Kerry Stokes’ fourth and last witness
statement released at the start of his evidence in the C7 case in the
Federal Court in Sydney has solved one small mystery of the Australian
media dating from 1999: Just why did Julian Mounter, the former CEO of
Seven, quit so suddenly in July 1999?

It couldn’t have been
solely because he fell so spectacularly from the stage at the previous
year’s Seven annual meeting, could it?

It
seems from the Stokes witness statement that some of the issues
currently under scrutiny in the C7 case were also behind Mounter’s
departure. Stokes told the court he was copied in on an email – from
Mounter to three executives of Seven and dated February 9, 1999 – which
stated that Mounter would open discussions with the CEO of Foxtel. But
he said he was overseas from the middle of December 1998 to around
February 15, 1999 and does not remember reading the email until later.

On or about March 26, 1999, I read Mr Mounter’s chief
executive’s report, which was tabled at the Seven Network board meeting
on that date. I recall Mr Mounter announcing at the meeting that he had
negotiated carriage of C7 on Austar at $2 per subscriber per month on a
tier. I did not consider that such an arrangement was appropriate and I
was concerned that the negotiation had taken place without my knowledge.

On our about March 26, 1999 I had a conversation with Mr Mounter during which I said words to the following effect.

“Julian,
you didn’t have the authority to conclude a deal like this. The price
is lower that we had previously considered. These matters should have
been brought to the board, or at least to me, before you committed the
company to such an agreement with Austar.”

Stokes goes
on to say that “on or about June 25, 1999, I read Mr Mounter’s chief
executive’s report which was tabled at the Seven network board meeting
held on that date. I understood from his report that Mr Mounter had
continued to engage in discussions with Foxtel and had offered Foxtel a
bargain basement deal for the carriage of C7.

Stokes says he was
“concerned that Mr Mounter had taken a negotiating position that was
contrary to the approach that had been documented in the term sheet
dated June 6, 1998… If Foxtel had made a counter offer, I expected
that Mr Mounter would have put that offer to me or the Board of the
Seven network for consideration.”

“Mr Mounter left the
employment of the Seven Network in or about July, 1999,” Stokes said in
paragraph eight of his fourth witness statement. That was just six
months or so in the job.

Yesterday when Stokes was asked about
Mounter’s actions he replied: “We had a chief executive who had, it is
fair to say, a different opinion as to how far the executive role went
and how far a non-executive chairman should be informed.”

When
asked by Justice Sackville if he though there was something odd in
this, Stokes replied. “I thought it was odd, our executive thought it
was normal.”

Peter Fray

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