professional conduct, page-2

IT will be lard on toast all round for boardroom newbie Benny Elias and his pals at Chameleon Mining, as they work out how to pay mounting legal bills over the coming months.

The mining tiddler had probably bitten off more than it could afford to chew with its legal action against the much bigger Murchison Metals over rights to the Jack Hills iron ore project. Lawyers don't come cheap and concerns over its ability to pay for the case led to the Federal Court ordering it stump up more than $1.7million in bank guarantees as security.

Now new legal storm clouds are brewing.

Chameleon shareholder United Industries International has lodged a claim in the Federal Court alleging that Chameleon circulated inaccurate and misleading information ahead of a shareholder meeting back in December 2005.

Chameleon was in administration at the time and the meeting was to decide on the appointment of three new directors, including Siew Hong Koh, and the issue of more than 400 million shares to two of his companies, Centrebright and Chalceus, and their chosen nominees.

According to United Industries, Chameleon failed to disclose full details of the parties that were to obtain ultimate voting power as a result of the share issue.

It alleges Chameleon was aware that one of the nominee companies, Captain Starlight, was to hold shares in trust on behalf of Koh's Union Pacific Investments and a superannuation fund of one of his associates, but failed to disclose that in the notice of meeting.

United Industries is also suing Centrebright and Koh, who left the board of Chameleon in April claiming his work there was done. He's still the largest individual shareholder in the company. Well, we think he is. Chameleon has yet to publish Koh's final director's interest notice, which would appear to be a breach of the stock exchange's listing rules.