Whistleblower hung out to dry over Invensys

Chris Hutching

Friday 23rd January 2004

Invensys whistleblower James Barnes said yesterday he was shocked that his evidence against former chief executive James Kennedy and senior executive Peter Taylor had been discounted. They have been acquitted of conspiring to defraud the company charges that Barnes himself pleaded guilty to in 2002, earning a two-year suspended jail sentence.

But Christchurch District Court Judge Colin Doherty last Friday concluded that Barnes was an unreliable witness because he would be willing to take risks for the $850,000 he had been paid by electronic company Invensys, and that Kennedy and Taylor did not have the sophistication and finesse for criminal deceit.

Even though Kennedy and Taylor have been acquitted of criminal charges they are now expected to face a civil lawsuit from US-based Invensys, which is understood to be keen to assert its intellectual property rights.

Auckland law firm Simpson Grierson filed civil proceedings before the SFO's district court prosecution.

The outcome of a civil lawsuit may be different because the onus of proof is lower than for criminal cases.

Yesterday, Barnes said he was surprised at the conclusion that his formerly alleged conspirators lacked sophistication because Kennedy, for example, had a PhD and had run one of the country's larger companies.

Barnes' personal situation had been extremely difficult over the past two years, he said.

Many people considered him a criminal while criminals considered him a nark.

"I regret ever being involved. In New Zealand if you were ever to become involved in a situation like this you should just sit down and shut up and never blow the whistle because you do not come out even from the experience.

"I've lost my credibility, 90% of my friends and acquaintances and I'm deeply embarrassed and humiliated, even though it now appears I was never involved in a crime.

"I pleaded guilty at the outset. I believed from how the SFO explained things to me that I was guilty of participating in a crime. It's too late for me now to change all that but I suppose I am relieved that I wasn't involved in one.

"Even though I have a record, I can walk with my head held high knowing I wasn't involved in a conspiracy since there wasn't one."

Barnes said he was looking forward to the end of his suspended sentence in a few months and seeking opportunities elsewhere.

"The US justice system sees what I did as the right thing.

"If I was a US citizen there are laws that protect whistleblowers.

"Anyone who blows the whistle is entitled under law to receive a percentage of the value of the recovery of fraud.

"My attorney tells me I wouldn't have been prosecuted (in the US) and I would have been protected under that legislation."

Barnes was the key witness in the December 2003 prosecution against Messrs Kennedy and Taylor by the Serious Fraud Office, alleging that the three men were involved in secretly developing an electronic component called a rectifier based on intellectual property owned by Invensys.

Barnes said in evidence he initially teamed up with Kennedy and Barnes to subcontract the manufacture of the rectifiers to a company in China and later market them around the world.

In his evidence, Barnes said he had initially thought the three of them were involved in immoral behaviour but then he decided it was probably also illegal so he approached the US parent company of Invensys, which invited him to the US to compose affidavits with the company's attorneys.

He struck a deal where he was paid $850,000 in return for his testimony and on his return to New Zealand he approached the SFO to tell his story, which led to his own prosecution and the case against Kennedy and Taylor

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