Pressure piles on One.Tel media heirs

Bradley Keeling with Lachlan Murdoch, James Packer and Jodee Rich

The Australian government is turning up the heat on junior media moguls James Packer and Lachlan Murdoch over their role in the failed telecom company One.Tel.

The government wants the two men, who are non-executive directors of One.Tel, to help 1,400 workers who have lost their jobs as a result of the company's collapse.

I certainly think that the directors of a company have an ethical obligation to do whatever they reasonably can to help out

Tony Abbott, Federal Workplace Relations Minister

The Federal Workplace Relations Minister Tony Abbott has said that directors of the company have an "obligation" to assist the employees, who were sacked after One.Tel went under with A$600m ($312m) of debts.

Mr Packer and Mr Murdoch, sons of the billionaires Kerry Packer and Rupert Murdoch and heirs to the two media empires, have so far resisted pressure to offer compensation.

Together they have lost over A$1bn ($520m) in the venture.

Liable?

The company was placed into administration earlier this month after its major shareholders, Kerry Packer's Publishing & Broadcasting Ltd (PBL) and Rupert Murdoch's News Corp, declared it insolvent.

James Packer and Lachlan Murdoch, who had persuaded their fathers to invest in the ill-fated company, released a statement at the time saying they had been misled over One.Tel's financial position.

They may be liable for the company's debts if it can be proven they were aware that One.Tel had continued to do business while it was technically insolvent.

The government's Mr Abbott recently told a local television channel: "I certainly think that the directors of a company have an ethical obligation to do whatever they reasonably can to help out all the stakeholders in the company.

"And that means workers, it means customers, it means everyone else who deals with the company."

Following pressure from the media and the public, One.Tel's founders Jodee Rich and Bradley Keeling have offered to hand back a large chunk of the hefty bonuses which they received while the company racked up huge losses.

Creditors

The workers are the first unsecured creditors in line for a payout after the winding down of One.Tel operations.

It appears unlikely there will be much, if any, money left after they are paid.

A spokesman for the CPSU Communications Union said it would vigorously pursue One.Tel to get all the workers' A$19m worth of entitlements paid.

Telecom companies Telstra Corp and Cable & Wireless Optus are together owed about A$100m by One.Tel.

Additionally, US-based company Lucent Technologies has submitted a A$1.28bn log of claims, said a spokeswoman for the company's administrator.

One.Tel is also being investigated by Australia's corporate watchdog, the Australian Securities and Investments Commission, for possible breaches of company law.