As ASIC joins fray, can corporate watchdog sort the Super Retail mess?

At last, the corporate cavalry has arrived to investigate the innards of what is going on at one of the sharemarket’s best-performing retail companies, which is embroiled in a tawdry legal battle with two former senior staff who claim it has a dysfunctional workplace.

The bad news for Super Retail – better known as the owner of Rebel Sport, Supercheap Auto and BCF (boating, camping and fishing) – is that, with the Australian Securities and Investments Commission inserting itself into the action to investigate claims, what was once a fascinating saga could become explosive.

And if Wednesday’s sliding share price is any guide, it might also become expensive.

Former Super Retail Group chief legal officer and company secretary Rebecca Farrell arriving at the Federal Court in July.Credit: Dominic Lorrimer

From the start, the volcano of a battle between Super Retail and two former employees was anything but conventional. The company announced in April from out of nowhere that it expected to be hit by a $30 million to $50 million legal action claiming bullying and victimisation, which would also expose an affair between its chief executive and a human resources manager.

Super Retail’s decision to “out” itself could be read as an attempt to be on the front foot with dollops of inference that the allegations were tantamount to a shakedown by two former employees – who are, incidentally, both lawyers.

The April announcement from Super Retail foretold expectations of a range of allegations against it, including inappropriate company travel and unsatisfactory record management.

This is a tale that at its heart may prosecute the potential trade-off between profits and corporate behaviour.

But it’s hard not to label Super Retail’s move as aggressive.

One of the women in the dispute, Amelia Berczelly, is alleging in an affidavit to the Federal Court that the retailer pushed her to the verge of suicide and bankruptcy as punishment for bringing to light allegations of an affair between chief executive Anthony Heraghty and the group’s former HR head Jane Kelly.

Berczelly stated in her affidavit that the sudden and unexpected ASX announcement was made without prior notice, and she believed it was “an act of victimisation taken to scare me for making my reports”.

It was certainly tone-setting for the battle that has stretched across six months and sparked the interest of ASIC, the corporate regulator.

This is a tale that at its heart may prosecute the potential trade-off between profits and corporate behaviour.

Super Retail says it has already conducted a review and investigation into the allegations by Berczelly and her co-accuser Rebecca Farrell and found nothing untoward.

However, it highlights the dilemma of what to do when a successful chief executive’s reputation is placed under a cloud by allegations from staff. It goes to the heart of the company’s corporate governance.

Clearly, the board is standing by Heraghty and has stated it will defend the claims against the company.

There has not been a peep from shareholders, the largest of which (with almost 30 per cent) is company founder Reg Rowe. He can’t be enjoying the adverse publicity surrounding the case, but must be happy about his newly minted billionaire status on the back of the company’s shares rising 42 per cent over the past year.

But at what point does the company’s success get overshadowed by the ugly optics of this battle?

Berczelly’s affidavit says she made two whistleblower complaints in February to Super Retail directors Howard Mowlem, Annabelle Chaplain, Judith Swales, Peter Everingham, Penny Winn and Mark O’Hare, and Super Retail’s external auditor, PwC. In late April, Berczelly and Farrell also made a joint whistleblower report.

In May, Berczelly filed her case with the Fair Work Commission against Super Retail, Heraghty, outgoing chairwoman Sally Pitkin and acting chief legal officer Inga Kirkman.

Berczelly is also supporting Farrell’s Federal Court case, which is due to be heard in December, relating to her alleged settlement agreement.

So the fireworks are a long way from over.

It’s one worth marking on your calendar.

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