Weldon pushed for due diligence on Clear to be finished quickly – former employee

Former NZX chief executive Mark Weldon knew the stock exchange's due diligence team wasn't convinced Clear would be a success but pushed ahead with the acquisition anyway, an ex-NZX staff member has told the High Court at Wellington.

NZX is suing Dominic Pym, Grant Thomas, and their companies Ralec Commodities and Ralec Interactive for between $A20.7-37.6 million, and say they provided "wildly inaccurate" forecasts prior to NZX buying the Australian grain trading platform in 2009.

Ralec's counterclaim of $A14 million, for both earnouts, plus bonuses says NZX and Mr Weldon underfunded the business which meant it couldn't meet the earnout targets.

Rachael Greer, who was a Queensland-based business acquisitions consultant at NZX, has been called by Ralec as a witness. She is appearing by video-link from Christchurch.

Ms Greer, who has been referred to as Rachael Cross by other witnesses up to this point, said there had been time pressure from Mr Weldon during the due diligence process and she thought that was influenced by the chief executive's desire to present the acquisition to the NZX board at scheduled board meetings.

Ms Greer said Mr Weldon had emailed her in July 2009 saying he was "100% there" on buying Clear before he had met anyone from Clear, and a factor in this was his desire to get Fonterra on board with dairy trading markets.

"The timeframes for the acquisition were set by Mr Weldon and I regarded the Clear acquisition was already determined to be achieved when Mr Weldon had told me he was 100% there," Ms Greer said. "I knew there were risks with Clear being a startup and particularly if NZX did not fund it going forward."

Ms Greer said that in September 2009 she had responded to an email from Mr Weldon asking for her 'unspoken assumptions' about the Clear acquisition with a list of issues, including the idea that as NZX was a large business, Clear "would have the impression NZX has money it would like to give out like lollies."

"The problem which I knew from prior experience is when NZX purchased a business it would say it would spend money, but when it came to the request it would be refused as unbudgeted," Ms Greer said.

"Nor was it my experience NZX would spend money replacing departed employees from that business. There was considerable friction across NZX businesses about so-called cost-cutting."

Ms Greer recalled a dinner held in late October 2009 after signing the acquisition of the Clear businesses where Mr Weldon asked the members of the due diligence team to present their perceptions on the likeliness of Clear's success.

"The due diligence team was reserved in terms of hitting targets. I recall Mr Weldon was annoyed they didn't necessarily think it was going to be a success," Ms Greer said.

She is being cross-examined by Alan Galbraith QC, the lawyer representing Mark Weldon.

(BusinessDesk)