Michael Pascoe writes:

Former Brisbane Lord Mayor Jim
Soorley has raised a most interesting ethical question about the
behaviour of non-executive directors who are part of an IPO and then
immediately jump ship.

Along with chairman Ken Tierney,
non-executive director Soorley has quit little ASX debutant Cumminscorp
just a week after the company’s unspectacular float. The shares issued
at 20 cents came on a week ago at 15 cents and are now down to 12.5.

The
Gold Coast-based company promises blue sky without horizons for various
water treatment technologies – details can be found in its ASX announcements
– but the public wasn’t exactly overwhelmed by the chance to invest.
After seeking $15 million without underwriting, Cumminscorp had to make
do with $5.4 million.

When trying to flog an IPO, it helps to
have a name or two on the board that would-be investors might recognise
and have some confidence in. Jim Soorley is a major public figure in
Brisbane, just the ticket to have on the prospectus.

But what
are the ethics of jumping ship a week after a listing that went sour?
The company announcement of the pair’s departure on Tuesday said that
both Tierney and Soorley had “previously signalled their intention to
reduce their respective contributions to the Company due to overriding
private interests”:

On tending his resignation, Mr Tierney said “it is with
much regret that the decision to resign as the Chairman of Cumminscorp
has become inevitable. As the Managing Partner of a thriving private
Chartered Accounting Practice the demands of my fulltime career must
remain a priority.”

Similarly, Mr Soorley’s long-term obligation to a Melbourne-based private enterprise has also weighed heavily on his decision.

And
the announcement notes that Tierney and Soorley will not be divesting
their interest in the company – hardly surprisingas they’re held in
escrow.

We’re left wondering how any Cumminscorp shareholders
might feel if they bought shares on the strength of Soorley or Tierney
being on the board and thus effectively promoting the company.
Disappointed would be one word that might come to mind. Disgusted would
be another one suggested by a Crikey subscriber.

Peter Fray

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