New Seven expenses affair rocks Sunrise, top network executives

On the afternoon of October 5, 2022, one of the Seven Network’s most powerful executives sent an extraordinary email to a young media reporter.

The message from veteran Seven commercial director Bruce McWilliam to journalist Zoe Samios accused her of driving Seven’s star executive producer Michael Pell to self-harm because she had asked questions about a secret fraud investigation overseen by a law firm and involving Seven’s flagship Sunrise program.

Former Sunrise executive producer Michael Pell.Credit: Jacky Ghossein

“This is what your unfounded reports have caused Michael to do,” McWilliam emailed Samios, attaching a photo of a bloodied and bandaged Pell in a hospital gown and with a large gash on his forehead.

“Why don’t you keep it up so he kills himself. You are a complete disgrace,” McWilliam continued, claiming the fraud investigation Samios had attributed to legal firm Seyfarth Shaw never existed.

“That law firm you name – didn’t conduct any investigation,” the 69-year-old media veteran wrote.

“If you publish untrue allegations. And he tops himself. It’s on you... And we are determined to protect him.”

McWilliam has been both confidant and consigliere to the nation’s most powerful media moguls. As a corporate lawyer, he had the late Kerry Packer as a key client through the 1980s and then worked for Rupert Murdoch in the 1990s before joining Kerry Stokes’ media empire in 2003.

Outgoing Seven Network commercial director Bruce McWilliam.Credit: Louise Kennerley

The accusation that Samios had pushed Pell to self-harm because of her pursuit of the investigation McWilliam insisted was non-existent concerned the 29-year-old reporter for The Sydney Morning Herald and The Age, who now works at the The Australian Financial Review. Within hours, her story was shelved after consideration of Pell’s wellbeing.

But while Samios didn’t know it, there was a problem with McWilliam’s fiery email.

The photo of the purported self-harm attempt was in fact an image taken several weeks earlier of an injury sustained by Pell after he had blacked out on a Los Angeles street.

Michael Pell (middle) pictured with former Sunrise hosts Samantha Armytage and David Koch. The presenters had no involvement in relation to the investigation. Credit: Instagram

And while Pell, a lauded television executive, was suffering from mental health issues, Samios wasn’t the cause of his distress.

According to close friends of Pell, he was not only burnt out by years at the helm of Sunrise but a culture within Seven of bullying, homophobia and infighting, as well as what he perceived to be a brutal and unjustified effort to remove him from the network seven months earlier. After months of speculation, a Seven spokesperson confirmed on Monday that Pell no longer worked for the network.

Pell’s supporters say he later expressed both horror and surprise after learning that the photo of his bloodied body was sent by McWilliam to Samios, along with a suggestion she had caused him to self-harm.

But a backer of McWilliam says he believes he had a duty of care to protect Pell’s interests as he sought to dissuade Samios from chasing a story she’d been circling for weeks.

Despite McWilliam’s denials in his emails, Samios was correct about the Sunrise investigation conducted by a law firm. Briefings by figures close to Seven reveal that in March 2022, Seyfarth Shaw had been commissioned by the network to probe serious allegations. They involved claims that travel benefits provided to Sunrise by Qantas and Accor Hotels as part of multimillion-dollar sponsorship deals had been misused by three Sunrise employees and a small number of their friends or family who didn’t work at Seven.

The Sunrise set at Seven’s former Martin Place studio. Credit: Jacky Ghossein

Seyfarth had in turn hired forensic accountants to conduct an inquiry codenamed Project Rally which uncovered evidence that the Sunrise employees may have gained “personal benefits”, including accommodation provided free of charge at hotels in Beverly Hills, New York and Sydney and free business and economy class Qantas flights within Australia.

According to the claims Project Rally examined and which are known to select Seven insiders, including some who spoke confidentially to this masthead, Pell was one of the three Sunrise staff members who allegedly “utilised the ‘contra’ benefits provided to Seven under the sponsorship agreements with Qantas and Accor, for his own personal gain”.

Project Rally was unable to make conclusive findings because Seyfarth Shaw had been told by the network to conduct “no interviews” with Sunrise staff and was prevented from accessing further records due to the “sensitivity of the matter” and the desire to avoid “tipping off those involved”.

Had this been done, sources close to Pell say he would have insisted any questionable use of company resources was unintentional and that any free travel or accommodation was connected to work, even if it was booked during holiday leave.

One senior Seven figure said this week that the story of the inquiry into Sunrise is as much about the initial allegations as it is about how they have been handled by Seven, including McWilliam’s decision to distribute the highly personal photo of Pell.

While Pell may be able to justify his use of Sunrise resources, there is no obvious explanation for why five “personal associates” of a Sunrise employee also obtained free travel perks despite having no connection to Seven.

A former senior Seven employee with knowledge of Project Rally said the alleged misuse of company resources for personal benefit was “very serious” for Seven, a publicly listed company.

Then there is the manner in which McWilliam sought to prevent the Sunrise probe becoming public – insinuating a young reporter had driven a Seven executive to near-suicide and denying the existence of an inquiry.

Seven in a spin

The revelations could not come at a worse time for Seven.

It is facing major and mounting questions about its culture and governance after it was revealed Seven’s Spotlight program allegedly reimbursed accused rapist Bruce Lehrmann for use of cocaine and sex workers while also giving him a year’s free rent in return for an exclusive interview.

Questions about whether Lehrmann received benefits from Seven were largely successfully dismissed or downplayed by Seven until they were dramatically detailed by former Spotlight producer Taylor Auerbach in court last week.

There is no suggestion McWilliam was involved in Spotlight’s Lehrmann expenses, but he played a key role in trying to keep a lid on another scandal that eventually engulfed Seven.

In 2014, McWilliam orchestrated Seven’s aggressive strategy to shut down a young female employee, Amber Harrison, who had alerted Seven’s human resources department to cocaine binges at work with her then lover, chief executive Tim Worner.

On the same day McWilliam had Harrison sign a non-disclosure agreement in return for a bonus and a new job, he authorised an investigation into her. The subsequent inquiry cost about the same amount as the $262,000 worth of alleged unauthorised expenses it uncovered.

Instead of a new job, on her return, McWilliam told Harrison she was being made redundant. When the former executive assistant went public with lurid details about the affair in 2016, Stokes dug in behind Worner, who stayed for another three years as Seven’s boss.

McWilliam was also central to another recent disaster for Seven: its years-long public relations and legal defence of now-disgraced war criminal and former Seven executive Ben Roberts-Smith.

In that case, McWilliam also attacked journalists who questioned whether Seven should be spending millions of dollars defending Roberts-Smith’s reputation and was dismissive of the credibility of murder allegations outlined in articles by Nine newspapers which were later proven true in the Federal Court.

In the Roberts-Smith scandal, not only did Seven’s strategy to back his legal case fail catastrophically, it produced equally damaging reputational damage for the network.

Even Roberts-Smith found it baffling. “It’s bizarre. Other businesses would have just gone, ‘mate, it’s not tenable’. I offered to resign at the start [of the war crimes scandal] and they said ‘nah’,” Roberts-Smith was once recorded telling an associate.

McWilliam’s prolific emails caused grief for Seven in the Roberts-Smith case. In December, Stokes opted to pay the millions for the legal fees of Nine after a judge ordered the release of 8600 emails between McWilliam and others, some of which were described as “personally embarrassing” by Federal Court judge Nye Perram.

Throughout this series of scandals, McWilliam has steadfastly kept to his strategy of aggressively lobbing legal threats and asserting that allegations of internal wrongdoing are the invention of Seven’s commercial rivals.

Seven West Media chairman Kerry Stokes in his Perth office.Credit: Trevor Collens

In 2017, two years before returning to Seven, current chief executive James Warburton described him as “probably the most aggressive corporate lawyer we have ever seen”.

McWilliam told Samios of her inquiries about Sunrise in October 2022: “Keep it up and maybe you can damage the [Sunrise] program as well to help your commercial interests by eliminating him [Pell]. So a double gain for you.”

The LA promotion

If the Spotlight scandal has highlighted the misogynistic, bullying and at-any-cost culture within parts of the Seven Network that was also on display during Roberts-Smith and Tim Worner’s scandal-soaked tenures as Seven executives, the reign of Michael Pell at Sunrise was meant to be different.

Appointed at the helm of Sunrise in 2010 aged just 28, the openly gay Pell was regarded not only as a creative whiz but an antidote to the bad old days of television.

Under his leadership, Sunrise thrived, consistently beating its rival Today (part of Nine Entertainment, owner of this masthead) and dominating the lucrative and intensely competitive morning television slot. With Pell at the helm, Sunrise was seen as the jewel in Seven’s crown and Pell became a reputed favourite of Stokes.

In March 2022, Seven announced Pell’s departure from Sunrise to take up a key network role in Los Angeles, a move he described as a promotion. Pell would report directly to chief executive Warburton, on the understanding he would be scouting for US shows to bring back to local audiences.

His departure was accompanied by significant fanfare, with Sunrise hosts David Koch and Natalie Barr farewelling him live on air in April that year. Koch called it a “bittersweet day” and the network aired a montage of his best moments during his 11-year run as the top-rating breakfast show’s boss.

His position sounded grand – senior vice-president, entertainment content, North America.

But Pell’s absence from multiple industry events in LA, including the annual television “upfronts” which give networks the chance to preview different programs to buy and air, sparked intrigue.

Was there more to Pell’s storied rise at Seven and his move to LA?

Supporters of Pell told this masthead this week that he fell out badly with the network, and has told confidants he was subjected to bullying and homophobia by others in Seven jealous of his success.

According to Pell’s supporters, the decision by senior Seven executives to refer his conduct to an external law firm as he was heading to LA was about finding any reason, real or imagined, to force him from Seven.

“This is a simple case of a brilliant, dedicated professional falling victim to one of the toughest cultures in the Australian media landscape,” said a former senior Seven staffer and backer of Pell. The staffer insists Pell was the subject of a “witch hunt” by enemies at Seven.

But according to documents sighted by this masthead, Pell’s critics within Seven had raised serious concerns that he or others at Sunrise were “misappropriating or misusing” company resources.

The referral to Seyfarth Shaw related to Pell’s oversight of the so-called “contra” deals at Sunrise. They involved Qantas and Accor Hotels sponsoring Sunrise and, in return for on-air brand promotion, Seven was given credits it could use for flights and hotel stays. The sponsorship deals are worth hundreds of thousands of dollars.

According to the terms of Qantas’ sponsorship of Sunrise, the flight credits were only to be used by Seven staff and for “official business” unless otherwise “approved in writing by Qantas”.

In line with most listed companies whose resources belong to the firm and its shareholders, Seven’s internal policies also provide strict rules that prohibit employees using their position to gain personal benefit.

Pell appears to have been aware of the need to use the Qantas flights for work purposes, emailing Qantas in May 2018 to state that the flights would be used only “if necessary by the production”. “We do not spend it because it exists”.

The allegations were and, in respect of Pell, remain unproven, muddied by the claim that, according to McWilliam’s later emails to Samios, Pell had “discretionary” use over Sunrise’s contra resources.

McWilliam’s emails with Samios from 2022 were marked “not for publication” but the contents were leaked to The Australian, which ran a story describing a “clash” between Nine and Seven over an unnamed expenses story, quoting directly from the email exchange while not naming any individuals aside from McWilliam.

The Sunrise investigation

There is no suggestion by this masthead that Pell has deliberately engaged in wrongdoing. But according to briefings from multiple sources who have worked for Seven and had access to company emails and investigation reports, the concerns about the use of the contra deals at Sunrise led to a preliminary internal network probe.

After that, two senior Seven executives, Trent Dickeson and Katie McGrath, appointed Seyfarth Shaw and a firm of forensic accountants to make further inquiries.

Among the travel by Pell under scrutiny by the investigation were two trips to the United States he took while on annual leave with his partner, another Sunrise employee.

According to the inquiry, during the first trip in September 2019, Pell and his partner stayed for 11 nights at the Beverly Hills Sofitel while Pell was on annual leave from Seven.

The accommodation was allegedly supplied by Accor, which owns the Sofitel, as part of the contra sponsorship deal after Pell’s personal assistant, Lorinda McCarville, emailed the hotel chain to request the accommodation be supplied via the “7 Network Contra Bookings”.

In her email, McCarville told Accor that Pell was a “VIP and the boss of Sunrise” and that his personal credit card had been erroneously charged a $6000 deposit for accommodation which should have been supplied free by Accor.

Rooms at the hotel cost between $AU493 and $AU2063 per night, with the 11-night stay costing between $4500 to $24,000.

On September 28, 2019, Pell was also emailed by McCarville and told the accommodation would be supplied at no cost to Pell.

In December 2021, Pell travelled on annual leave with his partner to Beverly Hills and New York, a trip that also allegedly involved accommodation at the Sofitel Beverly Hills and New York’s Mondrian hotel and which was charged to the Accor contra account.

McCarville emailed Accor while she arranged the booking for this travel to ask: “Is it possible to pay the difference in contra for the Hollywood suite?”

Free interstate travel and accommodation in Australia was also obtained by Pell via the contra accounts, according to records.

Michael Pell with the then Sunrise team at Universal Studios.

In July 2020, emails suggest Pell used the Qantas contra account to fly business class from Sydney to Cairns for a “long weekend”. He was allegedly on annual leave and accompanied by his partner, who also flew free, with total cost of the flights for the pair $4300. An email sent by Pell to his assistant reveals that, before the booking, he told her that he was intending to “book it ourselves” but “maybe we do use the contra” to instead pay for the flights.

In December 2020, records show the contra accounts were again used to fly Pell and his partner to the Gold Coast to stay at an Accor Sofitel hotel in Brisbane. Pell was on leave at the time of this travel.

Pell has insisted privately to supporters that because he worked 24/7, his own use of the contra accounts for free travel and accommodation always involved work duties, even when he was technically on leave.

McWilliam has also repeatedly insisted Pell was entitled to use the accounts how he saw fit, describing him in an email to Samios as “a creative genius” who “behaved like a Hollywood producer” and as a result had been appropriately backed by Seven.

But the Seyfarth Shaw inquiry also investigated a 10-day hotel stay in a Bondi hotel paid for via the contra account for the benefit of the husband of Pell’s executive assistant, McCarville. McCarville’s husband is not an employee of Seven and emails she sent to Pell show she was seeking the accommodation to ensure her husband could continue working after another family member was deemed a close COVID contact in 2021.

“Can I ask permission that I can book [my husband] into Mantra on Bondi … so he can go to work and not have to isolate,” McCarville emailed Pell on August 10, 2021.

Pell responded: “Yes. let [your husband] keep working. Book him in.”

McCarville, who left Seven in May 2022, declined to comment.

But McWilliam also defended this expenditure in his email to Samios, claiming Sunrise “accommodated someone (a family member)” to allow McCarville, rather than her husband, to “keep working”.

“So a show can’t use contra rather than paying expenses to achieve something?” McWilliam asked.

Project Rally also examined why a small number of associates of Pell who did not work for Seven were also given hotel stays or flights from the contra account in 2021.

One of the recipients, a law student, received free flights from Brisbane to Sydney on two occasions. Another three, including a KPMG employee, received free hotel accommodation, including at the Sofitel Darling Harbour, while a fourth received Qantas flights from Sydney to the Gold Coast. This masthead spoke to some of the five people who received the benefits but none were willing to comment.

Seven has since changed the way its contra deals with Sunrise are handled internally. People familiar with the changes but who are not permitted to speak publicly said contra and advertising partnerships – which were previously managed by Sunrise – now sit in the remit of Seven’s chief sales officer.

The blame game

While the story Samios was working on was never published, her inquiries in October 2022 were escalated to Warburton, Seven’s chief executive officer.

A blame game followed, with fingers pointed at Pell’s enemies within Seven.

Pell remained silent, a position he would steadfastly maintain for the following 18 months despite speculation about whether his US role with Seven was a promotion or a slow creep to the departure lounge.

Outgoing and incoming Seven West Media chief executives James Warburton (left) and Jeff Howard.

Warburton declined to comment and McWilliam declined to respond to a series of questions.

A Seven spokesperson confirmed Pell’s departure from Seven on Monday afternoon, and that he left the company “with our best wishes”.

“He has been a wonderful executive, a trailblazer in breakfast TV and we appreciated his work over a long period of time.”

Pell has signed a non-disclosure agreement, meaning he can never talk about Seven. The human resources executive who backed the Pell inquiry, Katie McGrath, left Seven in November 2022 and has also signed a non-disclosure agreement.

In March, it was announced McWilliam was planning on leaving Seven after 21 years of service. Warburton will also leave this month.

But even in Seven’s departure lounge, McWilliam is not finished making public waves. He resurfaced in last week’s Bruce Lehrmann defamation proceeding hearing, submitting an affidavit to explain why Seven had produced to the court so few documents detailing its dubious dealings with the accused rapist. McWilliam used his affidavit to blame Spotlight executive producer Mark Llewellyn.

This week, after this masthead told Seven it had uncovered new information about the story Samios had spiked after McWilliam’s emails to her in November 2022, the veteran media executive was back in attack mode.

“If you defame any current or former Seven people we’d support them in taking action to protect their reputation and that’d be a shame to get into wouldn’t it,” he wrote.

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