Chapter Three - Conflict of Interest
So, I must raise a conflict of interest that affected the outcome of the first four arbitrations. I felt it was best to leave this issue to last.
What has been decidedly the hardest decision for me to make since I began telling the COT story is exposing the conflict-of-interest issue between Graham Schorer (Golden Messenger) and Dr Gordon Hughes. For Telstra (the defendants in those four arbitrations) to have allowed this conflict-of-interest issue, which existed before the four complainants signed the arbitration agreement in April 1994, suggests that Telstra saw an advantage to their defence by allowing it. I uncovered this conflict-of-interest issue in 2008 after Graham Schorer asked me in August 2006 to write several reports concerning the COT story.
Federal Court Action
After several years of research into Graham Schorer's involvement in the COT arbitrations, I uncovered a critical detail: Dr. Gordon Hughes had been providing support to Graham and his Golden Messenger business while also serving as Graham’s legal representative in Federal Court during the earlier litigation against Telstra from 1990 to 1993. It is pertinent to highlight that these were the same technical issues that led to Dr Hughes being appointed by the TIO in 1994 as an arbitrator for all four COT claims against Telstra.
Upon inquiring with Graham Schorer regarding his decision to conceal this conflict of interest prior to the arbitration and my engagement to write the COT narrative, he responded in writing (File 565 - GS-CAV 522 to 580), presenting a compromise in an effort to encourage my continuation of the project. This raises important considerations regarding ethical practices and transparency in the arbitration process.
It is crucial to examine the conflict-of-interest issue from the viewpoints of the other COT claimants as well as from Graham's perspective. Given that Dr. Hughes was Graham’s legal advisor in both his business ventures and the Federal Court matters involving Telstra, his role warrants scrutiny. If Graham’s claims are accurate, and Dr. Hughes indeed knew about the concealment of vital documents during the Graham/Golden litigation against Telstra, then Ann Garms, Maureen Gillan, and I had every right to be informed about this situation.
The fact that Telstra and its affiliates managed to hide this information during federal court proceedings raises grave concerns. Moreover, suppose Dr. Hughes or members of the firm where he was a senior partner were complicit in this concealment. In that case, it casts a significant shadow over the integrity of the COT Four arbitration held just three years later. During this arbitration, Telstra allegedly concealed similar documents from all four COT cases while Dr Hughes acted as the arbitrator, further undermining the fairness of the process.
Conflict of Interest - Where do you draw the line?
Worse for the other two COT Cases and me is that Dr Hughes allowed Graham/Golden an extra three or more years longer to access their documents from Telstra, over and above what he allowed us, three COT claimants, even though the official arbitration rules did not permit this. Dr Hughes only allowed me one extra week to access my documents from Telstra, which shows how this conflict of interest tainted the whole arbitration process.
LOST ARBITRATION FAXES
I must take the reader forward fourteen years to the following letter dated 30 July 2009. According to this letter dated 30 July 2009, from Graham Schorer (COT spokesperson) and ex-client of the arbitrator, Dr Hughes wrote to Paul Crowley, CEO Institute of Arbitrators Mediators Australia (IAMA), attaching a statutory declaration (see ”Burying The Evidence File 13-H and a copy of a previous letter dated 4 August 1998 from Mr Schorer to me, detailing a phone conversation Mr Schorer had with the arbitrator early in 1994 regarding lost Telstra COT related faxes. During that conversation, the arbitrator explained, in some detail, that:
“Hunt & Hunt Australian Head Office of was located in Sydney and is a member of an international association of law firms. Due to overseas time zone differences, at close of business, Melbourne’s incoming facsimiles are night switched to automatically divert to Hunt & Hunt Sydney office where someone is always on duty. There are occasions on the opening of the Melbourne office, the person responsible for cancelling the night switching of incoming faxes from the Melbourne office to the Sydney Office, has failed to cancel the automatic diversion of incoming facsimiles.”Burying The Evidence File 13-H.
The fact that Dr Hughes did not officially disclose these faxing problems between his Sydney and Melbourne offices prior to arbitration or even during the arbitration process is hinging on criminal negligence.
It is clear from Front Page Part One File No/1, that at least six documents faxed from my office to the arbitrators office did not reach his office even though this exhibt shows Telstra charged me for these six undelivered faxes. Front Page Part One File No/1 shows the arbitrator’s secretary advised Tony Watson (of Telstra’s arbitration defence unit) that on 23 May 1994, six of my claim documents did not reach the arbitrator's fax machine. Yet, I was charged on my Telstra account for those six faxes. Why was this matter not investigated?
No one from the arbitrator’s office or the TIO’s office allowed me to amend my claim so that the unreceived claim documents could be valued as part of my arbitration process.
Why didn’t Dr Hughes (as the arbitrator to my case) explain to me as he did to Graham Schorer (refer Burying The Evidence File 13-H that my 23 May 1994 faxed claim documents might be in his Sydney office? Did Dr Hughes believe that exposing this faxing problem with his Sydney office would halt the arbitration process in my favour? Was Dr Hughes worried by exposing to me the flaws in his own two offices concerning the possibility this is where my other lost faxes ended up, this admission would bring an end to his remaining the arbitrator to the COT arbitrations?
Firstly, had Graham Schorer (as the COT spokesperson) disclosed to the COT Cases before we signed our arbitration agreement, we would have been within our rights to demand Dr Hughes supply an efficient faxing system throughout our arbitrations.
Secondly, we could have used this faxing problem between Dr Hughes's Melbourne and Sydney offices to support any arbitration appeal within the period allowed in our arbitration agreement.
It is essential to link these unaddressed lost arbitration faxes to both my case and that of Ann Garms (now deceased), because it is well written between us, lost many faxed arbitration-related documents.
Ann Garms (one of the other COT Cases) spent over $600,000.00 in her arbitration appeal in the Supreme Court of Victoria against Dr Hughes. Ann might have had a more favourable outcome of this appeal, which she lost, had she and her lawyers known of Dr Hughes's admission to Graham Schorer before the commencement of our four arbitrations.
Graham Schorer's primary reasons for claiming that his Telstra Flexitel matter was still unresolved at the beginning and during a Senate hearing, even though he did ‘blindly’ accept a deed of release from the Telstra Corporation in April 1999, thereby ‘agreeing’ that all outstanding claims against Telstra had been resolved. Unfortunately, this meant that the arbitration agreement signed by Graham Schorer and Telstra did not allow the arbitrator to assess those Flexitel issues because they were matters that had been partly addressed by Mr Gordon Hughes when he assisted Graham Schorer's previous Federal Court action against Telstra in 1990. Graham Schorer had accepted a settlement about that case.
However, Graham Schorer alleges he was unaware that the Australian Government Solicitor had already found and documented how Telstra had misled and deceived him over several years. It is clear, though, that once Graham signed his arbitration agreement on 21 April 1994, the Flexitel previous settled claim was reopened in Telstra's defending documents. In simple terms, when Dr Gordon Hughes was sent an Interim Claim by Mr Schorer, which included Felexitel issues that had already been part of the previous Federal Court action handled by Dr Hughes, once again, Dr Hughes was assessing claims for a second time. The whole arbitration became a circus, and Dr Hughes handed down against Telstra over the three years of Mr Schorer's arbitration.
Could this be one of the reasons Telstra allowed the Flexitel issue to be reopened once the arbitration agreement had been signed, even though Telstra and Graham were not supposed to raise these Flexitel issues during Telstra's 1994/1996 arbitration defence of those claims because by doing so compromised Dr Hughes position as being an independent arbitrator?
Pages 27 to 29 in our GS June 2013 report discuss a 2 November 1990 fax from Trevor Hill of Telstra’s Corporate Solicitors Office to Telstra’s Peter Gamble regarding Telecom v Golden Messenger Federal Court Legal Proceedings, which notes, among other items:
(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. (Exhibit GS 448-A file GS-CAV 448 to 456):
Directly below this entry the report then discusses an internal Telstra minute dated 7 November 1990 that Telstra’s Peter Gamble, Manager, Business Network Planning, sent to Mr F Jones, 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-CAV 1 to 88
These two documents, together with the Author’s Comment (4) on pages 27 to 28 of our GS June 2013 report, show that, regardless of whether Graham’s solicitors, Landers & Rogers, received a copy of the North Melbourne Telephone Exchange report during Graham Schorer's early Federal Court action, Mr Schorer 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.
CONFLICT OF INTEREST - Dr Hughes and Graham Schorer (refer to document 567 file GS-CAV 522 to 580 ).
On 21 November 2012, Graham 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” (refer to document 567 file GS-CAV 522 to 580 ).
This AGS letter is essential because when Dr Gordon Hughes was appointed as the official arbitrator to the COT arbitrations, he did not declare his conflict of interest regarding Graham Schorer's previous Federal Court action against Telstra.
It is as important to look at this conflict of interest issue from the perspective of the other COT claimants as it is to look at it from Graham Schorer's perspective because, as Graham Schorer'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, faulty Flexitel telephone equipment at Graham’s business premises.
Dr Hughes may have thought he was helping Graham Schorer when he allowed an extra two (and, in one case, three) years for Graham to prepare his submission to arbitration, over and above what he allowed the other COT claimants, even though this extra time was not permitted in the official arbitration rules. In other words, it appears as though Dr Hughes allowed his integrity to be compromised, which therefore left him a sitting duck, so to speak, because Telstra may well have then used this conflict of interest to their advantage so that in the end, Dr Hughes lost control not just over Grahams’ arbitration but overall the other COT arbitrations as well.
John Pinnock (TIO) later confirmed, however, in his address to a Senate Estimates Committee on 26 September 1997, exhibit GS 490 file GS-CAV 490 to 521, that this was certainly NOT the case, noting:
“Firstly, and perhaps most significantly, the arbitrator had no control over the process, because it was a process conducted entirely outside of the ambit of the arbitration proceedings”.
The questions arising out of this official statement are:
- Did Dr Hughes lose control over the arbitrations – he was conducting (seven at least) because Telstra knew he had never declared his conflict of interest?
- Did the secret use of Ferrier Hodgson Corporate Advisory as the secondary arbitrator for Graham’s arbitration contribute to Dr Hughes losing control over the process?
- Could it be that when the TIO (the administrator of the arbitration process) became aware that Dr Hughes had lost control over the process, the TIO had a duty of care to immediately request leave from the Supreme Court to appoint a new arbitrator?
Could it be that one of the reasons Telstra accepted Dr Hughes’ previous association with Graham’s Telstra Federal Court action without raising it as a problem about his appointment as COT arbitrator was that they knew that this AGS letter had never surfaced after it was first sent to Lander's & Rogers? So, they knew it had to have been deliberately concealed from Graham during his Federal Court proceedings?
Directly below this entry, the report then discusses an internal Telstra minute dated 7 November 1990 that Telstra’s Peter Gamble, Manager, Business Network Planning, sent to Mr F Jones, 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-CAV 1 to 88)
These two documents, together with the Author’s Comment below, show that, regardless of whether Graham’s solicitors, Landers & Rogers, received a copy of the North Melbourne Telephone Exchange report during Graham’s early Federal Court action, Graham 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.
This AGS letter is essential because when Dr Gordon Hughes was appointed as the official arbitrator to the COT arbitrations, he did not declare his conflict of interest regarding Graham’s previous Federal Court action against Telstra.
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