Legal action in relation to CPA Australia? - Part Two
Dear members and other interested persons,
Legal action in relation to CPA Australia? - Part Two
This is a follow up email to the email on Friday (Part One in effect).
Let me clarify some of the questions and queries many have had about the potential legal action in relation to the three year termination contract approved by the CPA Australia board in October 2016. Let me express it in ‘lay’ terms as I have found the legal language can be confusing (even if it is more precise).
- It is a derivative action on behalf of CPA Australia by me. To do that will involve getting the courts permission (what I call the first stage). Based on the information we have (and you all are aware of it and confirmed by the Independent Panel Reviews findings) we have a strong case for this application to proceed. What will be interesting is the approach/attitude of the new CPA Australia board in that application process, and what additional information they might have. Will they oppose it or will they support it, and on what grounds? Lets see if they really meant their ‘we are sorry for what happened in the past’ when someone else takes the action which they refused to take on behalf of CPA Australia themselves. This ‘application to the court’ stage is an important step, and will determine whether we proceed further. It will possibly only cost 10% to 15% of the $1 million sought.
- If I obtain the courts permission and if I decide to proceed (clearly we will know a lot more after this application ‘stage’ and I’ll be in a better position to know if it is worth pursuing to the next stage) then clearly we need to be able to show we have the finances to take it further. Hence the reason for the $1 million. By the same token the insurance companies may also decide not to proceed further so let’s not just presume an expensive court action here.
- All I am seeking at this stage is some idea of whether this amount can be raised before I even start any sort of legal action. If anyone does contribute then there is every chance that most of it will be returned if I win. If I lose then it will go to cover the legal costs. I am being careful and very frugal but legal action costs money. All the risk and liability rests with me, so no-one risks anything beyond what they contribute (if we get that far).
- I personally think it is important to pursue this to make sure the leadership of CPA Australia are held accountable for their actions. I believe based on the legal advice we have a very strong case, and that the past board should be held to account for their approving of a three year termination contract which was way over that which the Corporations Act allows for listed companies (one year) without shareholder approval, and it was approved after they had been told by an external consultant that at two years it was way too high.
- At this stage I am just trying to get an indication of who would be prepared to contribute, and how much because I cannot proceed if I cannot raise the $1 million. Ultimately it is in your hands as members and interested persons. I’m prepared to ‘give it a go’ but clearly I need your support. No problems if you can’t or won’t. This is our chance as the current board have said they will not proceed with this action so it is up to us if we want accountability.
- I have no specific time frame in view but I would think if we have not gotten near the target within say four months then I would suggest it’s probably not worth continuing. If this does go ahead I shall not be handling the collection and administration of the money.
What can you do now?
Can I encourage you to do what you can to help hold the past leadership of CPA Australia accountable for their decision on this matter. Let’s see if we can raise this $1 million to do so.
I would encourage you to speak up publicly about it. Many members feel this is important but so few are prepared to say anything publicly.
Following on from the AGM in May we have a new leadership (board especially) which have almost absolute power with very few (if any) effective checks and balances on their power. You marry that with the vast majority of the members being disinterested, unengaged or apathetic and we have the recipe for an organisation which can fall into the same traps we have experienced over the last decade. Being vigilant is hard work, and costly, but in this case we can do something very practical and it is within our means.
- Consider supporting this and notify me by email if you will, and the amount. Nothing will be collected until we reach the target and decide to proceed.
- Share this with other members, and encourage them to contribute. Remember this is quite achievable. If you think out of a membership of 120,000 all we need is 1,000 to contribute $500, and we will have raised half the amount. Some could contribute more, some less but however you look at it, it is achievable.
- Share this with other interested persons, and those from other professional accounting bodies in particular as this impacts on the profession. I have already raised a large amount from non-members. Many rightly see this as a bigger issue that just CPA Australia.
- I would encourage you to use the two articles attached to my first email (Summary of the CPA Australia saga by Joe Aston, and the Opinion piece by Prof Steven Taylor on the importance of accountability) to communicate the issue with others. Attached is short letter I have sent to other interested persons explaining what we are doing and seeking their support.
Just a passing comment
I trust you are all aware that CPA Australia, in their official submission on 6th August to the new draft ASX Corporate Governance Principles, firmly endorsed the new and contentious principle of an entity’s ‘social licence to operate’. Can I encourage you to read some of the recent media comments by the likes of John Wylie, David Murray and Elmer Funke Kuppe critical of this addition, and even the President of the ASX CG Council is backtracking on its inclusion.
I think it is a retrograde and dangerous principle with plenty of practical consequences that would possibly alarm many members.
Clearly ‘two sides to every story’ but can I suggest members be proactive in alerting your DC and the board to any concerns you have.
I disagree strongly with it. The CPA Australia board refused to tell me who the CPA Australia (so much for openness and transparency eh) person was who actually represented us on the ASX Corporate Governance Council (we are one of 20 organisations on the Council) but fortunately our new CEO Andrew Hunter came to the party and told me. It is John Purcell and he wrote the CPA Australia submission.
I suggest this is one of those changes which could ‘sneak in’ by default and you are only aware of the consequences after the event. I shall write a detailed critique of the ‘official’ CPA Australia position when I get a chance. But can I again encourage members to take a proactive interest in this and not let it just slip in without our adequate consideration.
Well I trust this helps.