This was published 5 months ago
Opinion
Tabcorp scandal is not the only bizarre corporate blooper from last week
Elizabeth Knight
Business columnistReally, you couldn’t make this stuff up. Adam Rytenskild, the head of one of Australia’s largest gaming companies, Tabcorp, has been forced to resign after allegedly making sexually inappropriate remarks about a female gaming regulator.
On the scale of dubious corporate governance to extreme scandal, this strike smashes the bell.
This is not the only bizarre corporate governance blooper to have emerged last week. The appointment of former Qantas loyalty executive Olivia Wirth as chief executive and chair of Myer is another eyebrow-raiser. But more on that later.
The gravity of Adam Rytenskild’s mistake wasn’t lost on the Tabcorp board.
The public is becoming increasingly conditioned to hearing about sexual harassment in the workplace. But to be pinged for making sexual jokes about a person who is in a powerful position over the company’s regulatory fortunes – that’s next level.
According to news reports, two sources said the comment made was in reference to a looming decision that would affect the profitability of the business. The sources said Rytenskild said he would perform a sexual act on the regulator if the decision went in the company’s favour.
Rytenskild’s jaw-dropping behaviour – or as the Tabcorp board described it, “inappropriate and offensive language” – was all the more bizarre given this guy had needed to pass a vigorous regulator probity check when he became an executive of the gaming company.
Unfortunately, these checks are generally related to fraud, risk exposure or money laundering, so they don’t cover mouthing off jokes about female regulators.
The gravity of Rytenskild’s mistake wasn’t lost on the Tabcorp board, which had received a whistleblower tip-off, appointed a legal firm to investigate the matter and unanimously voted him out – all in a matter of 10 days.
One of these board members, David Gallop, is the former head of the National Rugby League and as such could probably write the book on how to deal with behavioural indiscretions.
Rytenskild was stripped of all but his basic legal entitlements, so the alleged comment was particularly costly for his bank account – as much as $10 million.
He said he could not recall the incident and that it was not language he would usually use.
Tabcorp was approaching this scandal in a distinctly glass-half-full fashion.
For its part, Tabcorp was approaching this scandal in a distinctly glass-half-full fashion. It has awarded itself a tick for the speed at which it responded to the allegations and its openness in providing a broad-brush explanation for why the chief executive had abruptly departed, beyond its legal disclosure obligations.
But it is still a scandal – and one that comes after it reported a loss of $637 million for the six months to December 31 – a figure largely affected by a $732 million non-cash impairment related to tax rates paid in NSW and South Australia.
The only lucky break Tabcorp received when it delivered the news of Rytenskild’s poorly pitched locker-room humour, was that it shared headlines with Myer’s off-the-reservation governance decision to appoint Wirth as its chairman and chief executive.
Incoming Myer chief executive and chairman Olivia Wirth. Credit: Dominic Lorrimer
Even if one ignores the fact that Wirth has no retail experience, combining the roles of chief executive and chair is unusual and frowned upon in Australia.
Despite Wirth’s talent, which was amply demonstrated while she expanded Qantas’ loyalty business, the lack of specific retail experience is risky.
(She replaces John King, who with decades of international retail experience and know-how took many years to place the department store operator on even a solid financial footing.)
Wirth’s dual appointment will leave her heavily reliant on Myer’s largest shareholder, Solomon Lew, who will have green-lit her appointment.
Lew is one of the country’s most talented retailers, so some shareholders will see his influence over Myer by stealth as outweighing the fact that he didn’t need to make a full bid for the company to seal the deal.
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