Hidden faces behind Christine Holgate’s Australia Post assassination

We have just witnessed one of the most successful CEO character assassination campaigns ever attempted in Australia. The target was in one of Australia’s best chief executives ---who happens to be female -- Australia Post’s Christine Holgate.

Given Prime Minister Scott Morrison became part of the exercise and demanded her removal, I have been researching what happened.

Many senior post office people know who orchestrated the character assassination attempt and why. The ALP will be pleased to know that it was not the unions and it’s not the board. That’s all I can say.

The AusPost saga starts not with the watches affair but rather with the decision of various Coalition ministries to turn the board of Australia’s most successful government business enterprise into an appointment post for faithful Liberals. They now control the board. Some proved to be very good directors but this is a $10 billion enterprise that is competing against some of the world’s biggest and best companies including DHS, FedEx UPS and Japan Post’s Toll. It needs a board that includes those that have been deeply involved in large corporates and the transport and distribution business.

Nevertheless, AusPost has secured almost three quarters of Australia’s booming online retail parcel delivery business. The Prime Minister’s involvement illustrates why the $10 billion business should be floated like Commonwealth Bank, CSL, Qantas and Telstra. The public company would have a clearly defined obligation to run the mail service. Running this business as a virtual arm of the Liberal Party is not in the national interest.

Christine Holgate is recognised by the Australia Post people as an outstanding leader but at the Senate estimates committee she became rattled when, with no warning, she was pressed on the rewarding of four executives with Cartier watches two years ago. She made factual mistakes.

Christine Holgate in the estimates hearing where she was questioned about the watches. Picture: Gary Ramage

The Liberal Party-controlled board has now stated that it did not give permission to buy the watches. And having checked the invoices board members discovered that they cost $5000 each and not the $3000 she stated. It’s a $10 billion business.

If the board did not give permission to buy the watches then I am sure that the chairman at the time, John Stanhope, would not have done it alone.

This is what the post office people tell me actually happened.

Holgate made her normal written management presentation to the board which set out the vital importance of signing up three major banks to operate via the post office network. Holgate had previously isolated a weakness in one of the post office’s key weapons against the majors - its network of small branches.

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That network had given AusPost a place to deposit parcels not delivered. On its own, the low margin parcel business could not justify such a network and it required mail services, newspapers, lotteries etc to make it economic. But most of these non-parcel activities were in decline or threatened.

The bank deal not only doubled the rewards to the branch network but helped keep the vital branch network prospering. And with that prosperity came untold benefits to thousands of family businesses around the land and a banking service to rural and regional Australia. To them Christine Holgate was a hero.

They are understandably furious with the PM, who seems to threaten small business prosperity.

Somewhere in that Holgate report to her board was a statement that the four executives who pulled off the deal that added a vast sum to the value of the enterprise (my guess is $1bn) should be rewarded or benefited. Clearly the board did not challenge this proposal and effectively delegated the task to their CEO.

So how should those four executives have been rewarded? If it was to be a financial award then what was the appropriate level? In AusPost probably between $10,000 and $15,000 would be reasonable.

But Christine Holgate didn’t want to hand executives a fistful of cash but rather something they would remember. And here we discover a “weakness” --- she has a passion for watches.

Holgate was a very successful chief executive of Blackmores and was well rewarded. She came to AusPost for the challenge and allowed her salary to be set by the remuneration tribunal. It was a huge pay cut but the family was well off.

Paradoxically in the Senate estimates committee she is photographed wearing a watch that my jewellery mates say is worth between $30,000 and $50,000. It was a gift from her husband.

She acted on the board’s delegation and purchased four $5000 watches. The post office people think a director may have watched the presentation in 2018.

The “assassination campaign” has involved media leaking of Holgate expenses including football ground boxes, which are really useful when you want to keep in touch with major parcel generators.

Christine Holgate inspecting a new parcels facility. Picture: Mark Cranitch.

Australia has a mail service which may be not be as good as what it was when everyone was using the mail but it’s a lot better than it would have been without parcels.

To show how our Prime Minister made a mistake let me use an analogy that I emphasise is based on illustrative fiction.

Paul Keating is prime minister in 1993 and CSL is a government owned business organisation. Keating’s ministerial colleagues appoint ALP henchmen to control the CSL board.

Four executives discover and develop a unique way to process blood plasma so saving the Broadmeadows plant from extinction. CEO Brian McNamee gets permission to reward them but no amount is stated. McNamee’s weakness is golf and he rewards them with a year’s full membership at Royal Melbourne. Keating is furious and demands his ALP henchmen on the CSL board sack McNamee. Opposition leader John Hewson seizes on the Keating mistake and becomes prime minister in the 1994 election.

That’s not what happened. What did happen was that Keating admired McNamee, floated CSL and partly thanks to McNamee over time it became Australia’s largest company. As a public company Australia Post will be among Australia’s top enterprises.