WiseTech scandal: Richard White is now untouchable

If the WiseTech boss was another chief executive, he’d be long gone. Instead, a weak board had delivered a predictably weak response to his actions.

Richard White has essentially been cleared by a boardroom investigation. Picture: Nic Walker

If there was any doubt about the final trigger for WiseTech’s board quitting en masse three weeks ago, a string of damning findings about Richard White’s deception should be enough.

There were other critical factors, including White’s threats to unseat his former directors through a board spill; and legal warnings sent to board members from the billionaire’s lawyers, Clayton Utz.

There was also intense internal board debate with White over the loose timing of his WiseTech share sales. Then there was his refusal to sign on as a consultant.

Law firm Seyfarth Shaw – commissioned to investigate White late last year – concluded the WiseTech founder mislead his board at least twice about the nature of his intimate relationship with two females who overlapped with WiseTech.

Only extracts, not the full Seyfarth investigation, were released. Even with the conclusions distilled by WiseTech, they still go to White’s character as a leader.

One of the woman involved a deal where WiseTech bought software from her, and this arrangement too was found to have broken the tech company’s own rules covering conflicts of interest.

Richard White was found to have misled the board. Picture: John Feder

White’s behaviour was openly “misleading” and not fully transparent or candid, Seyfarth concluded. Nor did WiseTech – the company – have full visibility or knowledge surrounding the nature of the dealings with the supplier dubbed “Person B”, the Seyfarth report found.

There were a string of other relationships with women, but these were dismissed as private matters. White has long privately argued what he did in his personal life was a matter for him.

In a statement, White says with the benefit of hindsight, he would have more fulsomely disclosed the issues to the board and handled the process differently. He also understands the seriousness of his actions.

If White was just another career chief executive at an ASX company, he’d be long gone.

Instead, a weak board that he now leads. has given him a gold pass. As founder and biggest shareholder of the $30bn software play, White is now untouchable.

Private vs. public

White has always maintained the affairs and legal and reputational fallout were a matter for him, but the Seyfarth report shows at least two of these relationship had moved squarely into WiseTech’s world and set off several governance red flags.

Instead of seeking to protect WiseTech, the billionaire instead engineered his own boardroom coup. In the process he overturned his very own decision to step back from the company, but stay as a contributor, while giving it the space it needed to develop management maturity over the long term.

The implosion of the Tesla brand is a cautionary tale for founder-led companies. Picture: AFP

It was these actions and other board pressure from White that prompted the stunning resignation of four independent directors last month, including chairman Richard Dammery. Each of those board members had seen a copy of the final Seyfarth report before they walked.

White then named himself executive chairman to run the process of his own investigation, while filling his empty board with old friends.

Responsibility for the Seyfarth report was handled by Michael Gregg, an early stage investor who had stuck gold with WiseTech. Gregg is WiseTech’s sixth biggest shareholder and sat on the software company’s board for nearly two decades, including eight years before its stock market listing. He is now the lead independent director.

And the full throated response by Gregg to White’s misbehaviour behaviour?

A review of the company’s code of conduct to “enhance” the language around disclosure of close personal relationships inside the company. There’s also a promise of getting another board director.

In other words: Nothing.

White’s actions and the boardroom drama is likely to be dismissed by his supporters as short term noise as long as everything is going well operationally for WiseTech.

For years, White has brought the magic to WiseTech, and many investors will be tempted to look past this messy chapter.

However, WiseTech’s governance and processes are likely tested as another inevitable crisis come its way. And its weakened board won’t be equipped to deal with any of it.

Indeed, this may come around earlier than anticipated, with ASIC now understood to be actively examining the events surrounding WiseTech’s boardroom upheaval. The regulator has not alleged any wrongdoing.

Tesla moment?

Without strong independent voices in the boardroom challenging management, the software company is setting itself up for longer term mediocrity – or worse, implosion.

It doesn’t take too much to see US carmaker Tesla as a cautionary tale. Elon Musk’s public march to the far right has quickly alienated the EV maker’s core customer base, particularly outside the US.

Tesla’s board, led by Australian Robyn Denholm, has failed to reign in Musk’s increasingly bizarre public moves. At the same time, her board twice agreed to a stupefying pay deal that has been repeatedly rejected by courts.

Richard White is now in his 70s and still has no succession plan in place. He has a search underway for a new chief executive, but with the billionaire running the show this makes it unlikely he will secure a serious outsider who is prepared to do things differently. Expect an internal candidate to fill the roll.

White is now in charge of creating and nurturing the culture of WiseTech, yet he still can’t distinguish how his external actions have diminished the business he runs.

WiseTech’s board says in its findings, it was conscious of “the exceptional knowledge and value” that White brings to strategy, product, customers and shareholders.

As far as they’re concerned, he really is untouchable.

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Myer’s challenge

Pressure is now on Myer’s Olivia Wirth to extract maximum value – and possibly more – from her all-or-nothing $800m merger with Solomon Lew’s Apparel Brands.

The deal was overwhelmingly supported by investors earlier this year, and has the potential to fundamentally change the trajectory of Myer. It could also turn out to be a major distraction for the next year or two, given a complex integration of brands like Just Jeans, Dotti and Portmans under the single Myer banner.

Wirth tells The Australian there’s always going to complexity in any transaction, but it’s a matter of getting the foundations right. In this case, she pointed to the complimentary nature of the two businesses and having the leadership team in place.

“We have a plan. We’re very focused on where we need to be, where we need to start, and we’re very clear on where we believe the opportunities are”.

The Myer executive chair has already claimed a third of the $30m in annualised savings from the combination of Myer with Lew’s apparel brands. Here, she says a bigger balance sheet and improved cashflow of the combined business means Myer has been able to lock in a lower interest rate from its banks NAB and Commonwealth.

Myer executive chair Olivia Wirth.

Myer had an ordinary first-half with its headline profit crashing 18.5 per cent, sliced by costly and serious teething problems at its new automated warehouse in Melbourne’s west.

These still haven’t been fully resolved, and is having the $12m double whammy of running dual operations and missing out on sales.

At the same time, the past six months have arguably been the toughest for discretionary retailers, with the cyclical peak in interest rates and hit to consumer confidence. Despite improving optimism among other sectors of the economy, Wirth reckons discretionary retail is yet to turn the corner. Her first half numbers were also competing against a previous half where names like Taylor Swift and Pink were swelling Melbourne and Sydney with extra tourists.

Wirth reckons she can extract another $10m of annual savings from folding the three stand-alone labels Sass & Bide, Marcs and David Lawrence into Myer’s head office.

As far as the blockbuster merger is concerned, there’s an uninspiring $20m of savings remaining to be achieved.

However, the deal was never sold as a defensive play, rather Wirth sees the combination of data and loyalty as a way to grow sales from a portfolio of relatively mature retail brands. She says there’s plenty of overlap in the custom base of the two and will deliver a big uplift in cashflow generation. On the other side of the deal Lew, who is now the biggest shareholder in Myer with a near 27 per cent, reckons that with Apparel Brands management know-how and property naos, even small gains in Myer’s wafer-thin profit margins will see huge earnings gains from billions in revenue.

The ink is barely dry on the merger and wasn’t captured in Myer’s latest half year accounts, However Wirth is planning to flesh out what she sees as the opportunities ahead at a strategy day on May 27.

Loyalty remains the priority, and Wirth is determined that millions MyerOne cardholders will start generating points from Just Jeans or Portmans some time in the second half of this year.

Last week she put the finishing touches on her retailing A-team, tapping executives from Super Retail, David Jones and Cotton On. She also has several highly regarded Lew executives in place, including Josh Molloy (property) and Teresa Rendo (head of Apparel Brands).

None of this retail revolution would have happened without the blessing of retail billionaire Lew. He is shortly expected to sit inside the Myer boardroom and, after years of activism, has more than just pride on the line when it comes to making this new house of retail work.

Originally published as WiseTech scandal: Richard White is now untouchable