Deeper forces in Christine Holgate watches saga?

Christine Holgate during the October 2020 parliamentary hearing, at which she was confronted with the need to explain a two-year-old watch purchase. Picture: Gary Ramage

The facts behind the Morrison-Di Bartolomeo-Holgate Cartier watch tangle are so simple that it’s almost unbelievable that the Prime Minister, the chairman of Australia Post and its former CEO couldn’t have sorted it out in a few days.

That leads me to believe that there are hidden, deeper forces in this mess that are not yet revealed.

Whether those forces exist or don’t exist, the Australia Post Cartier watch affair is a perfect example of why it’s so important for politicians, corporate executives and indeed anyone with responsibility to address issues quickly and not allow them to fester.

In the case of former Australia Post CEO Christine Holgate, the whole affair is now becoming linked to the status of women in the corporate community. Women will argue that no prime minister or corporate chairman would treat a male CEO the way Holgate was treated.

Now Australia Post is in the spotlight, the government cannot afford another major controversy, yet there is one lining up to hit it.

As I pointed out yesterday, the PM and the Treasurer are sitting on issues in the Australian Taxation Office which, if not addressed properly, will also fester and blow up in their face.

The facts in the Cartier watches affair are easy to understand. Four executives had done an outstanding job bringing together our leading banks to distribute their products via the Australia Post branch network. It added about $80m to $100m to the Australia Post bottom line and made viable most of the thousands of branches around the country.

In turn that gave a well-managed Australia Post an almost unassailable lead in online parcel delivery. What Holgate should have done was to award each of the executives a substantial cash payment. The whole issue would then not have arisen. Maybe it was a female touch, but instead she gave each of the executives a $5000 Cartier watch. She is now the first to admit that she made a mistake, given that Australia Post was a government organisation. But in no way was it a hanging offence.

Indeed the board was fully aware that the executives were going to receive a reward, although they did not know it was to be watches. The former chair, John Stanhope, aware of the mandate, approved purchase of the watches and indeed signed the cards as part of the presentation which he also attended. The auditor and those in the Australia Post financial check system approved the purchase. It happened two years ago and it was widely known within the organisation.

I believe that either high up within Australia Post, or among outsiders close to the organisation, there was a skilful anti-Holgate movement determined to have her removed as CEO.

The first signs were a series of half truths in the media about her alleged big spending. Holgate should have immediately put her side of each of the publicised incidents, but she didn’t. In her statement she claims she was prevented from defending herself. If that’s true it’s inexcusable and a clear sign of a deeper agenda.

Then, without warning, she was confronted with the need to explain the two-year-old watch purchase before a parliamentary committee.

It was a carefully-planned trap and was linked to the earlier leaks. She fumbled and her answer could have been better.

It didn’t help that she was wearing an expensive watch given to her by her husband.

At the time Scott Morrison was under pressure in parliament on other issues and when confronted with the Cartier watch purchase he went over the top and demanded that Holgate be stood down.

At this point the chairman, Lucio Di Bartolomeo, had two choices — defend his CEO or support the Prime Minister.

He could have said that he had no power to stand her down because she had acted within board approval parameters and with the approval of the former chairman. She could have been asked to manage the enterprise through the Christmas parcel boom. However, there would be an inquiry into the matter which would report in, say, February.

Australia Post chairman Lucio Di Bartolomeo had two choices - defend his CEO or support the Prime Minister. Picture: Getty Images

The problem the board faced was that it had many connections with the Liberal Party, making it hopelessly conflicted between loyalty to the party and loyalty to their CEO. While some board members had been unhappy about the watches they later approved the awarding of a pen to the retiring former chair. A clear policy was needed on such issues but that did not require removing the CEO.

I think there is not much doubt that there was a group of people in high places who wanted Holgate’s removal.

I got a real whiff of this during the crisis when a number of CEOs of Australia Post customers said they were prepared to make a statement in support of Christine Holgate. One gave me his mobile but changed his mind and warned me that there were much deeper forces involved in this issue. The others also suddenly changed their mind.

For the government the task ahead is now probably about toughing it out but there’s no doubt that the Australia Post board must be reconstructed to have much greater expertise in the business that it operates. It must have a chair who has a track record of standing behind his or her chief executive. It’s very difficult for a chair who has not stood behind a CEO to recruit a good one.

Remember, Australia Post is competing fiercely with some of the world’s best parcel operators. Thanks to Christine Holgate and her predecessor Ahmed Fahour, Australia Post is winning and is an enormous asset for the government and the community.

But if the wrong person is made CEO then Australia will lose a fantastic asset and the network of people behind destroyed post offices will become the enemy of the Liberal and National parties for a long time.