A breakdown in relations between construction giant Leighton Holdings and its controlling shareholder has sparked the resignation today of its chairman Stephen Johns along with two non-executive directors, Perth-based former Alcoa boss Wayne Osborn and former Reserve Bank governor Ian Macfarlane.
The key issue was relations between Leighton and its major shareholder, German company Hochtief, and more specifically with Spanish company ACS, which gained control of Hochtief and therefore Leighton two years ago.
"Their view is that Hochtief no longer supports an independent board at Leighton," the company said in a statement, in reference to the resigning directors.
Leighton said current arrangements with Hochtief were expected to continue and a board meeting will be held over the weekend to elect a new chairman.
The trigger for the resignations was a dispute over board appointments, according to a letter from Mr Johns, which has been released to Fairfax media.
His letter said that Hochtief executive chairman Marcelino Fernandez Verdes, a long-serving ACS executive and recent appointment to Leighton’s board, interfered with the appointment of a new independent director.
‘‘These actions gave rise to serious concerns that Hochtief no longer supported the important principle of Board independence,’’ Mr Johns wrote.
All five independent Leighton directors, including Paula Dwyer and Robert Humphris, wrote a protest letter to Mr Verdes after he privately requested Mr Johns step down.
The independents also requested a special board meeting to be held on March 13, but Hochtief’s representatives on Leighton’s board refused to attend.
Finally, they wrote a letter asking Hochtief to maintain Leighton’s independence, which it had enjoyed through a series of corporate governance protocols.
‘‘Hochtief provided a wholly unsatisfactory response to this letter, uncommittal to the core issue of Hochtief’s support of the corporate governance protocols,’’ Mr Johns letter said.
The company issued a statement late today saying the remaining directors do not agree with the conclusions drawn by the resigning directors.
"There have been a series of events in recent months which are open to interpretation," the statement said.
"The remaining Australian directors have a different view about how to interpret these events."
The board departures come after the company conducted a review of its assets following a series of major cost blowouts on projects during 2011 and 2012.
IG Markets analyst Evan Lucas said there had been to-ing and fro-ing for some time between the Leighton board and Hochtief.
"Leighton's have had an overhang with the amount of capital expenditure they've had going out, deals falling through and therefore Hochtief has come back in saying the board isn't managing it the way we want it to," Mr Lucas said.
"It has been a long time coming with some sort of spill at the top end of Leighton."
Spanish Group ACS, which has a 40 per cent controlling stake in Hochtief, also had some input in how Leighton had been run over the past three years, he said.
It appeared to some that the chairman and directors had fallen on their swords following pressure from Hochtief, he said.
Meanwhile, Mr Lucas predicts Hochtief will continue to dabble in the company following a series of projects which came in over budget, particularly the disastrous Brisbane airport project.
In February Leighton announced it will sell 70 per cent of its telecommunications assets as part of its $885 million phone and internet infrastructure assets to the Ontario Teachers' Pension Plan.
Last week the National Broadbank Network awarded $334 million of work to Leighton Holdings company Visionstream.