Men Who Killed Qantas - Matthew Benns [66]
My case is not the end of the price-fixing investigations. I believe that there are many more cases yet to be raised.
I just spoke to investigators from Canada this afternoon. Recently I was interviewed by investigators from New Zealand. As often as I am approached now I cooperate because of the offer of immunity. Investigators want to know about the business of air cargo. Fasten your seat belts, there’s a bumpy ride ahead.15
He was right. In America, British Airways and Korean Air were each fined $US300 million and Japan Airlines $US110 million. Qantas, along with the other airlines, was being pursued around the world and announced it was putting aside $40 million to cover penalties in Australia, Europe and New Zealand. The question quickly came up as to whether that would be enough. The Australian Competition and Consumer Commission (ACCC) pursued the airline doggedly into the Federal Court and succeeded in slapping a $20 million fine on Qantas.
In an agreed statement at the end of the Australian Federal Court case, the ACCC said Qantas ‘expects to pay a very substantial penalty in Europe at the conclusion of European Union investigations’.16 It then faced fines in the High Court in Auckland in New Zealand for operating an ‘extensive and long-term cartel’ in the global freight market.17 Qantas was also named in a US class action estimated to be worth $US1 billion and an Australian class action worth $A200 million. The Australian action was put together by Melbourne class-action specialists Maurice Blackburn Cashman. The legal eagle was using the airlines’ cooperation with authorities, in return for smaller fines, to bolster its clients’ case. Qantas was targeted together with British Airways, Japan Airlines, Air New Zealand, Cathay Pacific, Singapore Airlines and Lufthansa.
After Qantas and British Airways were fined in America the legal firm’s principal, Kim Parker, said: ‘These guilty pleas will certainly be tendered as evidence against the airlines in the class action. Air freight customers will now have even greater confidence in recovering the hundreds of millions of dollars spent on fuel and other surcharges over the last seven-year period in question.’18
Qantas boss Geoff Dixon told the National Aviation Press Club in August 2007 that the airline did not know how much cash it was in the hole for. ‘As you know, we had said there was a potential liability, but we’ve not been able to quantify it as yet and we’re still in discussions with a range of authorities on the issue,’ he said.19
Apart from the financial damage, the price-fixing scandal had also damaged the airline’s reputation. What it told people was that Qantas, together with every other airline, had ripped off its cargo customers. That meant every single person who bought something that had been shipped by air freight between 2000 and 2006 had paid over the odds for it. It also said the Qantas board had nothing to do with it. ACCC chairman Graeme Samuel backed Qantas’s statement that the price-fixing had been arranged in the freight department and was not known to the board. ‘As soon as the Qantas board learned of the conduct, it instructed its legal department and staff to make an exhaustive investigation and to provide full assistance. Qantas has continued to assist and provide evidence both in relation to its own conduct and that of others. Its behaviour after learning of the conduct in its freight division has set a standard we would hope all companies finding themselves in a similar position would follow.’20
Not everyone saw it that way. ‘Plain and simple, price fixing is theft,’ wrote University of New South Wales competition and fair trade Associate Professor Frank Zumbo in the Herald Sun after McCaffrey was sentenced:
While Qantas itself pleaded guilty and paid a $US61 million criminal fine for its role in the conspiracy, other Qantas executives or employees