This afternoon at the big CMSF superannuation conference in Hobart, Telstra executive and HIH Royal Commission star Stuart Korchinski
will be running a very interesting workshop called “Clearing houses – help or
hindrance? The benefits of a clearing house in a choice environment.”

Korchinski is managing director of KAZ Group’s troubled superannuation
administration business, AAS. Sharing the stage with him for one hour at the
Hobart Grand Chancellor will be Frank Gullone, the CEO of Superpartners, the
industry behemoth controlled by the union movement through various industry

KAZ cost Telstra $350 million in a takeover last year and is proving very
troublesome. The story of what has gone wrong even made it on to the front of
today’s Fin Review. Crikey reported last week that the AAS superannuation division is likely to be
sold, although KAZ Group CEO Mike Foster wrote to Crikey denying this as you
can see from this package on the site.

We continue to hear rumours that negotiations are underway with Mellon Financial
Group, the new owners of Citistreet, who hope to play an aggregation game in
the Australian superannuation administration market.

Korchinski has an interesting history as he spent five years in senior
positions at failed insurer HIH. He even scored another mention in The SMHlast week as Ray Williams’s counsel made his pitch for clemency by pointing out
that HIH shareholders spent $17,000 so that Korchinski and his family could
attend his father’s funeral in Canada.

But that was only the tip of the iceberg as Workers Onlinereported in 2002:

When one of Ray’s favourites, accountant Stuart Korchinski, left the company
Williams tossed an additional $75,000 into his payout to bring it up to
$910,000. Korchinski had previously benefited from a $158,000 bonus and the
company writing off a quarter million housing loan. Oh, and when he shot
through, HIH sold him the SAAB convertible he had become attached to for $1,000.

KAZ hired Korchinski in February 2002 and made no mention of his HIH history in
this press release at the time. See where Korchinksi fitted in to the HIH executive profile list here.

Meanwhile, a subscriber responds to today’s KAZ media coverage:

A read of today’s Fin Review reveals no surprises on the continuing Telstra-Kaz saga. On the surface it
would appear Telstra “missed out” on some new business opportunities, however
this is only skin deep. The word is ‘this was never going to work’. Teams
inside Telstra are still bemused as to why the acquisition went ahead in the
first place.

You see, the key issue is technical strategy and execution — not business
growth. Telstra’s outsourcing business is currently out of control, partly
through poor business
decisions and management who don’t understand how to run a technology business
but for the most part due to a lack of strategy between Telstra and it’s core
customers such as QANTAS, Group5 and NAB.

Whilst business growth could deliver more to the bottom line, the underlying
issue is around phyiscal infrastructure. The computer systems used to run
Telstra’s outsourced customers are old, failing and out of warranty. To save a
few dollars, Telstra has not replaced or renewed more than 50% of its systems.

This has led to excessive calls to the customer service helpdesk, with more
effort required to resolve simple problems. This results in overstaffing of the
call centre
environment to “prop-up” existing systems in the hope they will one day be

Meanwhile staff are moving on after years of fighting the politics associated
with obtaining funding and a strategy to replace the failing computer equipment.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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