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EDITIONS
Wednesday, 7 August, 2002, 13:13 GMT 14:13 UK
Murdoch heir defends One.Tel fiasco
One.Tel founder Bradley Keeling , Lachlan Murdoch, James Packer and One.Tel joint founder Jodee Rich
Keeling (left) with Murdoch, Packer and Rich
The heir to the Murdoch media empire has taken to the witness stand to defend his role in the collapse of the Australian telecom company, One.Tel.

Lachlan Murdoch, the son of News Corp chairman Rupert Murdoch, testified at the inquiry into the company's collapse, facing questions from the company's liquidator over his family's investment in One.Tel.


I told Mr Packer that it was a very interesting concept... that we should be able to build a great business

Lachlan Murdoch

Looking relaxed, the 30-year old was also asked about bonus payments made to directors of the company and the events leading up to the company's collapse in May 2001.

Mr Murdoch told the Sydney courtroom he still believed the combined payments of A$7m (2.4m; 3.7m) to One.Tel founders Jodee Rich and Bradley Keeling were "reasonable".

He also rejected suggestions that they were "greedy".

Messrs Rich and Keeling received a total of A$7m in performance bonuses in 1999 but the payments were not made public until September 2000.

Some 1,400 workers have lost their jobs as a result of the company's failure, and liquidators are now trying to discover any evidence that might lead to the recovery of One.Tel's debts.

In disgrace

Lachlan Murdoch, who oversaw News Corp's A$575m investment in One.Tel, was a non-executive director of the company along with James Packer, son of Australia's richest man - Kerry Packer - and heir to Publishing & Broadcasting Ltd.

The backing of the two media heirs in 1999 attracted considerable media attention for One.Tel.

Both men have also said that they were "profoundly misled" about the financial situation of the company, when it collapsed.

However, Mr Murdoch did say on Wednesday that he was at a board meeting that approved changes to One.Tel's accounting practices which concealed losses for the full year result in 1999.

One.Tel now owes A$600m to creditors, and made losses of about A$1bn for the Murdoch- and Packer-controlled companies.

A 'great business'

During the court hearing, Mr Murdoch was polite but restrained, preferring to give one-word answers to the questions put to him.

Speaking about when Mr Packer first broached the idea of backing One.Tel to him, Mr Murdoch said: "I told Mr Packer that it was a very interesting concept... that we should be able to build a great business."

Mr Murdoch will continue to give evidence before the liquidator's inquiry on Thursday and Friday.

One.Tel provided mobile, fixed-line, broadband and internet services to 1.8 million customers in Australia, Hong Kong, the United Kingdom, France, Switzerland, Germany and the Netherlands.

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Neil Shoebridge, editor, Australian Business Review
"It's certainly raised issues about their judgement."
See also:

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