Crikey’s Sydney man, Crullers, was disappointed about the lame apologies James Packer offered to shareholders at last year’s PBL AGM. Michael Slattery, QC, wouldn’t stand for them at the OneTel hearing in the Federal Court.
While the media has been giving the entire hearing a right royal going over, Jamie was definitely the star witness.
His pulling power was proven by a large contingent of hacks who arrived around the time yours truly did – a good forty minutes before proceedings were due to kick off. Court 20A, which would seat about 80, was chockers, with up to about a dozen or so punters at times craning their necks around the door at the rear of the courtroom.
Mum Ros and wife Jodhi were there for moral support. (Sorry Raewyn – can’t give you fashions on the field because they were on the other side of the crowded courtroom to me.) And did Crullers see Jodhi chomping on chewy as she exited the courtroom just before lunch? Crullers only caught a brief glimpse, so he’s being a bit cautious before accusing Jodhi of being so disrespectful.
Jamie took the stand and did something which puzzled this first time observer initially – he tacked “privilege” onto the front of every single answer to his questions.
Counsel for the Telco Tragic stepped up to the plate and first asked “Are you James Douglas Packer?”
“Privilege – yes.”
“Is your address…” (we won’t reprint it here lest an army of Sole Subscribing well-wishers feel the need to do Jamie and Jodhi a good deed and bring around a batch of freshly baked scones in their moment of need).
“Privilege – yes.”
“What is your occupation?”
“Privilege…” and on it went.
The whole point of the exercise was for Jamie to claim privilege under the Corporations Law so that his responses can’t be used against him in any subsequent criminal proceedings.
Jamie’s silk pointed out that Jamie wished to claim privilege for all his answers and counsel for the liquidator graciously allowed Jamie’s silk to pipe up if Jamie ever forgot to claim “privilege”.
Why couldn’t they just cut that rubbish and let it be known from the top that Jamie’s entire testimony was subject to privilege? For a simpleton like yours truly who doesn’t appreciate the subtleties of the law, this is just another reason to declare it an ass. Unfortunately, the Corporations Law is framed such that Jamie had to go through the rigmarole of declaring “privilege” to each question.
It all got a little ridiculous when counsel for the liquidator asked “do you have page 424?” and Jamie answered “privilege – yes”.
You can’t be too careful these days – someone just might sue your roody poo candy ass if you get a question like that one wrong.
I was quite keen to see how often Jamie’s memory would fail him and I didn’t reckon it was too bad, although when I gave up counting after an hour he had given an “I can’t recall” or some such at least 15 times.
I can’t recall (there’s that magic phrase again) any occasion where Jamie came up with an absolute howler on material facts (i.e. those big ‘uns so earth-shattering that they’d have to be permanently imbedded in the grey matter) and claimed that he couldn’t recall.
Mr Michael Slattery, QC, counsel for liquidator Ferrier Hodgson, gave Jamie a fair old grilling – I was there from commencement at 10:15 to lunch at 1pm. Slats was on his feet all the way, didn’t take the suit jacket off even when the room turned into a sauna and Jamie’s counsel requested that he be allowed to tog off, and kept pounding Jamie on the minutiae of the OneTel business.
Most were glad to get out after just under 3 hours – and Jamie’s booked in for 3 days!
Mr Slattery’s first line of attack was to refer back to the “painful lessons” comment and the apology Jamie had made in last year’s chairman’s address to PBL shareholders over OneTel. Mr Slattery asked the apology was for Jamie’s personal conduct in relation to OneTel, which Jamie denied, saying that he was apologising for accepting the bona fides of Jodee Rich.
Yeah, right Slats – as if he’s going to fess up that easily!
Mr Slattery then focused for a few minutes on Jodee’s previous failure, Imagineering. Jamie said that he “completely and fully believed” that Jodee had “learnt all his lessons” from this disaster in the early 90s. Rich started Imagineering in 1981 as a wee 21 year old, but by 1990 the company folded under debts of almost $42 million. Imagineering’s losses were caused by untimely expansions, a depressed economy, high debt and provisions for obsolete stock according to an independent report into the collapse.
Aside from the stock – which OneTel didn’t have – does the rest sound familiar?
When pressed by Slats, Jamie reckoned that Jodee had assured him “probably hundreds of times” that he (Jodee) had learnt his lessons.
It was interesting to see Mr Slattery circle on this one – clearly, he was trying to make out Jamie was derelict in his directors’ duties in jumping on board the freight train OneTel before checking whether Casey Jodee had caused any derailments in the past.
Mr Slattery asked Jamie to specify exactly what lessons it was that Jodee had learnt. Jamie said it was “to never put himself in a position where that would happen again”.
Yeah, thanks for that erudite explanation, Jamie.
It’s at this point that I don’t want to be seen to be offering free advice to the esteemed Mr Slattery, but he really should have nailed Jamie on this lame piece of puffery.
That’s the kind of garbage we shareholders (or proxy holders as is generally my case) have to put up with at AGMs. When you have a bloke by the short and curlies (metaphorically of course – Jamie didn’t tog off that much) in the Federal Court, you don’t have to put up with these non-descript answers.
At this point I was starting to feel a bit better about not being able to land even a glancing blow on company directors at AGMs, but Mr Slattery didn’t take long to turn up the heat on Jamie.
Jamie told us that he hadn’t made inquiries into the Imagineering collapse per se, but had made inquiries into Jodee Rich prior to investing in OneTel.
The next issue Mr Slattery toyed with was the curious appointment of Jamie to the OneTel board for a matter of only a week in August and September 1997.
Jamie implored that he had no recollection of being a director back then, of signing any document to become a director or of signing anything to cease becoming a director. He said that he’d only found out in the past four days that he was a director.
Mr Slattery pounced somewhat incredulously and asked how the heck (not his exact words) Jamie’s name could be placed on the public record with ASIC and he didn’t know that he was a director.
Jamie quite smartly replied that he didn’t say that he wasn’t a director back then – he said he “didn’t recall” being a director back in 1997.
There weren’t too many sparks flying between silk and silvertail. At one point Jamie started launching into a pre-emptive rebuttal and Mr Slattery piped up “don’t worry about what views I may have, Mr Packer. I simply ask you to answer my question.”
On one occasion Mr Slattery had to ask Jamie a couple of times to please answer the questions when Jamie was being a tad evasive, but other than that there wasn’t too much lively banter.
Oscar Wilde v Edward Carson, QC in the Old Bailey, it most definitely was not.
Or for that matter, Rose Porteous v Alastair Hope in the Western Australian Coroner’s Court.
During questioning on whether Jamie had inquired into the Imagineering collapse, Jamie offered to explain why he was so confident about the OneTel investment.
Mr Slattery graciously allowed Jamie to explain, whereupon he indicated that through a “loose investment in a joint venture” he was put onto his mate, Bob Mansfield, about getting into the phone re-selling caper.
Jamie explained that Bob was then and is now a good mate. His good mate’s advice? Get onto Jodee!
And Bob’s still a good mate?
There’s one thing you can say about the three generations of Packers – they’re loyal to a fault!
With mates like Rodney Adler and Bob Mansfield doling out investment advice to Jamie, I would have bailed long ago if I were a PBL shareholder.
Mr Slattery then turned his line of attack to the statements of corporate governance contained in OneTel’s annual reports.
For those of you who have observed the never-ending stream of corporate collapses that go on in this country and think that company directors pay these principles of corporate governance mere lip service, we have a startling exclusive for you right here on Crikey – IT’S NOT TRUE!!!
No, Jamie said it himself – they really do take these corporate governance statements seriously.
After a pause, Jamie most definitely answered in the affirmative when Mr Slattery asked “you really believe this – it’s not just window dressing?”
Slats hammered Jamie over the various pillars of corporate governance supporting the OneTel colossus. It took a good three or four efforts to get an affirmative response to the question of whether Jamie saw that it was his individual and the board’s collective responsibility to ensure the company’s principles of corporate governance were adhered to.
Slats spent the next two hours on the issue of the $7.5 million bonuses paid to Jodee Rich and Brad Keeling proving that this wasn’t the case – “death by a thousand cuts”, as one hack in my vicinity mentioned.
When Mr Slattery pressed him on what he saw the role of the directors to be, Jamie answered that it was “continually encouraging the executive directors to improve the information they provide to the board”.
A pity for Jamie that he wasn’t asked the question he wanted next – “well, did they do that?”
There was a lot of argey-bargey on the bonuses.
Mr Slattery spent a lot of time on whether it was unusual that these bonuses kicked in immediately once certain market capitalisation targets were met and whether it was strange that the bonuses not be put before shareholders to approve.
It most certainly is odd, but it took a while to wean that out of Jamie.
One of the more interesting points that Mr Slattery nailed Jamie on was whether he’d been at the board meeting approving the controversial bonus payments. Jamie initially didn’t recall the board being advised at a meeting in October 1999 that the bonuses had been paid.
Mr Slattery put paid to that later, wheeling out the board minutes which clearly indicated that the board had adopted the Remuneration Committee’s resolution to pay the bonuses.
The Remuneration Committee included our old mate, Rodney Adler, by the way.
Again, it was pretty clear what Mr Slattery was doing in setting Jamie up. He asked a series of questions about whether Jamie read the board minutes after they were sent to him, if there was something unclear in it, he’d check it out with someone and then sign off on them.
Jamie’s defence was that even now he would have approved the bonus payments, because the targets had been met.
Mr Slattery then focused on the fact that the market capitalisation targets had to be “sustainable”. When the company’s share price subsequently fell back below the target levels, it looked pretty ordinary to be paying out $7.5 million each to a couple of duds who hadn’t even made the company cash flow positive let alone profitable.
Jamie covered for himself that he didn’t know until the bonus payments had become more or less public that they’d been paid (around September 2000). Mr Slattery tied this back in beautifully to the argument about Jamie’s dereliction of duty – how the heck could a director not know of a $7.5 million bonus payment to two blokes until almost a year after it occurred?
We heard a bit about the colourful language Jamie had used in trying to “persuade” Jodee on numerous occasions to pay back his bonus. Jodee said no can do – he’d already paid tax on it.
From further questioning, it appeared there was no other excuse that Jamie could remember for Jodee to not repay the bonus.
If that was the reason he accepted, he’s an even bigger goose than he already was for pumping his dough into OneTel in the first place.
He should have told Jodee to go lodge an amended assessment with the Tax Office! Stacks of other employees do it each year when they’ve been over- or under-paid and the mistake is later corrected.
Of course, this isn’t any old employee we’re talking about here, one must remember.
Mr Slattery tried to up the ante by suggesting that Jamie had accused Jodee of being “insane” for not repaying the bonuses before it became public. Jamie’s argument was that Jodee had 620 shares in OneTel, so if investors deserted the company once the ludicrous bonuses became public and the share price went down 20 cents, the $7.5 million bonus was chump change compared to the loss on his shares.
While the attempt to get Jamie to call Jodee “insane” seemed a pretty pointless exercise in semantics, it did ram home several points, foremost of which was that Jamie didn’t have a clue about the bonus payments until the horse had bolted.
And to think that the $7.5 million bonuses are a drop in the ocean compared to the company’s total losses – it will be interesting to see what Mr Slattery has up his sleeve over the next couple of days.
Jamie’s pals have certainly left him plenty of ammunition.
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