The alleged sex-for-investment scandal involving Australian tech billionaire Richard White is just the latest corporate disaster in a country that is fast losing its reputation as a tightly regulated market with strict governance standards.
More than A$7 billion ($4.6 billion) in market value was wiped out of WiseTech Global Ltd this week. after media reported that White – the company’s co-founder, CEO and largest shareholder – paid millions of dollars to a former sexual partner to settle allegations of inappropriate behavior.
With a governance review underway, the crisis surrounding the freight software giant and its figurehead CEO deepened on Thursday, when the Australian Financial Review reported that a former director had accused White of intimidation and bullying. Previously, the newspaper said White also had a years-long relationship with an employee before gifting her a A$7 million waterfront home in Melbourne. According to the report, the transaction was not disclosed to the board.
Helen Karlis, spokesperson for White’s attorneys at Clayton Utz, said the law firm had no immediate comment on the latest allegations made. The company did not respond to previous repeated requests for comment.
Within months, allegations of operational or ethical failures have also hit Australia’s two dominant supermarkets, one of its major banks, its largest insurer, its largest listed media company and Sydney’s main casino. In a country with one of the world’s largest pension funds, where employee contributions are mandatory, ordinary savers foot the bill when share prices fall.
Another tycoon founder, Chris Ellison of Mineral Resources Ltd., also became embroiled in a scandal this week with the company investigating historical unreported payments that helped him avoid taxes. Australia’s corporate watchdog has launched an investigation and since Monday the miner’s market value has dropped almost $2 billion.
The mining magnate described his actions in a statement on Monday as “a bad decision and a serious error of judgement.” He had subsequently ‘voluntarily’ fully disclosed the matters to the Australian Taxation Office, with all outstanding taxes, penalties and interest refunded. The company’s board said earlier this week that it retained confidence in Ellison.
While director or corporate offending is a global phenomenon, this appears to be particularly pronounced in Australia where a confluence of factors are at play. Many of the country’s largest industries—aviation, banking, food, and retail—are duopolies or oligopolies, comfortable environments that can be conducive to abuses of market power.
Australia has a population of just 27 million and has a relatively small group of independent board members who oversee listed companies. Many directors have positions at multiple companies. Advocacy groups have long said that board members are reluctant to speak out when standards at one company lapse for fear of losing a board position at another.
That’s not the only problem. Some of the country’s watchdogs are either under-resourced, have few corporate heads to their name, or hand out fines that do little to deter bad behavior. Star Entertainment Group Ltd. was fined just A$15 million – less than 1% of revenue – by the regulator this month after an investigation found the casino operator had breached its license multiple times and was unable to run its flagship complex in Sydney , despite taking two years to address the issues.
The head of a Senate inquiry into the Australian Securities and Investments Commission, the country’s top regulator, described the agency in July as “an organization with no transparency, few prosecutions and a litany of cultural, structural and governance issues.”
One of the most damning assessments of an Australian workplace came only last week when Nine Entertainment Co., publisher of the Sydney Morning Herald and the AFR, published an independent review of its own practices. The report revealed systematic abuse of power and authority, bullying, discrimination and sexual harassment.
At too many companies, internal governance measures fail to detect problems before they develop into major public scandals, says Rahat Munir, professor at Macquarie University’s business school and head of accounting and corporate governance. Australia’s geographical remoteness, far from the world’s major financial and business centres, means its companies risk operating in their own bubble, he said.
“As a result, it is very easy to manipulate the local market,” he said.
WiseTech issues
At WiseTech, shareholders are feeling the pain of the claims against White and the board, which includes the Australian sovereign wealth fund, along with the largest pension fund, AustralianSuper Pty. WiseTech shares fell as much as 5.8% on Thursday, with the stock on track for its worst monthly period. performance since February 2020.
“We should all be concerned that these are not isolated examples, but a pattern of behavior that is causing direct losses to shareholders,” said Brendan Lyon, professor at the University of Wollongong’s faculty of business and law. Business regulation is failing, says Lyon.
The wave of accusations against WiseTech and White is now threatening the company’s leadership. Former director Christine Holman accused White of “persistent intimidation and bullying” when she left the board in October 2019 after less than a year, the AFR reported Thursday. The AFR said it did not suggest White bullied or intimidated Holman, but accused him of doing so. Holman declined to comment to the newspaper.
AGL Energy Ltd., where Holman is now a board member, sent her an interview request from Bloomberg News earlier this week, which she declined. AGL did not respond Thursday to a new request from Bloomberg for comment from Holman on her reported resignation letter from WiseTech.
A spokesperson for WiseTech did not comment on the latest AFR report, but said the company has a clear policy regarding the disclosure of close personal relationships in the workplace. White confirmed that he complied with the policy, the spokesperson said.
“The board continues to proactively investigate a range of matters, monitor the situation and carefully consider all relevant factors,” the spokesperson said.
On Monday, the AFR quoted White as saying he was concerned about all allegations, even untested ones.
White reached an out-of-court settlement last week with another alleged former lover he was pursuing over bankruptcy, the case that first brought him to media attention. The woman claimed White expected her to have sex with him in exchange for an investment in her business.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)