WiseTech and MinRes join growing list of governance casualties

Billionaire Richard White’s personal controversies have finally started to bleed into the affairs of his company, WiseTech Global, with investors fearful that White’s Lothario-type behaviour may force him to step back from running the $36 billion company.

That fear triggered a multibillion-dollar rout in WiseTech’s share price on Monday and, perversely, the collapse is a testament to the importance of White to the company.

As far as the market is concerned, there is no WiseTech without White. It’s the textbook definition of “key man risk”, one that is likely to now put the tech company’s board under severe pressure to act.

Linda Rogan is challenging a bankruptcy notice issued by Richard White.Credit: Nick Moir and Oscar Colman

The scandal engulfing White began a few weeks ago and initially involved one allegation in a Federal Court dispute that he expected sex from beauty entrepreneur and Real Housewives of Sydney contender Linda Rogan in exchange for business advice.

The allegation was salacious but, in a corporate sense, seemed containable. However, new allegations of inappropriate advances on LinkedIn published by Nine on Monday added a serial flavour to the allegations about White, which had been contained in an affidavit by Rogan, who is applying to toss out bankruptcy proceedings brought by White.

To ignore the new claims from other women — one of whom branded White the “LinkedIn Lecher” — is no longer an option for the WiseTech board. It released a statement on Monday stating it was reviewing the full range of matters outlined in the media and “taking external advice”.

Sure, the alleged scandal is personal in nature but captains of industry need to exercise judgment, particularly if they are responsible for listed companies and are investing shareholders’ capital.

But how the board deals with White is quite the dilemma. As the founder and brains behind WiseTech, and its largest shareholder, White enjoys asymmetric power. Directors and shareholders may not approve of how he conducts his personal life, but an extended fall in WiseTech’s share price will shred their hip pockets – and shareholders will hate that even more.

Until this scandal exploded, WiseTech shareholders had experienced a dream run with the company’s share price up 122 per cent year-on-year. White has been lauded as an Australian tech success story, creating and leading the premier software provider for global logistics, a niche but critical cog of the global economy.

And White isn’t the only Australian founder/billionaire to be exposed this week for controversial behaviour. The board of heavyweight miner Mineral Resources has confirmed it is investigating revelations by The Australian Financial Review that its founder, mining mogul Chris Ellison, had once operated an offshore tax evasion scheme.

Richard White and Chris Ellison are under heavy fire.Credit: Dominic Lorrimer, Trevor Collens

Mineral Resources shares dived by almost 13 per cent as Ellison admitted to a serious lapse of judgment. In Ellison’s case, the board is firmly sticking behind its man, declaring full confidence in him despite being in the throes of an external investigation.

Both White and Ellison are, according to the market, the crucial driving force behind the success of their respective businesses. But questions must be asked about whether the respective situations playing out at WiseTech and Mineral Resources add to the general and growing distrust of big business by the broader community.

For months, the big end of town has been defending itself against anti-business sentiment, much of which has been intensified by Canberra politics. The community’s faith in institutional business class is being sorely tested, and these latest alleged lapses of judgment from White and Ellison will now add more fuel to the fire.

Last week the corporate regulator successfully alleged that Harvey Norman had been misleading customers by promoting interest-free and no-deposit payment methods without disclosing that customers could only access those methods by being a Latitude GO Mastercard holder.

And then there is the tawdry Super Retail saga, which escalated last week when the Australian Securities and Investments Commission (ASIC) confirmed it would investigate the company in response to a multimillion-dollar legal action claiming bullying and victimisation of two female staff, and an affair between its chief executive and a human resources manager.

Closer to home, Nine Entertainment’s cultural shortcomings were laid bare last week. An external report revealed uncomfortably high levels of bullying, harassment and abuse of power, complete with shocking anonymous quotes from dozens of current and former employees.

It’s a list of governance nightmares that’s seemingly growing longer by the minute.

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