CEO of Co. That Owns Kazaa in Sydney Court

The Associated Press
Friday, April 28, 2006; 9:09 AM

SYDNEY, Australia -- The chief executive of the company that owns the Kazaa file-sharing network on Friday denied hastily selling her multimillion dollar Sydney mansion and sending the proceeds to the tax haven of Vanuatu to make sure record company lawyers could not get their hands on it.

The denial capped more than four hours on the stand for Nikki Hemming at the Federal Court of Australia in Sydney. She was cross examined on two affidavits she wrote detailing her assets ahead of a possible court order for damages against Kazaa's owners for authorizing widescale copyright breaches by users of the so-called peer-to-peer network.

Hemming's appearance marked the first time such a senior executive linked to Kazaa has taken the stand in a long-running legal battle between Australian record labels and Kazaa.

Last year, a federal court judge ruled that Kazaa's owners, including Hemming, did nothing to rein in widespread copyright infringements by Kazaa users. Lawyers for the owners have appealed and no decision has yet been handed down on the appeal.

If the appeal fails, the Australian recording industry has vowed to seek millions of dollars in damages.

Fearing that Hemming and other executives named in the case could send their assets overseas out of the court's reach, the Federal Court last year froze their assets. Friday's questioning appeared aimed at establishing whether Hemming was able to get some money offshore before her assets were frozen.

In a packed courtroom, record company lawyer Richard Cobden painstakingly outlined a complex web of companies and a trust linked to Kazaa in Australia and Vanuatu.

Hemming is chief executive officer of Sharman Networks, the Vanuatu-based company that owns the Kazaa software used by millions of people around the world to swap music and video files.

Hemming, wearing a black suit and white blouse, said Sharman bought the Kazaa file-sharing software in early 2002 for 600,000 euros ($750,000) from a Dutch company, Kazaa B.V.

In February 2003, Hemming bought a 1.7 million Australian dollar house in Sydney, partly funded by a $810,000 unsecured loan from a company in Vanuatu with an interest rate of 3.5 percent, well below Australian rates at the time.

In December 2004, with a new swimming pool she was having built still not finished, Hemming sold the house to John Myers, an accountant who worked for Sharman, for 2.1 million Australian dollars ($1.58 million) and paid back the loan to Vanuatu.

Cobden said to Hemming she appeared to have rushed through the sale because the Kazaa trial was close to ending "and you had formed a pessimistic view about your prospects in that trial."

Hemming, who earlier denied that the so-called loan was actually money controlled by Sharman in Vanuatu, replied: "That is also not true."

"The sale of the house had nothing to do with the case," she added.

© 2006 The Associated Press