Hesta threatens to follow AusSuper and sell its shares in scandal-riven WiseTech Global

Superannuation giant Hesta put Richard White’s WiseTech Global on watch over its governance and transparency issues, leading to the possibility it could follow AustralianSuper and sell its stake.

Hesta chair Nicola Roxon, WiseTech Global executive chairman Richard White and Hesta chief executive Debby Blakey.

Industry superannuation fund Hesta has threatened to sell its stake in WiseTech Global, saying the scandal-plagued company isn’t doing enough to improve its poor governance and culture, as founder Richard White tightens his grip on the logistics software titan.

Hesta, whose chair is former federal attorney-general and health minister Nicola Roxon, is one of WiseTech’s biggest external investors.

On Friday, the industry fund’s chief executive Debby Blakey said it would follow AustralianSuper off the share register – AusSuper dumped its $580m stake in March – if WiseTech did not lift its game.

“Hesta has placed WiseTech on our watch list in response to ongoing governance, leadership and culture concerns,” Ms Blakey said.

“We believe developments in recent months call into question the company’s ability to make the necessary changes to restore investor confidence.”

The $32.39bn ASX-listed group has been embroiled in a series of scandals involving Mr White, who founded the company 30 years ago and agreed to resign as chief executive last year following allegations that he exchanged business advice for sex.

Hesta chief executive Debby Blakey says WiseTech is on its watch list.

That didn’t last long.

He initially stepped into a $1m-a-year consulting role, but the board struggled to agree on exact terms, leading to all its independent directors – including chair Richard Dammery – quitting in February.

The exodus paved the way for Mr White, who fronted investors and analysts at the Macquarie Australia Conference in Sydney this week, to return to WiseTech and consolidate his leadership. He has since crowned himself executive chairman, chief innovation officer and is heading the search for his successor as CEO.

Last month the company struck a new 10-year employment agreement, including a further five-year extension option, with Mr White, who owns about 37 per cent of the business. Hesta owns about 0.6 per cent.

WiseTech has also appointed former chair Andrew Harrison as an “independent” director, attracting criticism from the Australian Shareholders Association.

The ASA has also voiced concerns about Mr White, WiseTech’s governance and lack of independent directors, saying it is “not operating as we would expect an ASX-listed company to operate”.

Ms Blakey cited the Australian Securities and Investments Commission inquiry and WiseTech’s succession plan as reasons for relegating the stock to Hesta’s watch list.

“Our concerns relate to the conduct and actions of the executive chair, the lack of independence of the WiseTech board, and uncertainty regarding company leadership and succession, as well as news of ASIC’s preliminary enquiries,” she said.

“We believe the company has a critical and immediate opportunity to appoint highly skilled and genuinely independent directors, to demonstrate a sustained focus on succession, and provide comprehensive and transparent disclosure.

“Taking these actions will begin to provide investors with confidence that WiseTech

is taking appropriate action. Through our regular engagement and increased monitoring we will seek progress on these matters to help protect long-term returns.”

Ms Blakey said Hesta regularly reviews its portfolio “on behalf of our members” and looked

forward to engaging with WiseTech’s lead independent director, Mr Harrison.

An independent review found that Mr White misled the board about his personal relationship with an employee. But the company has refused to release the entire findings of the investigation conducted by Seyfarth Shaw and Herbert Smith Freehills.

WiseTech Global executive chairman Richard White, right, fronting investors and analysts at the Macquarie Australia Conference. Picture: Supplied.

A board subcommittee comprising WiseTech co-founder Maree Isaacs, Charles Gibbon and independent director and former 16-year board veteran Michael Gregg, “acknowledges the legitimate governance concerns raised in the board review findings”.

Mr White will be 80 when his employment contract with WiseTech expires.

“My return to employment at WiseTech as executive chair and chief innovation officer reflects my long-term commitment to continuing WiseTech’s track record of delivering strong shareholder returns,” Mr White said last month.

“I am focused on implementing WiseTech’s product-led innovation strategy and ensuring we have a strong succession plan in place to maintain our growth momentum.

“I am confident of WiseTech’s future growth prospects, our ability to execute our strategy and the strength of our high calibre senior leadership team.”

WiseTech shares have fallen more than 21 per cent since January.

ASIC chair Joe Longo remarked to the Australian Council of Superannuation Investors conference in Melbourne last month: “There does appear to be an outbreak of issues in the bedroom migrating to the boardroom and that’s a bit unfortunate for confidence in our governance arrangements.”

Originally published as Hesta threatens to follow AusSuper and sell its shares in scandal-riven WiseTech Global