The alleged sex-for-investment scandal ensnaring Australian tech billionaire Richard White is the latest corporate disaster in a country that is fast losing its reputation as a tightly regulated market with strict governance standards.
WiseTech Global Ltd.’s market value has been wiped off by more than 7 billion Australian dollars ($4.6 billion) this week after media reports that White – the company’s co-founder, chief executive officer and largest shareholder – accused a former sexual partner. Had paid millions of dollars. Dealing with allegations of inappropriate behaviour.
With a board review underway, the crisis at the freight software giant and its key CEO deepened on Thursday as the Australian Financial Review reported a former director had accused White of bullying. Earlier, the newspaper had said White also had a years-long relationship with an employee before gifting her a Australian $7 million waterfront home in Melbourne. According to the report, the transaction was not disclosed to the board.
Helen Carlisle, a spokeswoman for White’s attorneys at Clayton Utz, said the law firm had no immediate comment on the latest allegations aired. The company has not previously responded to repeated requests for comment.
In just a few months, allegations of operational or ethical failings have also hit Australia’s two leading supermarkets, one of the major banks, the largest insurer, the largest listed media company and Sydney’s main casino. In a country with one of the largest pension pools on the planet, where workers’ contributions are mandatory, everyday savers are saving as stock prices fall.
Another tycoon founder, Chris Ellison of Mineral Resources Ltd., also found himself embroiled in a scandal this week as the company was investigated over historic undeclared payments that helped him avoid taxes. Australia’s corporate watchdog has launched an investigation, and nearly AU$2 billion has been shaved off the miner’s market value since Monday.
The mining giant called its actions “a poor judgment and serious lapse of judgment” in a statement on Monday. He subsequently “voluntarily” made full disclosure of the matters to the Australian Taxation Office with all outstanding tax, penalties and interest paid. The company’s board said earlier this week that it retained confidence in Ellison.
While executive or corporate crime is a worldwide phenomenon, it is particularly evident in Australia, where a confluence of factors come into play. Many of the country’s largest industries – aviation, banking, groceries, and retailing – are monopolies or oligopolies, comfortable environments that can be conducive to market-power abuses.
Australia is home to only 27 million people and has a relatively small group of independent board directors to oversee listed companies. Many directors have roles in many businesses. Advocacy groups have long said that when standards are lapses at one company, board members are reluctant to speak out for fear of losing a board position at another company.
This is not the only problem. The country’s few watchdogs either lack resources, have few corporate positions to their name, or impose fines that do little to deter bad behavior. Star Entertainment Group Ltd. was fined just A$15 million this month – less than 1% of revenues – after an investigation by its regulator found that the casino operator had breached its license multiple times and had failed to do so. Despite this he was ineligible to run his major Sydney complex. Two years to solve its problems.
The head of a Senate inquiry into the Australian Securities and Investments Commission, the country’s primary corporate regulator, described the agency in July as “an organization devoid of transparency, few prosecutions and with cultural, structural and governance issues”.
The most devastating assessment of the Australian workplace came just last week when Nine Entertainment Company, publisher of the Sydney Morning Herald and AFR, released an independent review of its practices. The report exposed systemic abuses of power and authority, bullying, discrimination and sexual harassment.
Macquarie University Business School Professor Rahat Munir, who leads the department of accounting and corporate governance, said that in too many businesses, internal governance measures are not detecting problems before they develop into major public scandals. Be. Australia’s geographic remoteness, far from the world’s major financial and corporate centres, means its companies risk operating in their own bubbles, he said.
“As a result, the local market is very easy to manipulate,” he said.
wisetech crisis
At WiseTech, shareholders are feeling the pain from claims against White and the board, which also includes Australia’s sovereign wealth fund as well as its largest pension fund, AustralianSuper Pty. Shares of WiseTech fell as much as 5.8% on Thursday, putting the stock on track for its worst monthly total. Demonstration from February 2020.
“We should all be concerned that these are not isolated examples, but a pattern of behavior that is causing direct harm to shareholders,” said Professor Brendan Lyon of the University of Wollongong’s Faculty of Business and Law. Corporate regulation is failing, Lyon said.
A barrage of allegations against WiseTech and White now threaten the company’s leadership. Former director Christine Holman accused White of “continuous threats and intimidation” after she left the board in October 2019 after less than a year, AFR reported Thursday. The AFR said it did not mean that White threatened or intimidated Holman, only that she had accused him of doing so. Holman declined to comment to the newspaper.
AGL Energy Ltd., where Holman is now a board member, sent him an interview request from Bloomberg News earlier this week, which he declined. AGL did not respond to a new request from Bloomberg on Thursday for comment from Holman on his alleged resignation letter from WiseTech.
A WiseTech spokesperson did not comment on the latest AFR report, but said the company has clear policies related to the disclosure of close personal relationships in the workplace. According to the spokesperson, White confirmed that he complied with the policy.
“The board is actively investigating a number of matters, monitoring the situation and carefully considering all relevant factors,” the spokesperson said.
On Monday, AFR quoted White as saying he was concerned about any allegations, even untested ones.
White last week reached an out-of-court settlement with another alleged ex-boyfriend whom he was suing for bankruptcy, a case that first thrust him into the media spotlight. The woman alleged that White expected her to have sex with him in exchange for investment in his business.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
