Kevin Gallagher, CEO of Santos, to face questioning regarding insider trading accusation against Forge Group

Santos CEO, Kevin Gallagher, is anticipated to provide testimony in a longstanding legal dispute involving the collapsed contractor, Forge Group, and engineering company Clough regarding allegations of insider trading. The legal battle, ongoing for almost six years, revolves around claims of breaches of the Corporations Act by Clough, Clough Operations, former managing director Gallagher, and executive Neil Siford.

Although no criminal charges have been filed, Forge Group’s administrators contend that Gallagher and Siford, who both held director positions in all three entities, were aware of the company’s misleading risk management statements when Clough sold its 35.9% stake in the contractor back in March 2013. This share sale, which garnered Clough nearly $187 million as Forge Group’s stock price soared to around $6.05, is at the center of the legal dispute. Forge Group’s administrators argue that had the information known to Gallagher and Siford been public, the shares would have fetched a significantly lower price.

Subsequent to the share sale, Forge Group encountered turmoil as its stock price plummeted amid concerns of project underperformance. By February 2014, the company announced a profit write-down, leading to its collapse with debts totaling $800 million and the appointment of administrators from insolvency firm Ferrier Hodgson.

A civil trial was scheduled to take place in Perth from May to mid-June, but uncertainties arose when the company sought a delay to allow for more time to present expert evidence. Although a trial schedule split between May, June, and November was proposed, Gallagher and Siford’s legal counsel argued against this, suggesting that the entire trial be delayed until November 10 or even deferred until 2026 to prevent prejudice against the defendants.

The conflicting trial dates proposed prompted Justice Matthew Howard to consider handing over the case to another judge. Both parties were instructed to propose new potential trial dates before a scheduled hearing. In the meantime, Forge Group and the defendants have set aside four weeks for privately funded mediation in anticipation of the trial. This legal battle continues to unfold as the intricate details of the alleged insider trading claims are scrutinized in court.