When Rupert Murdoch decided to punish the editor of the London Sunday Times for publishing the fake Hitler Diaries in the 1980s, he promoted his editor Frank Giles to the position of “Editor Emeritus”. When asked what the title meant, Murdoch said: “It’s Latin, Frank. E means you’ve been given the elbow and meritus means you deserve it”.

Executives who report to a CEO are promoted, retire, leave, depart or decide to pursue other opportunities. Not many are dismissed. So when Coles Myer announced the dismissal on Friday of Peter Scott, Managing Director Merchandise, Supermarkets and a 30-year Coles veteran, it suggested this one is being done with maximum malice.

There are probably only a handful who know the exact reasons for Scott’s departure. On Friday afternoon, the buzz around Tooronga was about the leaking of confidential information to a potential suitor. The Age is linking the departure to the receipt of non-monetary gifts, of some magnitude, from suppliers. These are all unsubstantiated allegations. One source suggested that with KKR still around, Coles may prefer to have a story circulating about gifts rather than admit to rats in the ranks.

Whatever the circumstances, it must be highly embarrassing for Fletcher to fire another direct report. Steven Cain, who was effectively Scott’s predecessor, moved on in late 2004. At the time there were stories about Cain being white-anted by senior colleagues. Last month Richard Broug, head of grocery merchandise and regarded by many within Coles as close to Scott, departed with a haste that parallels the latest exit.

Scott is to be replaced in the short term by Mick McMahon, who is ex-Shell and experienced in the fuel and convenience sector, although as a grocer he is an unknown. At a time when Coles is facing challenges from competitors and defending itself against barbarians, the market may well want to see someone with more supermarket credentials heading what is effectively 60% of the business.

This latest contretemps follows the poorly received first attempt at announcing a strategy plan – which drove the share price down to $10.60 – the scepticism about the revised strategy, criticism surrounding the hasty rejection of the KKR bid, and the stuff up surrounding the management incentive scheme. Following some big promises, the recently released first quarter sales were unimpressive and indicate Coles is losing further ground to rival Woolworths.

Peter Fray

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