Newcrest hit with Australia’s biggest fine: over $1.1 million

Newcrest Mining hit with Australia’s biggest fines: Over US$1.1 million

Newcrest Mining (ASX:NCM) — Australia’s biggest gold producer — has admitted to the country’s Securities & Investments Commission (ASIC) that it breached continuous disclosure requirements on two occasions in May and June last year, and has agreed to pay US$1.12 million ($A1.2m) in a settlement to be put to the Federal Court.

Last year the firm made a bombshell announcement. It was going to write down the value of its assets by between $5 billion and $6 billion and very sharply cut back on its operations, all in the wake of a major dip in the price of gold.

Media covered Newcrest with criticism, claiming that the bad news had been selectively, inappropriately and illegally leaked to a few analysts earlier in the month. Those analysts had all — “coincidently” — rushed out commentaries on the company, sharply downgrading their assessments from their earlier reports.

In today’s statement, the Melbourne-based miner, one of the world’s top five gold mining companies by reserves and market capitalization, confessed its investor relations team held a series of selective briefing of analysts and investors beginning on May 28, last year.

Newcrest Mining hit with Australia’s biggest fines: Over US$1.1 million

Shares in Newcrest Mining declined steeply last year, after several investment banks had sharply decreased their forecasts for the company’s performance.

Under the settlement, ASIC and Newcrest will propose to the Federal Court that Newcrest be fined $800,000 for the first contravention (relating to the expected gold production for 2014), and $400,000 for the second contravention (relating to the expected capital expenditure for 2014). The actual amount of the penalties is a matter for the court to determine.

“It is very rare for ASIC to bring these actions. But secondly, the amount of the penalty that both parties will take to the court is the highest of any of the matters that have previously gone to court,” Ian Ramsay, from Melbourne University's Centre for Corporate Law, told ABC News in an interview.

While Newcrest has not admitted knowingly or intentionally breaching its corporate obligations, it has still admitted liability, he added.

The largest penalties imposed by the commission to date are a fraction of what Newcrest will have to pay. The biggest was against animal drug producer Chemeq, which was fined $500,000 in 2006 for breaching continuous disclosure. International contractor Leighton Holdings was charged with a $300,000 penalty in 2012. Southcorp, Promina, Rio Tinto and Commonwealth Bank have also received fines of about $100,000 each.

Despite the severity of the penalties, no one at Newcrest has been dismissed. Three of the four executives named in the settlement documents remain at the company. The only one not there any longer is former chief executive Greg Robinson, who left the firm in October, for reasons said to be unrelated to the disclosure scandal.

Newcrest's stocks were up 1.81% to $10.15 at close Thursday.

Image by Everett Collection