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Legal Action over CPA Australia's Alex Malley's Termination Pay? Part One

Hi members of the accounting profession, and other interested persons,

Can I briefly mention five things that impact us all, plus a very brief ‘literary excursus’. Note especially 2 on Legal Action.

1. The CPA Australia saga has petered out into a professional whitewash.

What happened?      This article by Joe Aston at the AFR done in January this year will give a good overview.

Professional whitewash?      Try this opinion piece by Prof Stephen Taylor from UTS, and this article by yours truly.

CPA Australia’s decade of decline?

Pre 2009:  competent and answerable leadership

2009-2017: ‘abuse of power’ leadership

2018 - : ‘absolute power’ leadership.

Who cares?      Just 6% of the membership bothered to vote at the recent ‘momentous’ AGM, so you draw your own conclusion.

Why should I be concerned?      CPA Australia is one of the organisations that sets the accounting, financial reporting, ethical and corporate governance standards that impact the marketplace.

Like it or not it has enormous influence.

2. Legal action to hold to account the board who approved the three year termination payment to Alex Malley.

One year is the maximum allowed for a public listed company without shareholder approval. CPA Australia is an unlisted public company.

The new leadership refuse to take action against the past leadership for their failings.

If we want any sort of accountability we will need to do this ourselves (and by ourselves I include all accountants as this impacts the credibility of our profession).

N.B. We cannot recoup the payment made to Alex Malley. Rather the focus is on the board who approved the payment

Our legal advice     

A derivative action on behalf of CPA Australia.

This will involve an application to get court approval and then, if necessary, the issuing of proceedings and court 'action'.

We have spent $25k to date getting legal advice.

Likelihood of success     

Very very high.

Funding Target to proceed     

$1 million. It may be considerably less depending upon the success/failure at the various stages in the process.

Is this achievable?      

I have already raised ‘promises’ totalling over six figures from some wealthy concerned individuals (only one is a CPA member).

It will just take 1,000 individuals to give $500 to raise half the amount then it seems achievable.

Some will give more, some less.

Ultimately that is a question only you can answer.

It is now or never      

If you think this is worth pursuing to hold these leaders accountable then this is the opportunity.

This cannot proceed unless we can raise this money.  

Am not collecting money now, just wanting some idea at this stage of who will contribute and how much.

If you aren't interested, no problem. But lets not kid ourselves that any further action will flow from the new board. It won't.

If we win I daresay you shall get most of it back (cost recovery).

If we lose then it’s to cover the legal costs.

I'm not overly optimistic after the poor showing at the AGM, but I'm prepared to give it a 'last shot'.

What to do now?

i. Email me if you are prepared to contribute and how much. That will enable me to determine whether this is worth pursuing. Send to brett@excellere.com.au.

I will not proceed unless we can raise the money.

ii. Speak to other possible contributors.

I suggest this has much wider impact than just CPA Australia and even the accounting profession.

Who were the board that approved the three year termination contract?

(refer Independent Panel Review Final Report p.57)

  • Tyrone Carlin (Chair/President)
  • Jim Dickson (Dep. President)
  • Deborah Ong (Dep. President)
  • Richard Petty
  • Graeme Wade
  • Kerry Ryan
  • Michelle Dolin
  • Jennifer Lang
  • Sharon Portelli
  • Richard Alston
  • David Spong
  • Martin Hourigan

What board members were on the Nomination and Remuneration Committee?

  • Graeme Wade (Chair)
  • Kerry Ryan
  • Tyrone Carlin
  • Jim Dickson

Questions and queries

Happy to answer these if you have them.  

3. Gift to South Sydney Rugby League Club from CPA Australia

The CPA leadership refuse to tell the membership the amount of this gift to the club our recently sacked CEO (Alex Malley) supported.

The Independent Review said the objective of this sponsorship was not clear and that it was primarily 'entertainment related'.

The agreement was dated October 2016 (same month that CEO's three year termination contract was approved), we members only found out about it in 2017.

As with the previous leadership so with the current one - transparency and openness are things to talk about doing not actually do.

4. Reduce membership fees by $200, and professional development costs by 50%

How do you hold a leadership with absolute power (such as at CPA Australia) in check?

The new leadership opposed vigorously any constitutional checks (members can’t vote directly for board, can’t ‘effectively’ call members meetings or communicate major concerns) so it seems to me that the only check is to control the revenue they have to spend.

They wasted $20 million on CPA Australia Advice, they squandered millions promoting Alex Malley rather than the organisation, they paid themselves scandalous remuneration etc.

I suggest members fees need to be reduced by $200 to at least place some control on the amount of money they have to squander, and that professional development fees be reduced by 50% to develop the profession rather than be seen as a money making exercise for this leadership to waste.

I suggest members contact their divisions and the board members and tell them so.

5. To keep perspective

Did you know that

  • the directors of CPA Australia each receive 50% more than the directors of CAANZ?
  • the CEO of CPA Australia receives a salary 50% greater than the Prime Minister of Australia?
  • the Chair of CPA Australia with a turnover of $180 million gets the same remuneration as the Chair of RuralCo with a turnover of $1,800 million?

Just saying because the board of CPA Australia will not tell you these benchmarks.

Cheers, don’t forget to let me know on the Legal Fund.

Brett

Brett Stevenson BComm MDiv CPA

Excellere www.excellere.com.au

brett@excellere.com.au

 

A brief literary excursus

Forget August 1914 by Alexander Solzhenitsyn, let me introduce

October 2016

by CPA Australia

Subtitle. Not The Year of Living Dangerously but The Month of Acquiescent Silence

Chapter One. October 2016

The Board of CPA Australia unanimously approve a three year termination contract with the (now sacked) then CEO Alex Malley after being told one year prior that the then current two year contract was ‘significantly above’ normal commercial arrangements. Of course no papers were kept to provide any information on why this decision was made. The conclusion of the Independent Review Panel

“This reflects very poorly on the former Board, given the size of the termination payment being well above any comparable benchmark.”

Chapter Two. October 2016

Agreement between South Sydney District Rugby League Football Club Limited and CPA Australia. The objective of why is not clear but it…..”contained a large proportion of benefits that were entertainment related”. Need it be noted that the (now sacked) then CEO Alex Malley was a supporter of this football club.

Chapter Three. October 2016

AHRI, the organisation that Peter Wilson is Chair of (and has been for some 20 years because they cannot find a suitable replacement), announced a partnership with CPA Australia. This is the same organisation that Jon Scrivens also serves on the board. Did I forget to mention that Peter Wilson is the new Chair/President of CPA Australia, and Jon Scrivens one of the new directors. Contrary to their contentions that they were shocked at the events occurring at CPA Australia as they looked ‘from the outside’, it would seem they had more of an ‘inside outsiders’ view than most.

Chapter Four. October 2016

Plans were well underway at the APESB (sets ethical standards for the accounting profession) for their 10th anniversary dinner in November where Ian McPhee was on the panel discussion as he has been a longstanding member of CPA Australia on international equivalent body, the IESBA. With fellow guests such as Merran Kelsall Chair and CEO of the AUASB, and John Cahill and Penny Egan as both CPA Australia representatives on the APESB, and also immediate past presidents of CPA Australia, it was a sparkling evening for some more ‘inside outsiders’ to shine. Did I mention that Merran Kelsall now serves on the new CPA Australia board who along with Peter Wilson was shocked at the events occurring at CPA Australia as she looked ‘from the outside’. And of course you will recall that Ian McPhee who also wrote a forward to Alex Malley’s book The Naked CEO also headed up the Independent Panel Review of CPA Australia as he was independent and in that report made no recommendations for the ‘then current’ leadership to be held accountable for their actions. I guess if you ask no questions you can tell no lies.

Chapter Five. October 2016

Robyn Erskine was also well into her CPA Australia appointed representative position on the IFAC Small and Medium Practices Committee, and Ric De Santi was having a break from being both a long serving (9 years) Tasmanian Divisional Councillor (2005-2014) and member of the Representative Council (2013-2014) but was contemplating entering the fray again as a div Councillor again in 2017. Need I mention that both Robyn and Ric were appointed on the new board of CPA Australia, and of course were also shocked at the events occurring at CPA Australia as they looked ‘from the outside’. Perhaps some more ‘inside outsiders’ I would surmise.

Chapter Six. October 2016

By this time the AFR had published five articles in the previous 8 months highlighting some of the issues at CPA Australia. Now these truly were written and observed by outsiders from the outside, and what they could see of the inside did not look good. But clearly those on the inside (such as those mentioned above) were not able to have such a keen insight or awareness of the issues. Why is that you right ask?

Well, to be honest I haven’t got a clue.

All I can surmise is that there were a lot of ‘insiders’ who were blind to their immediate surroundings but when the opportunity arose to profess being members of the outsiders so they could later become an insider they jumped at the chance.

Chapter Seven. October 2016

Just to complete the picture,

  1. guess who was President of the ACT Divisional Council in October 2016? You got it in one - Tim Youngberry. Another one of those acquiescent ‘inside outsiders’.
  2. guess who was celebrating their 6th anniversary of becoming a life member of CPA Australia? A little harder perhaps but it is Richard Petty, the long serving Chair of the all powerful Nominations and Remuneration Committee

Yes, October 2016 by CPA Australia had plenty of indicators of a sorry saga that was yet to be revealed, and as you can see just from the brief outline I think the joke is on us.

Postscript. Brief Summary

Recognise any names from October 2016 - The Month of Acquiescent Silence?

Ian McPhee led the Independent Panel Review into CPA Australia in 2017 which was characterised by no recommendations for action to be taken against any of the past leadership.

These are some of the people on the new CPA Australia board ‘appointed’ October 2017

  • Peter Wilson - Chair/President
  • Merran Kelsall - Deputy President
  • Jon Scrivens - Director
  • Ric DeSanti - Director

These are the still current CPA Australia appointed representatives on the following (from 2017 annual report)

  • APESB Penny Egan
  • APESB John Cahill
  • IFAC Board Richard Petty
  • IFAC Small & Medium Practices Committee Robyn Erskine
  • IFAC Compliance Advisory Panel Penny Egan
  • IFAC IESBA Ian McPhee