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Robert Gottliebsen

Christine Holgate mistake will haunt Scott Morrison

Robert Gottliebsen
Australia Post chief executive Christine Holgate questioned over the Cartier watches during Senate estimates in Canberra. Picture: Gary Ramage
Australia Post chief executive Christine Holgate questioned over the Cartier watches during Senate estimates in Canberra. Picture: Gary Ramage

As Prime Minister Scott Morrison prepared for Christmas celebrations he received an “horrific” independent report on the removal of Australia Post chief executive Christine Holgate.

Not surprisingly the report was immediately ordered to be kept secret because not only did it completely exonerate Christine Holgate but showed that the remarks of the Prime Minister to the parliament were simply wrong.

And in that context it indirectly damned the two ministers responsible for Australia Post --- former finance minister Mathias Cormann (who was in his last full week of office ) and Communications Minister Paul Fletcher. Neither alerted the Prime Minister that he was about to make a horrible mistake.

Also deeply wounded by the report is the chairman of Australia Post, Lucio Di Bartolomeo, and his Liberal Party-controlled Australia Post board.

The independent report prepared by lawyers Maddocks revealed that under the Australia Post regulations the chief executive was allowed to make executive rewards up to $150,000 for good performance without board approval.

Holgate alerted the board that she planned to use her authority but did not stipulate how much she would spend or how she would spend it. She awarded four executives a total of $20,000 -- $130,000 below the maximum -- in the form of four Cartier watches that cost around $5000 each.

The executives had pulled off a banking deal that added $70 million to $100 million annually to the bottom line of Australia Post and secured the future of 3000 small business post office branches around the country. The post offices were furious that she was ordered to stand down.

The report says the former chairman approved the purchase of the watches and the board was aware that a reward for outstanding performance was to be made.

The report praised the work of Christine Holgate as CEO and was adamant that she did nothing wrong in purchasing the watches.

But the Prime Minister certainly did do something wrong and made remarks in the parliament after reference to the watches in a Senate committee.

He did not check his facts and probably didn’t know that the event took place two years earlier. And when part of the true facts were revealed by myself and other journalists (the rest came out in the independent report) it was clear to all in Canberra that he had made a terrible mistake, but he did not recant.

Accordingly the following remarks to parliament will personally haunt our Prime Minister for a long time.

Morrison said he was disgusted by the abuse of taxpayers’ money and added: “I was appalled and it is disgraceful and it’s not on.

“So, immediately, I spoke with ministers and from those discussions, decided that there had to be an independent investigation done by the department, not by Australia Post, and that the chief executive should stand aside immediately.

“That report will come back to me and my members of my Cabinet and if there are issues to be addressed with board members, then they will be addressed then.

“This all happened within an hour, so appalled and shocked was I by that behaviour, as any shareholder would in a company raise their outrage if they had seen that conduct, by a chief executive, the management or the board, they would insist rightly on the same thing.

“We are the shareholders of Australia Post on behalf of the Australian people, is that the action was immediate, and if the chief executive wished to stand aside, she has been instructed to stand aside, if she doesn’t wish to do that, she can go.”

Prime Minister Scott Morrison said of Ms Holgate in parliament: “She has been instructed to stand aside, if she doesn’t wish to do that, she can go.” Picture: Sean Davey.
Prime Minister Scott Morrison said of Ms Holgate in parliament: “She has been instructed to stand aside, if she doesn’t wish to do that, she can go.” Picture: Sean Davey.

But, in my view the impact of the Prime Minister’s mistake was multiplied by actions of the chairman of Australia Post, Lucio Di Bartolomeo and his Liberal Party-controlled board. They should have known of the $150,000 CEO discretionary authority under Australia Post rules; that she had alerted the board that a reward would be given and that the then chairman had approved the watches and been at the presentation ceremony.

Again in my view, given the board and previous chairman involvement, their job was to back their top-performing chief executive. Instead, as loyal Liberal Party members they made a statement that did not support their CEO.

Di Bartolomeo should have explained to the Prime Minister how the watches came to be given; that the board knew that there would be rewards and that an Australia Post CEO could give awards up to $150,000 without board approval.

When the chairman did not stand behind his CEO it made Holgate’s position untenable. Had Di Bartolomeo and the board supported her my guess is that she would still be there. The failure of the chairman and board to support their CEO will make it that much harder to find another.

Australia Post chairman Lucio Di Bartolomeo. Picture: NCA NewsWire
Australia Post chairman Lucio Di Bartolomeo. Picture: NCA NewsWire

New Finance Minister Simon Birmingham took office on October 30 and will now have the independent report in front of him. He will need to consider whether a new chairman is required and will question whether the board should be controlled by the Liberal Party.

He needs to understand that Australia Post is a business. Its rules in allowing its chief executive to award bonuses for outstanding achievement reflects a recognition of the fact that it is a business. Christine Holgate was allowed to stay in the Hyatt Hotel under the rules – again reflecting the fact that it is a business. Moreover it is a business that is taking on some of the world’s best parcel operators and under Christine Holgate defeated them soundly, adding billions to the worth of the business.

Readers will be well aware of my criticisms at the time.

If anything, the independent report shows that I did not go far enough in those criticisms of the Morrison ministry and the chairman and board of Australia Post.

Having said that, the current management of Australia Post has not fallen over under the weight of increased parcels and the Morrison Christmas pudding will be flavoured with what has been an excellent overall performance in a tough year.

Robert Gottliebsen
Robert GottliebsenBusiness Columnist

Robert Gottliebsen has spent more than 50 years writing and commentating about business and investment in Australia. He has won the Walkley award and Australian Journalist of the Year award. He has a place in the Australian Media Hall of Fame and in 2018 was awarded a Lifetime achievement award by the Melbourne Press Club. He received an Order of Australia Medal in 2018 for services to journalism and educational governance. He is a regular commentator for The Australian.

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Original URL: https://www.theaustralian.com.au/business/leadership/christine-holgate-mistake-will-haunt-scott-morrison/news-story/2ad06e0e8940bdcfaa2cf82a39d343c8