Sep 5 2017 at 4:40 PM - AFR
'We did the right thing': chairman Jim Dickson defends CPA board and Alex Malley
by Edmund Tadros
At least he said sorry at the start.
CPA Australia Chairman Jim Dickson has belatedly apologised to members of the embattled accounting body for a "particularly challenging" period that has seen CEO Alex Malley fired with a $4.9 million payout and the entire board resign or announce they would leave by the end of the year.
But after that brief apology before a Senate economics committee, Mr Dickson then spent the next hour-and-a-half justifying the conduct of the CPA board during the past few months.
A defiant Mr Dickson went into detail about how successful the body's marketing strategy had been and continues to be, defended the conduct and legacy of Mr Malley and reiterated that holding this year's annual general meeting in Singapore had been the correct decision.
It was an extraordinary performance that showed Mr Dickson continues to believe he and the remaining board have done nothing wrong despite overseeing an implosion at the nation's largest accounting body.
'Effective marketing strategy'
He did concede that, perhaps, the board's communication with members could have been a little better.
"What I've learned since taking over the job some 98 days ago, not that I'm counting, is we need to communicate better with our members," Mr Dickson said. "We need to involve our divisions, particularly our divisional councils and presidents in setting our strategy so that they got a form of ownership of it. And I think with our marketing, we need to explain our marketing strategy better to our divisions and to our members. I believe our marketing strategy was extremely effective."
CPA's marketing strategy, which cost members in the tens of millions a year, had centered around Mr Malley, the television show In Conversation with Alex Malley and Mr Malley's autobiography The Naked CEO. Since firing Mr Malley, the accounting body has completely stripped Mr Malley's presence from its website and rebranded The Naked CEO website as Career Mentor.
Mr Dickson denied that the money had been wasted and defended the value of having celebrity guests such as Henry Winkler, who portrayed Fonzie in the US sitcom Happy Days, on the TV show.
"It broadens the audience of the organisation," Mr Dickson said, "It [helps] the organisation to continue to grow. It provides employment opportunities for our members because CPA becomes more well known throughout the business community with all our stakeholders."
Mr Malley an 'outstanding leader'
The public hearing, in Canberra on Tuesday afternoon, was part of an examination of Corporations Act updates to compel companies to store and then provide the email addresses of their membership base to members who ask for it. The amendment, sponsored by Senator Nick Xenophon, was inspired by rebel CPA member Brett Stevenson's battle with CPA to get a list of member contacts to share his concerns about the way the CPA is run.
Senators had been unhappy at the responses of CPA representatives last month and demanded the board appear and answer questions. Mr Dickson appeared, alongside CPA directors Graeme Wade and Tim Youngberry, while two more directors, Sharon Portelli and Michele Dolin, dialed into the hearing.
In one of the many tense exchanges, Mr Dickson said that Mr Malley has built been performing well when he was fired by the board.
Senator Xenophon: "So [Mr Malley] was doing well. He was an outstanding leader. But you still had to get rid of him. Is that what you're saying?":
Mr Dickson: "Yes."
Senator Xenophon: "That kind of doesn't make sense to me. If he was doing so well why would you get rid of him?"
Mr Dickson: "The feedback we had from our members, other stakeholders, in that changed circumstances were that it was in the interests of the organisation going forward to terminate Mr Malley."
Mr Dickson admitted that Mr Malley's $4.9 million termination payout, three times his annual base salary, had been in his contract but took on notice questions about when and why the clause had been inserted.
The chairman also claimed CPA's annual general meeting, which caused an uproar among members when it was held in Singapore, had been a great success.
Senator Jane Hume asked why the AGM wasn't moved back to Australia once the board knew about the issues raised by rebel member Mr Stevenson and others.
Mr Dickson replied that changing the venue back to Australia would have "been an affront to our very important Singapore members".
Advice losses planned for
Fellow CPA director Mr Wade also revealed that the business plan for the loss-making CPA Australia Advice business showed it was "going to be a five or six year project."
"t's a very carefully thought out strategy that will produce significant benefits for the public interest and those consumers of financial planning," Mr Wade told the committee.
The advice business generated $46,000 in income losing $5.7 million in 2016, according to documents filed with ASIC. In total, the subsidiary has lost a cumulative $7.4 million in its first 19 months of operations and has drawn down more than $12 million of a $20 million unsecured loan from CPA. At this rate of losses, it is unclear how the operation can continue to operate beyond next year.
The financial advice business has also created a legal conflict of interest that will mean public practice CPAs around the country will lose their legal shield from multimillion-dollar lawsuits from October 8.
Mr Dickson perhaps summed up the vast gulf between the board on one side and the unhappy membership and Senators on the other side, when he noted at the start of the hearing: "We have acted in accordance with the CPA Australia Constitution and the law at all times. But we recognise it as a dichotomy between the record what members expected of us."
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