‘Trusted’ Mountain Designs exec took $500,000 in kickbacks
The ex-marketing manager of collapsed Queensland outdoor retailer Mountain Designs has been jailed for receiving almost $500,000 in secret kickbacks, which had a significant impact on the demise of the company.
Police & Courts
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The ex-marketing manager of collapsed Queensland outdoor retailer Mountain Designs has been jailed for receiving almost $500,000 in secret kickbacks after outsourcing millions of dollars worth of printing to brokering companies owned by his family.
Former Mountain Designs owners claimed in statements provided to the Brisbane District Court that Gavin John Flannery’s dishonesty, which was only uncovered after they hired a private investigator, had a significant impact on the demise of the company.
Flannery, 48, was last week sentenced to three years’ jail after pleading guilty to the receipt or solicitation of secret commissions by an agent.
The Gold Coast man, who now owns his own marketing agency, was ordered to serve six months behind bars before the sentence will be suspended for four years, after he corruptly received half a million dollars that belonged to the company.
Mountain Designs was owned at the time of the offending by the Brisbane Nunn family and once had 65 stores across Australia and New Zealand.
It was wound up in 2018 and purchased by Spotlight Group Holdings.
The court heard Flannery began working for Mountain Designs in 2006, after being hired as the general manager of retail and marketing.
His role included organising all printing services for the company’s brochures and other promotional materials.
Flannery engaged two print brokering companies — Inkmaster, run by his father and stepsister and Skyline, which was operated by his partner — to retain printing services from external companies, the court heard.
Their quotes were inflated by up to 10 per cent and caused the company to outlay more money than they otherwise would have if Flannery had dealt directly with the print companies, Crown Prosecutor Judith Geary said on Thursday.
He also failed to source quotes from other companies.
Between 2008 and 2014, Flannery corruptly received 69 payments, totalling $490,000, from the print brokering companies owned by his family, for providing them with the work from Mountain Designs, the crown said.
The company paid about $3 million for printing during the period, the court heard.
During the sentencing hearing, Ms Geary said the corrupt kickbacks and inflated marketing costs were “a contributing factor for the collapse of the company” after the former owners provided victim impact statements claiming this.
“This was a significant breach of trust,” she said.
“He was a trusted employee in a management position.”
But defence barrister Chris Wilson said it was not the “true position” to say that the payments contributed to the collapse of the entire company.
Mr Wilson said Flannery had in fact increased the company’s profitability significantly prior to his resignation in 2014.
Flannery’s case was in court compared that of disgraced ex-state government minister Gordon Nuttall, who was convicted of receiving secret commissions during his time in office and jailed for seven years and ex-CMFEU boss Dave Hanna, who was found guilty of corrupt activity relating to the building of his plush Logan home by tradies paid for by Mirvac.
But Mr Wilson argued: “There are a lot of features of this case that render it quite different than that of corrupt ministers and union officials”.
In sentencing Flannery, Judge Bernard Porter did not accept his behaviour in receiving secret commissions caused the collapse of the company but had “ultimately contributed to Mountain Designs financial distress”.
He accepted the Flannery was not committing the dishonesty “solely for the purpose of siphoning money from the company”.
“There is little doubt that offences of this kind cause suffering to those who trusted the person who received the corrupt consideration,” Judge Porter said.
“My experience both in commercial litigation, and more limitedly of these kinds of offences in this court, is that even though it is business, it is felt as personal by the persons involved.
“However, so there is no doubt, the proposition that the sums involved could materially have contributed to the collapse of Mountain Designs is one which, respectfully, I do not accept.”
But Judge Porter had earlier noted in the sentencing hearing: “I don’t want to, in any way, minimise how traumatic it is if you are running a company and you suddenly find someone you trust is doing this to you”.
Despite a number of “glowing” references being tendered to the court, where even the former Mountain Designs chief executive said he “trusted” Flannery, Judge Porter added: “ … I suspect any experienced senior company office in any field would be horrified to know that a senior marketing officer was doing that (corruptly receiving money)”.