Christine Holgate Australia Post saga takes new twist with cash offer

Australia Post is desperate to offer cash to Christine Holgate, but with one condition.

The Morrison-Australia Post saga has taken a bizarre new twist.

Former Australia Post chief executive Christine Holgate filed her resignation with the Australia Post board and stated she did not want the $700,000 or so that she was entitled to receive on leaving. But the Australia Post board has asked her to reconsider and take the $700,000 in cash. But there was a caveat to their offer — she would have to sign a “no compete” agreement.

Naturally, as one of the best digital logistics executives in Australia she has no intention of limiting her options and has told Australia Post directors to keep their money. (Or should we say ‘‘government money’’?)

I was alerted to this new twist in the Morrison-Australia Post saga by an email sent to me by Angela Cramp, who acts on behalf of 2850 community post office owners who have been appalled by the Prime Minister’s potential attack on their viability.

I will quote the email in full at the end of this commentary.

Meanwhile, my friends in the private equity business are planning to spend January doing their sums, looking to purchase all or part of Japan Post’s Toll empire in Australia.

Some of them have contacted Holgate offering a salary many times the Australia Post level for a Toll CEO role.

But as far as I can determine, she has not agreed to talk to any of them, saying she wants to wait until things are clearer. If she were to agree to become CEO of private equity-owned Toll group then that private equity operator would almost certainly win, because they could pay more for the Toll operation.

It was Holgate at Australia Post who shredded the Toll parcels operation, and because of her intimate knowledge of Australia Post, the private equity operators think she is likely to be able to turn the tables.

On the surface Scott Morrison looks to be impregnable as Prime Minister and morale in the ALP is low. Morrison in combination with Josh Frydenberg and Greg Hunt handled the Covid-19 crisis in a way not surpassed by any other world leader.

Yet, amazingly, Morrison made a complete hash of the Australia Post watches affair. Indeed, so bad has been his handling of this matter that the independent report from lawyers Maddocks has been declared a “cabinet secret” for fear that its revelation would greatly damage the Prime Minister and would cause Labor to campaign outside post offices around the land — the opposition’s first sniff of a victory.

The essence of the report was revealed in my December 22 commentary on The Australian’s website, under the heading “Christine Holgate mistake will haunt Scott Morrison”.

Correct procedures

Maddocks found that Holgate was operating under correct Australia Post board procedures and that the Prime Minister had been badly misled.

But strangely hidden in the “secret report” is the bones of a solution that may prevent the Prime Minister being tarnished in the long term.

The solution will require the chairman of Australia Post, Lucio Di Bartolomeo, to stand down. He might be grateful to be invited to take such a step because he faces a long, gruelling cross examination by the Senate estimates committee.

Last month, in response to several questions by the ALP’s Senator Nita Green, Di Bartolomeo stated that Holgate had agreed to “stand aside”. Earlier he had made similar press statements.

Holgate has been adamant that she did not stand aside in the weeks after the PM’s outburst in parliament demanding that she be stood down. (Later she resigned)

The ALP now smells blood and Di Bartolomeo and all the Australia Post directors face long interrogations by Senate estimates as they seek to determine the truth behind the Morrison-Australia Post saga and the contents of the secret Maddocks report. To understand the solution that comes out of the Maddocks report we need to look at how the saga unfolded.

Four Australia Post executives put together a deal with Australian banks that not only added between $70m and $100m to the Australia Post bottom line but secured the future of those 2850 small enterprises. Holgate and the four executives were heroes in the small business community.

Completely exonerated

Holgate had the authority to make bonuses of up to $150,000 without board approval. She told the board she was planning a bonus for the executives but did not state the amount. In the end she chose $20,000 but delivered the bonuses in the form of four $5000 Cartier watches. According to Maddocks, the former chairman attended the presentation ceremony. Maddocks details all the events and completely exonerated Holgate.

But back in October the Prime Minister was grossly misled about the affair and demanded that Holgate be stood down pending an investigation.

Although commentaries by myself and others pointed out that if there was a mistake it was made by the board, not by the CEO, Morrison held his ground. The Maddocks report must have deeply shocked him.

What should have happened in October when the Prime Minister demanded that Holgate be stood down is that the Australia Post chairman should have responded that she did nothing wrong so could not be stood down.

Longstanding directors knew she had been operating completely in line with board rules. Accordingly, if she would not stand down then they could not stand her down. But the chairman kept saying she had been stood down. What actually happened was that she agreed to take two weeks’ leave. The chairman will need to reconcile his statements to Senate estimates with what other directors say.

The Labor Party, in long interrogations of each Australia Post director, plans to link the affair to the Liberal party’s internal workings.

The Morrison-Australia Post saga is the greatest opportunity the Labor Party has had to deeply wound the Prime Minister.

Christine Holgate was griled at a Senate estimates committee over the gift of watches. Picture: Gary Ramage

Meanwhile, the good news for the government and the Prime Minister is that Simon Birmingham is the new finance minister and he was not in any way linked to the bizarre events of October. Given that the Australia Post chair did not advise the government that Holgate was operating in accordance with board rules in giving the watches it is only reasonable that he be asked to stand down.

Given that the independent report has completely exonerated Holgate there’s no reason why Birmingham can’t invite her back. She has taken no financial settlement and has not taken legal action against the Australian Post, which she is clearly entitled to do.

As for the Prime Minister, he can continue to state the watches were an inappropriate bonus and indeed Holgate has agreed that the watches were a mistake, but she was operating in line with board guidelines.

With the chairman out of the way, Birmingham theoretically could invite Holgate back as CEO, but he can only do that if the Prime Minister agrees.

That will not be easy but Birmingham is a good operator and may be able to convince him. Whether Holgate would agree is an unknown.

But if there’s any doubt that hiding the truth is the wrong way to go then both the PM and Birmingham should read the email from Angela Cramp because she reflects a deep feeling in her small business community.

Cramp knows that if Holgate is given the opportunity to run Toll she will do incredible damage to the post office and may jeopardise the financial situation of 2850 privately owned post offices

The email from Cramp follows:

“As Community Post Office Licensees, and from the Board and members of the LPOGroup that represents the interests of 2850 Community LPOs all over Australia, we wish to convey our deepest gratitude, equally to you both, for your great work bringing out the facts of the train wreck that is currently trying to scuttle our CEO Christine Holgate, and therefore our businesses, our investments and our communities. Owners of Community Licensed Post Offices have been under huge financial stress for more than a decade trying to keep our doors open, due to the serious neglect of the postal service by both major parties as governments of the day.

“We know only too well what bad is, having experienced it under the previous two CEOs and respective boards and ministers, so when we experience good, it is not possible to sit back and watch that be snatched from our clutches by foolish deeds that should never have happened.

“To read your articles about the events and treatment of Christine Holgate, publishing very clearly what we would very much have like to have been able to get published was as joyful for 3000 licensees as Christine Holgate has been, and still is for that matter.

“Christine offered her resignation, conditional upon it being effective immediately, which was not accepted by the board. There has been no paperwork signed by either party, so we believe the chairman of the board has misled the Senate at the estimates hearing he attended.

“Christine Holgate did not agree to stand down and has not agreed to resign, yet the chair gave evidence to the Senate committee that Christine Holgate did both.

“It is a huge relief that good people are not remaining quiet in the face of this, and our greatest hope is that this mess can be put to right and Christine Holgate returns to her desk to continue to reform and reshape Australia Post for a viable and sustainable future.

“She is a once in a lifetime leader and your support for her does you absolute credit. You have both assessed the situation correctly and called it for what it is, absolute rubbish.

“Christine is a keeper, and if Australia wants a future fit-for-purpose postal service that is viable and sustainable, then the whole of Australia needs her back at work, not just licensees.

“We had wished for good sense to prevail long before now, so we can only hope that your words have a far greater impact on the powers that be, to right this wrong, than our pleadings which have been falling on deaf ears.”