Crikey doesn’t get many scoops but the defection of The Two Marks from Andersen was one of them.
The hot news from Arthur Andersen today is that the two Marks – Korda and Mentha – are jumping ship to set up their own corporate recovery practice. They have handed in their notice to Andersens with seven week’s notice – apparently E&Y wanted them to cough up $400,000 each to buy into the Australian partnership and they would be bringing a job worth $65 million in fees over the next two years.
A lot of the partners who have been told this news about the $400,000 buy in having forked out over $1million a piece for Enron (with potentially more to come for Bond & HIH), are rethinking whether or not to go the EY direction.
The two Marks have so far creamed almost $20 million out of the Ansett administration for Andersen and have been given another six months by creditors to keep creaming.
They have assumed the highest profile of any Australian accountants we’ve seen in recent years so here’s a little bit of background on the lads whose new firm will be competitor to the boutique corporate recovery outfits like Ferrier Hodgson and Sims Lockwood.
Who are Mark Korda and Mark Mentha?
Both of the lads are career AA people with more than 20 years under their belt.
Both started in Audit, moved across to Insolvency/Corporate Recovery Services (‘CRS’) after not setting the world on fire in audit (Mentha went to RMIT and failed some of his PY exams first time round we believe). Both had very fast progression to partner as they were there for the insolvency boom following recession of the early 1990s.
John Spark, then head of division, moved to Ferrier Hodgson, leaving Korda as effective boss. Mentha was international equity partner by the time he was 31.
Korda’s first big job was receiver & manager of Budget-Rent-a-Car-Systems (‘BRACS’) in 1989 which is ironic given the Ansett family connection.
In insolvency lean times in early/mind 90’s both moved away from insolvency in AA. Korda moved over to head up audit in approx 1993 to use his acknowledged admin skills when audit was then in a mess. It was thought Korda could be on track to be Melbourne office managing partner but something went wrong and he came back to corporate recovery around 1999. We don’t know much about Korda outside work, but he was a good family man living out in Eltham for many years.
In about 1993 Mentha became head of ‘operational consulting’ a division in AA which was then mimicking the sort of jobs Andersen Consulting (now the completely separate Accenture) did but on a much smaller scale!. That also went a bit pear shaped and Mentha came back to CRS a few years later. Mentha is a very keen golfer, was off 5-7 handicap. He follows St Kilda in the footy and reputedly met his wife on a blind date set up by a solicitor mate (she worked at the mate’s law firm)
Mark Francis Xavier Mentha (might be Mark Xavier Francis Mentha) is obviously a good catholic boy. AA partners are obliged to donate about 10 per cent of their earnings to charitable causes and one of Mentha’s chosen ones was the Xavier College foundation.
At one stage other jobs of significance they were involved in in the past included one of the multiple old Venture retailing stores receiverships and the voluntary administration of Brash’s stores. Michael Humphris was the AA CRS partner who did the Brashs job and he’s now over at Sims Lockwood working on the Hazelton administration.
There has been some talk about disquiet among AA partners from other areas in Melbourne over the attention Korda & Mentha were getting over Ansett & how they are alsways popping up on the TV.
Crikey’s Two Marks scoop
Sealed section update on April 9
We broke the story about the Two Marks leaving Arthur Andersen yesterday and it will be interesting to see how the rest of the media cover the yarn. The Age posted a yarn on their website last night at 7.48pm after AA put out a statement following our story. You can read it here
Administrators are appointed as individuals rather than firms so there is no doubt they will take the Ansett business with them but what about the huge team of people at Andersen who have worked with them?
Surely the Two Marks are meant to be furiously negotiating with Virgin-Lang Corp at the moment, not haggling over the establishment of their own firm.
And if someone decides to sue the administrators for being way too cosy with the unions and Tesna and dropping more than $100 million of creditors’s money by putting planes back in the sky, which professional indemnity insurer will pick up the tab?
Our celebrity accountants have had a huge six months and it’s only going to get bigger. We reckon they should sign a lease for themselves to set up shop in the old Ansett building.
Did the media give any credit to Crikey?
A reader emailed the following yesterday:
Love the work you’re doing.
Regarding The Two Marks, a colleague dined with TTM last week and apparently they weren’t planning to make the move public until mid-May. Certainly a decent scoop!
Andersen showed a bit of initiative and belted out a statement on Monday night confirming the development but Crikey still get not get much credit in the mainstream media with the exception of AAP.
The Australian made a reference to their business being “reportedly worth $65 million” and the Fin Review referred to “reports” Ernst & Young asked AA partners to fork out between $200,000 and $400,000 to join. The Herald Sun had a similar “report” of the $400,000 figure and also used our figure of $1 million in costs for worldwide Andersen partners from the Enron and other collapses. Only Leonie Wood from The Age appeared to do a solid amount of her own research.
Feedback to our Two Marks yarns
You’ve really been kicking some great goals! Your burst this afternoon about the Two Marks departing Andersens has raised a few eyebrows among other Andersen types. Obviously once you’re leaving the fold it’s open season on your reputation! Among the stories doing the rounds in commenting on your report:
* Surprise at Mentha choosing the Xavier Foundation as he spent only one year there, having completed years 7-11 at a government school in country Victoria
* Brash’s: it’s being claimed that this was not Mentha, but two other partners at AAs (apparently this is a matter of public record)
* Budget: Again, a Sydney AA partner (Peter Allan?) is being touted as the key person on this – it’s even being claimed that Korda did not have a liquidator’s licence at the time!
Nasty stuff indeed.
Rival Big Four accountant has a go
You wanted Korda history:
He was boss of AA Corporate Finance for the privatisation of Australian Defense Industries in 1999 on behalf of the Office of Asset Sales. The process was so stuffed that all the bidders withdrew except the Transfield/Thomson-CSF (French Government) syndicate. All bidders who knew about defence (Raytheon, Lockheed Martin etc) took one look at the hideous process and ran a mile.
The result: Taxpayers got about $250m rather than the $1 billion it was worth.
The US will hardly share defence technology with us now because the French control ADI.
Korda came out of it OK – he was so friendly with the bidding syndicate they appointed AA as auditors.
Blunders over Ansett process
Whatever you think of the two Marks and Ansett, they ignored a fundamental busines proposition when they gave Fox/Lew sole bidder rights. No competitive tension = a bad deal. Corrigan wouldn’t agree with this. He’s got a good deal. The two Marks don’t care . They get paid by the hour, regardless of outcome.
Don’t forget the Lion Nathan debacle
Crikey has written plenty about Lion Nathan’s disastrous foray into the Victorian pub game and you should remember that the Two Marks were instrumental in implementing this strategy although the decision to buy was obviously by management.