that we three COTs, i.e. Ann Garms, Maureen Gillan and me, first learned that, three years before Dr Hughes accepted the position as COT arbitrator, that another large legal firm where he was a senior partner had already represented the forth COT case, Mr Graham Schorer, in Graham’s first fight against Telstra in relation to the very same issues that the first four COT members were battling against.  Regardless of this second, major, conflict of interest however, Dr Hughes was still presented to us as an ‘independent’ arbitrator.

It turned out, however, that worse was yet to come, in relation to this conflict of interest issue because, once my arbitration began, it certainly seemed that Dr Hughes was only following the arbitration rules when he felt like it, for instance, he only allowed me one extra week after the required one month that was initially allowed for each of us to submit our claims, and then only allowed me just one month in which to respond to Telstra’s defence of my claims, BUT he allowed his previous client, Mr Schorer, more than three years in which to submit HIS claim, and then retired before Mr Schorer could take his complaints about the running of his arbitration to the Government.  Please be aware here that I am not, for even one moment, suggesting that Mr Schorer was not entitled to the very large compensation payout he eventually received as a result of Government intervention on his behalf. What I am suggesting is that, if Dr Hughes had allowed his arbitration technical consultants the extra time they requested so they could properly complete their investigation into my arbitration claim (Chapters One to Five in our Prologue page, then those matters would all have been settled more than two decades ago.

Please note the following Exhibits are being edited 20111025143553046 / 20130627133948062.