Packer son tells of £120m flop

Lachlan Colquhoun12 April 2012

AUSTRALIAN media heir James Packer today told a packed courtroom he had invested A$327m (£121m) into failed telecoms company One.Tel without feeling a need to investigate a previous failed venture of One.Tel's founders.

From the witness box in a court inquiry into the A$750m collapse of One.Tel, 34-year-old Packer said that founder Jodee Rich had assured him 'probably hundreds of times' that he had learned his business lessons and would never be involved in another failure.

Packer and Rich attended one of Sydney's most exclusive schools, and Rich has said he was closer to James than to any man. After falling out over One.Tel, and most particularly over a A$7m bonus paid to Rich, the two no longer speak to each other.

Packer is expected to spend three days being grilled over his knowledge of One.Tel's finances in its last days. He and fellow heir Lachlan Murdoch, who led News Corp's A$350m investment, have said they were 'profoundly misled' by One.Tel's directors. Murdoch is expected to give evidence in the coming weeks.

Australian business author Paul Barry said in a recent book about One.Tel that Packer and Murdoch 'do not emerge from the saga as the brightest crayons in the box'.

How One.Tel vision faded

ONE.TEL began life as a simple re-seller of telephone services in the mid-1990s, but after the Packer and Murdoch families became involved the vision was one of a company that would challenge big market players such as Telstra.

James Packer became involved through old school connections to founder Jodee Rich and then brought in Lachlan Murdoch as he saw a project that could cement their business friendship. The two families invested $700m in One.Tel as it set up business in Britain and Hong Kong and began an ambitious plan to build a 3G network in Australia.

The Packer-Murdoch axis lifted One.Tel's value to A$2bn, but the company plunged to bankruptcy a year ago.

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