Merry Christmas to Peter Wilson. When it was suggested that Peter Wilson should be independent of the old board so that we can have a fresh start Peter responded with "That's your issue". Summary of the meeting here: viewtopic.php?f=23&t=594
A good summary of where we are up to by Joe Aston of the AFR, linked to from here: viewtopic.php?f=5&p=4137#p4137
If you are new to this website read the story so far: viewtopic.php?t=321#p1793
Check out some of the AFR articles, too many to list and check out some of the ABC reports: http://www.afr.com/business/accounting/ ... 215-h055ej http://www.afr.com/business/accounting/ ... 211-h02x1d http://www.abc.net.au/news/programs/the ... s,/8626662
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Legal action in relation to CPA Australia?

Discussions about the constitution and how CPA Australia is run
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JWheldon
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Joined: Wed May 24, 2017 6:43 pm

Legal action in relation to CPA Australia?

Post by JWheldon » Tue Sep 04, 2018 1:53 pm

This is interesting reading from Brett Stevenson.


https://www.excellere.com.au/blog/2018/ ... a-part-two

Legal action in relation to CPA Australia?
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).

https://www.linkedin.com/pulse/legal-ac ... stevenson/

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.

Cheers

Brett

https://www.excellere.com.au/blog/2018/ ... nation-pay

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,

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’.
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

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