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ERG boss blames ComBank

  1. ERG boss blames ComBank
    By Jan Eakin
    July 29 2002

    ERG boss Peter Fogarty is considering legal action against Cubic Transportation Systems and has accused both Cubic and the Commonwealth Bank of running a two-year "concerted attack" aimed at damaging the smartcard operator's reputation with investors.

    Mr Fogarty said yesterday he would be seeking legal advice on Cubic's efforts to block a contract awarded to an ERG-led consortium to overhaul Sydney's public transport ticketing system.

    ERG was awarded "preferred tenderer" status 12 months ago but the project has been delayed by Cubic's lawsuit, which accused the Department of Transport of tampering with the tender process.

    On Friday the NSW Supreme Court dismissed Cubic's allegations. Justice Michael Adams ruled that Cubic had engaged in "positive dishonesty" and had been "guilty of reprehensible conduct" during the 18-month tender process.

    A spokesman for Cubic said the findings had been referred to the group's head office in San Diego where in-house lawyers would confer with their Australian counterparts before deciding whether to appeal.

    Cubic has a reputation for appealing most of the court cases it loses.

    Speaking from the US, Mr Fogarty said Justice Adams' comments had "shown [Cubic] for what they really are".

    He added that once he had read the full transcript of the court's findings he would be seeking legal advice.

    "We may have some rights against them," Mr Fogarty said.

    The ERG boss also accused Cubic and the Commonwealth Bank - members of the SmartPos consortium that made the rival bid for the Sydney contract - of launching a campaign to damage ERG's image within the investment community.

    When asked if he blamed the pair for the negative investor sentiment that has surrounded ERG over the past couple of years, Mr Fogarty said: "Absolutely.

    "I'm not blaming them for the tech market crash but there has been a clear strategy to stop us winning contracts around the world."

    ERG's share price has fallen more than 90 per cent since its peak at the height of the technology sector boom.

    Cubic's general manager in Australia, Glenn Maker, said Mr Fogarty's claim was "so ridiculous it doesn't justify a formal response".

    Commonwealth Bank refused to comment.

    Cubic, which has operated the State Rail Authority's ticketing system for the past 12 years, also rejected Justice Adams' findings.

    "Cubic stands by its global reputation for honesty, ethical dealings and outstanding performance," Mr Maker said.

    The 163-page judgement said the Cubic syndicate demonstrated a willingness to take advantage of "highly confidential information ... quite improperly ... It is difficult indeed to see how the court would be justified in directing the defendants to reconsider the plaintiffs' tender when its lack of good faith and positive dishonesty have been so devastatingly exposed."

    Mr Fogarty, who arrived in the US over the weekend, has yet to speak to the NSW transport department but he said he hoped the judgement would help "get things wrapped up" in the next month.

    The Director-General of Transport, Michael Deegan, said the $100 million contract could now be formalised.

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