One of Australia’s largest independent ISPs, Veridas, may enter receivership following what appears to be a bizarre management rebellion that exacerbated an extended service outage and a likely mass loss of customers.

CEO and owner John Russell has confirmed in a post on the Whirlpool broadband forum over the weekend that he believes that receivers may be called in to the ISP this week, pending the outcome of a meeting with network supplier Telstra today.

Russell, who lives overseas, has alleged that senior managers at the ISP including general manager Kevin Slack actively resisted his attempts to organise repairs to a network outage, although this has been contradicted by one report that

said Slack was personally supervising efforts to restore network service.

There have also been claims t

hat technical staffers, accompanied by security guards, were locked out of the premises by the local managers. Various posts on the Whirlpool site suggest that resellers of the Veridas service have already begun defecting to other suppliers such as People Telecom and Telstra. Direct customers are also threatening to churn to new ISPs citing the lack of responsiveness by Veridas over the outages.

The sequence of events began on Tuesday when Veridas’s network collapsed, affecting an estimated 30,000 customers. As various posts flooded into Whirlpool from customers, resellers and Russell himself, it became apparent that Russell had lost effective control of the business and that not only was the network down, but bank accounts had also been frozen and on-the-ground management were no longer taking instructions from Russell.

Although services were partially restored throughout Friday, at least three resellers of Veridas posted to say that they were switching to new suppliers. Resellers

claimed at the Whirlpool site that they have had no or negligible communications from Veridas on the outages.

Then on Saturday, Russell posted at Whirlpool a series of claims, including one that he had received serious offers to buy the business from E

FTel and Wild Internet and another claiming that Telstra had sought a teleconference at 10am this morning to discuss the firm’s credit arrangements.

Russell alleged: “Telstra has decided to take advantage of the situation, brought about by events of the last 3 days, and is attempting to pressure Veridas to sign additional paperwork to the current contracts it has with Telstra.”

He continued “On Wednesday, I recommended to Telstra that they appoint an administrator or receiver and I was told ‘… Telstra would not be very keen to do that, because a liquidator could require Telstra to return all the money Veridas had paid Telstra over the last six months this would amount to somewhere between six and eight million dollars.”

Telstra declined to confirm details of the allegations in the weekend press and denied it was responsible for any network outage, but there were unsubstantiated and contested claims last night that Telstra was unilaterally dis

abling Veridas customer ADSL line codes. Veridas’s Queensland offices were also uncontactable over the weekend and its website was down, although some users reported that its DNS address was at least still resolvable.

Ryan Krylyszyn, head of Krytech, a Queensland-based Veridas reseller, described the sequence of events as the “the biggest sh-t blizzard I have ever seen in the history of Australian internet”.

Russell himself posted a statement on Saturday stating: “The situation is a real mess. Despite my substantial and best efforts to find a solution, including selling Veridas, I have been thwarted at every post. The current director of Veridas holds my shares in trust for me—I am the only shareholder— and has decided to act against the best interests of Veridas contrary to my instructions. I am highly distressed about all this and reluctant to spend large amounts of money in courts as I believe the process will be too long.”

Peter Fray

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