Pittwater Life July 2017 Issue

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Business Life: Money Business Life Time accountants woke up and smelt the irony Look up the definition of irony in the dictionary and you’ll be referred to the listing for CPA Australia. Thirty years is a long time – that’s how long I’ve been a member of a professional body that aspires to be one of if not the pre-eminent governance organisation in the country, CPA Australia. Since February this year the CPA brand has been all over the press… and not in a good way. To get a handle on the scope of the problems affecting the leadership of CPA Australia first consider these simple questions: n Would you expect rank and file members to be able to vote for the appointment of directors to the governing body? n Would you as a member expect to know how much the directors and key senior staff are paid? n Would you expect the organisation to not compete with members in the marketplace? n Would you expect directors and senior staff devote the majority of their time to advancing member interests? I think most reasonable people would answer yes to all these questions, regardless of whether they belonged to a local football club or a large professional body. These questions are basics when it comes to associations. Unfortunately however in the case of the national accountants body it seems that we have been living in the builder’s house, or driving the mechanics car. As far as the press reports are concerned, members have taken their eye off the board and they have been let down. For anyone following the saga through the pages of the major papers it has been a long, drawn-out and complicated story. From what I understand matters came to a head in February of this year when the CEO of CPA Australia, a fellow named Alex Malley, questioned governance standards at Woolworths over the issue of the Masters Hardware chain in an op-ed piece published in the Australian Financial Review. This was followed by the AFR’s Rear Window columnist, Joe Aston, calling out what he saw as hypocrisy and describing Malley as “Australia’s most accomplished self-promoter”. This article, along with further CPA Australia self-promotion, piqued the ire of Armidale-based CPA Brett Stevenson who raised objections “… about the way the accounting body marketed itself, the focus of the marketing on CEO Mr Malley, the poor transparency about salaries of key executives, the promotion of Mr Malley’s autobiographical book in the US and a lack with Brian Hrnjak of focus on issues close to the hearts of accountants”. Pretty much from that point on, the bean counters were at war (and if you like to know what that might look like feel free to refer to Monty Python’s famous Accountancy Shanty: youtube.com/ watch?v=7YUiBBltOg4). Like Stevenson, many of us who regularly travel through the airport or around town would notice and/or comment to our colleagues about the massive billboards and placards advertising Malley’s ‘The Naked CEO’ book or ‘In Conversations’ TV show – our membership fees at work we would joke. Unlike Stevenson we never did anything about it. And so a soap opera of sorts played out between February and May 2017. Stevenson, leading a dissident faction of members, demanded access to member contact information including email addresses that was previously available on the CPA website but removed without reason. The board ignored repeated requests for information about the payment of director’s fees and senior executive salaries. Questions 52 JULY 2017 Celebrating 25 Years
were raised about the extended tenure of certain board members. More questions were raised about sponsorships paid by CPA Australia to professional sporting groups, including one related to a current director. There were apparent issues with membership statistics that just didn’t add up. And what appeared to be the final straw – the board decided to hold the AGM in Singapore. All these issues played out for everyone to read in the pages of the capital city and national newspapers. And then quietly, in the dead of night on 31 May, after the first State of Origin game had concluded, the board issued an email to the members with a 32-page document enclosed. The document was accompanied by a notice advising early retirement of the President. What it contained though was explosive. According to the board of directors, the self-promotion of the CEO is simply a welcome and effective marketing initiative. In their view there are no governance issues of concern, just opposing points of view. It is apparently ok to establish a subsidiary company, lend it money and then pay another round of board fees to the directors even though that company has lost millions. It is also ok to pay the CEO, the head of a member-based organisation not an ASX-listed corporation, a salary of almost $1.8 million per year. And that’s about when the abacus hit the fan. Following the president, independent directors (former federal liberal politician Richard Alston and Kerry Ryan who sits on the board of the Richmond AFL Club) quit their posts as reported by Ben Butler in The Weekend Australian: “It was a fortnight ago, and the former Liberal minister and current federal president had dialled in to a meeting of the board of CPA Australia, where he was one of two independent directors, to lay down the law about how to get the organisation out of an apparently never-ending crisis engulfing it and its controversial chief executive, Alex Malley. Sources say Alston delivered a 20-minute “rant” on the need to bring independent experts in for a good hard look at what was going on – and wrong – inside CPA.” These three departures were then rapidly followed by four more director resignations up to mid-June, leaving the organisation without a quorum for meetings. New chairman Jim Dickson chose to support the CEO continuing in his role even though the AFR reported that the organisation was facing an ASIC review over potential breaches of directors’ duties and the alleged misuse of members’ money. Dickson then announced a three-person review of CPA Australia headed by former chief of the Defence Force Sir Angus Houston, former federal auditor-general Ian McPhee and a third member to be named. The appointments of Houston and McPhee have already been challenged by dissident members, as both have had involvement with Malley in the past – Houston Continued on page 55 Business Life Celebrating 25 Years JULY 2017 53
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