The Queensland energy baron Trevor St Baker has invoked his right against self-incrimination in a court case brought by a former executive at ERM Power, who alleges he uncovered “sham transactions” and insider trading.
A Queensland supreme court ruling last week found that St Baker and his son, Philip, along with nine other former directors of ERM Power, should be excused from making certain disclosures in the case because doing so would expose them to “a real and appreciable risk of criminal prosecution”.
St Baker, a prominent energy investor and a major donor to the Liberal National party, founded his former flagship ERM Power in the 1980s and was the company’s largest shareholder when it was acquired by Shell for $617m in 2019.
The next year a former executive at ERM, Kent Quinlan, filed a civil case in the Queensland supreme court, claiming he made whistleblower disclosures about corporate misconduct at the publicly listed company in 2012.
Quinlan is suing ERM Power, an associated company and 11 former directors for breach of contract, breach of statutory duty and breach of confidence.
The supreme court decision says Quinlan alleges he investigated two apparent “sham” transactions in 2012 that artificially inflated ERM’s profits. Court documents allege these transactions, including one with the Queensland government power company Stanwell Corporation, “were calculated to artificially enhance ERM’s market value in a way which misled and deceived investors”.
It is alleged that Quinlan held a reasonable belief that the transactions were artificial or fictitious, liable to mislead the market and ERM’s shareholders, and were in contravention of the law.
Trevor St Baker stepped down as chairman of ERM in 2011, a year before the alleged sham transactions. He remained a director until 2017 and the major shareholder until 2019. He is not personally accused of corporate misconduct in the court filing.
Philip St Baker was the managing director and chief executive of ERM from 2006 to 2014. Quinlan alleges Philip St Baker “engaged in insider trading in the purchase of shares by his family share trading account on two occasions”.
The St Bakers have been approached for comment via their legal team.
Quinlan alleges he was entitled to protections as a whistleblower but had been subject to 25 separate “vindictive stratagems” by ERM and various directors between 2012 and 2020.
In a preliminary judgment handed down last week, Justice Sue Brown excused the defendants, including Trevor and Philip St Baker and nine other former directors of ERM, from making certain disclosures.
Trevor and Philip St Baker, and the other nine directors, had asked the supreme court to be excused from disclosing certain information and documents in the case on the grounds that “there is a real and appreciable risk of self-incrimination or exposure to penalty if they are not relieved from compliance with the pleading rules”.
“According to [Trevor and Philip St Baker] that risk is revealed by the serious allegations made … Mr Quinlan’s own statements, the significant media attention the proceeding has received, and the Australian Securities and Investments Commission’s statements in its enforcement priorities,” the judgment said.
“[Trevor and Philip St Baker] also refer to Asic media releases from 2022 which refer to Asic’s interest in taking action in relation to insider trading and market manipulation.
“I am satisfied that [Trevor and Philip St Baker] have a real and appreciable risk of criminal prosecution or commencement of civil penalty proceedings which is reasonably held given that Mr Quinlan expressed an intention to lodge a complaint with Asic … the media attention of the proceeding, and Asic’s stated priorities.”
