Whilst the corporate plod has received the mother of all beltings in today’s papers for the failure to string up former One-Tel CEO Jodee Rich, more attention should be focused on the role played by Australia’s politicians and the Murdoch and Packer families.
The sophistication of any democracy is usefully measured by the ability of the judicial system and so-called independent regulators to independently prosecute the rich and powerful.
For at least 15 years before the One.Tel collapse, the Murdochs and Packers were the two richest, most powerful and most politically connected families in Australia.
When One.Tel fell over on May 20, 2001, James Packer and Lachlan Murdoch teamed up to release this remarkable statement claiming to have been “profoundly misled” and vowing to “explore all remedies available to us”.
Being directors of One.Tel, the most obvious remedy was to brief the corporate cop that the non-executive directors had been lied to by the management team.
Showing remarkable alacrity, ASIC issued this press release on December 12, 2001, trumpeting that proceedings against the three executive directors Jodee Rich, Brad Keeling and Mark Silbermann had commenced.
However, the non-executive directors were divided into two camps. Non-executive chairman John Greaves was pursued whilst the three long-serving NEDs, James Packer, Lachlan Murdoch and Rodney Adler, were left alone.
Then ASIC enforcement chief Jan Redfern gave evidence in the case that Australia’s two richest heirs weren’t pursued for “strategic and legal reasons”.
Was this another way of saying they were too rich and powerful?
Brad Keeling was the first to roll over in March 2003, agreeing to a 10 year ban, a $92 million compensation bill and liability for ASIC’s $750,000 in legal costs. He eventually handed over less than $1 million to ASIC in a settlement with his creditors.
John Greaves also didn’t have the resources to fight and rolled over in September 2004, settling for a 10 year ban, a $20 million compensation bill and ASIC’s $350,000 legal bill. In a later settlement with creditors, Greaves also handed over less than $1 million to ASIC.
Jodee Rich yesterday revealed that he twice offered to settle with ASIC, but the plod rejected his terms. He also claims that John Howard’s brother Stan, the long-time Rich family lawyer, urged his now deceased father Steven Rich to encourage his son to settle.
Now whose interest would such a settlement have been in? The three most obvious parties are Lachlan Murdoch, James Packer and ASIC – the triumvirate which co-operated ahead of the original proceedings being launched.
We all know that John Howard was very close to Kerry Packer – look no further than that taxpayer funded memorial service in January 2006.
Similarly, it has been widely reported that James Packer was one of the few Sydney business figures who was close to Peter Costello.
As Treasurer, Peter Costello personally selected the ASIC chairs who had carriage of the matter: Melbourne lawyer David Knott until 2004 and Adelaide accountant Jeff Lucy until 2007 when the judge retired to consider his findings.
Now that Justice Austin has released his damning judgment criticising both James Packer and Lachlan Murdoch as witnesses, the reputation of Australia’s regulatory system is under threat.
In my opinion, James Packer and Lachlan Murdoch got special treatment from ASIC because of who they were.
Given ASIC’s more recent tactic of pursuing entire boards in the James Hardie and Centro Properties Group matters, you have ask whether the approach would have been different if a Murdoch or a Packer was a director of one of those companies?
Surely a Senate inquiry is now warranted to investigate whether ASIC treats all citizens equally when applying the law.
There are a number of other interesting factors at work. The caning of ASIC by the judge and the press means it is less likely to appeal.
Similarly, the judge’s criticism of James Packer and Lachlan Murdoch makes it much more likely they will settle with One-Tel’s liquidator Paul Weston over the aborted $132 million rights issue.
Finally, as Jodee Rich flies off to America today to pursue his latest venture, social media dashboard Peoplebrowsr.com, it is worth considering who stuck by the controversial One-Tel founder during this ridiculously long 8 year ordeal that cost him $15 million.
Rich’s legal team led by David Williams SC clearly did a superb job, wife Maxine was there in court with him most days and even PR man Tim Allerton was there from beginning to end when it would have been easy to walk away given the forces they were all up against.