Maurice Blackburn has commenced a class action against Australia's largest project development and contracting group.
Following a series of profit downgrades and concerns that Leighton Holdings failed to disclose the problems it faced on key infrastructure projects, Maurice Blackburn will act for shareholders in the company.
On 14 February 2011, Leighton announced an estimated a full year profit of $480 million, but by 11 April that had turned into a $427 million loss. As a result, Leighton's share price dropped 14 percent.
In its April announcement, Leighton highlighted that the Brisbane Airport Link, the Victorian Desalination Plant, and Al Habtoor Leighton Group were the source of its financial problems.
Andrew Watson, principal and head of the class actions department at Maurice Blackburn said Leighton had allegedly breached the continuous disclosure provisions of the Corporations Act in failing to tell investors information regarding the material cost increases and delays on the projects before April 2011.
"We will allege that by 2 November 2010 and certainly by February 2011 Leighton should have told the market of the need for these massive writedowns," said Watson.
"Shareholders expect a company like Leighton to have proper risk management and internal reporting systems to ensure timely announcements are made when there are difficulties," said Watson.
Leighton had, on five separate occasions between November 2010 and March 2011 advised the market that the Victorian Desalination Plant project was on schedule for delivery of first water by the end of 2011.
Watson said it was difficult for Leighton to justify such statements in light of its sudden announcement on 11 April 2011 that the project was suffering serious delays and costs overruns.
Maurice Blackburn last settled year settled a similar shareholder class action against construction company Multiple for $110 million.