Firm criticises SFO complaint

"This whole exercise has had a devastating effect on our core business." David Johnson

Callaghan Innovation is defending its Serious Fraud Office complaint about Trends Publishing after the SFO dropped its investigation into the company.

In 2014, the government grants agency contacted the SFO in relation to a grant it awarded magazine publisher Trends.

An independent review by Deloitte found Trends breached its agreement with the grants agency, leading to the grant’s suspension and a demand the company repay $332,967.

Trends denied any wrongdoing, and claimed Callaghan had defamed the company in public comments.

This week, Trends chairman David Johnson said the SFO had concluded its investigation and no criminal charges would be laid.

An SFO spokeswoman confirmed the investigation was closed.

‘‘This whole exercise has had a devastating effect on our core business.

‘‘Many customers withdrew their regular advertising, key staff working on our research and development project left our business, and it significantly de-railed our progress on the innovative research and development project we were being part-funded by Callaghan to develop.’’

Johnson said the publicity about the SFO complaint had put the company under financial stress.

‘‘It is extraordinary that the SFO complaint process can be used and ultimately unfounded allegations publicised by a party to a commercial invoicing dispute to damage the credibility of a wellknown business, and that the party on the receiving end of the complaint is issued with secrecy orders relating to the process so it can’t really fight back.’’

Callaghan chief financial officer Richard Perry said the agency was aware the SFO had decided not to proceed with a case.

He said the SFO had told Callaghan it acted appropriately in making a complaint after it uncovered irregularities in the way Trends claimed funding.

‘‘We referred some of these irregularities to the SFO as they are better equipped than us to determine what, if any, criminal matters arose.’’

Callaghan was seeking repayment of the funding to Trends, Perry said, while the company had also issued proceedings against the government agency claiming it had no grounds to terminate.

It also made other claims, set to be heard in November, all of which Callaghan denied.

A defamation case against Callaghan had been dropped.

‘‘As these matters are still before the court we will not be making any further comment,’’ Perry said.

Johnson said he looked forward to the November court case.