Telstra CEO Sol Trujillo is once again in the firing line, this time
over awarding a $3.4 billion contract to a company with which Trujillo
himself was associated. This morning the AFR reports that documents
tabled by shadow communications spokesman, Stephen Conroy, imply that
Trujillo “fast-tracked a $3.4 billion contract with equipment
manufacturer Alcatel” despite Telstra senior executives warning of “a
decade of systematic problems with Alcatel, including overcharging,
poor product quality and short-cuts that led to sub-standard

of Telstra is bipartisan, with the AFR noting Liberal Senator Michael Ronaldson
questioning why Telstra was in such an “unseemly rush” to strike an agreement
with Alcatel.

Telstra claimed that the decision to award Alcatel the $3.4 billion deal was
“fully in line with [Telstra’s] procurement policies and [its] vendor selection
policies at the time”, the nature of the process gives rise to questions of good
governance. Especially since Trujillo was
previously on the advisory board of Alcatel chairman, Serge
Tchuruk. As noted
by the AFR on 5 May:

“In the
past, some vendors complained that the rules at Telstra were too tough and often
too slow. But the system was well-documented and most regarded as firm but fair.
Now, in place of the tough competition of a year ago,
Trujillo is
operating a system which insiders say has less transparency and at least the
perception that entrée to the lucrative selection process can sometimes turn on
a past relationship with the CEO.”

companies hiring expensive US-based CEOs seem to have one of two results. Either
the well paid Yank CEO does an excellent job (for example, Frank Blount at
Telstra or Paul Anderson’s solid rescue job at BHP) or the foreign CEO
absolutely stuffs things up even more (such as George Trumbull’s debacle at AMP
or Chris Tyler’s ill-fated reign at Solution 6).

remains to be seen which category Sol will fall into, however on recent form,
and looking at the Telstra share price (which has dropped by 24% since
commenced in July 2005) and recent governance practices, it is looking
increasingly like Sol may fall into category two.