Flight of fancy’s hard landing for Victorian Governor Linda Dessau; Loans turn sour for Magellan Financial staff

Victorian Governor Linda Dessau and partner Tony Howard lay a wreath to honour Queen Elizabeth II. Picture: Ian Currie

We’re hearing a lot of travellers were unhappy that Victorian Governor Linda Dessau somehow got lost between the Qantas chairman’s lounge and the boarding gate at Melbourne Airport on Wednesday, delaying the flight by almost 30 minutes.

About 200-odd passengers were left smouldering by the inconvenience and watched on, aghast, as Dessau shouldered her way to the front of the queue for the flight to Canberra, having been granted a request to board first by Qantas management.

Why this was even necessary completely evades us. Business class passengers are already given priority boarding.

As to the aggravating factor of Dessau’s late arrival, the notion that she was led astray en route to the gate – as suggested to Margin Call on Wednesday – sounds a little dubious, although we concede it’s amusing.

Consider that she was accompanied by two staff members and an airport worker who’d somehow been co-opted to carry her garment bag. Were they all bamboozled by the uncomplicated signage? It’s absurd.

We’ve been to Melbourne airport on a number of occasions. It’s not an engineering marvel. It’s not even close to Heathrow or the labyrinthine Charles de Gaulle with its network of train shuttles and sub-designations.

The choices are to turn left or to turn right, a task comparable in complexity to the single-track drudgery of Ikea shopping; to become lost, in either setting, is an achievement.

Excruciating as it might have been to witness, Dessau, unperturbed by the fuss, still boarded the flight ahead of everyone else. Exactly why Qantas management didn’t just let everyone onto the plane is stupid enough; their own staff were visibly appalled by the fiasco.

The airline couldn’t tell us why all of this pageantry was necessary but the Governor’s office disputed the claim there had been some tarrying in the chairman’s lounge.

In one of the most curiously worded statements we have ever been provided, a spokesman said: “Neither the Governor or her staff requested or expected any passengers to be delayed from boarding the flight. There was no delay in the Governor and her party leaving the lounge when requested to make their way to the gate.”

In any case, the resulting intermezzo saw hundreds of passengers file past seat 2D knowing that its bejewelled occupant was the cause of their disruption.

Fortunately for Dessau, many of them believed she was a federal politician, owing to scuttlebutt disseminated earlier at the gate lounge. “And then no one recognised who it was,” one told Margin Call.

On Friday afternoon, the Governor’s office provided a second statement to Margin Call.

“The Governor has never and would never want, ask or expect passengers to be held back for her to board a flight before her and her party,” it said. “During her almost eight years in office, the Governor has taken dozens of flights and this has never been expected or requested, and to our knowledge has never happened before.

“After being asked to remain in the lounge for a period longer due to the flight being delayed, the party was collected and escorted to the wrong departure gate, after which they were subsequently escorted to the correct departure gate. The Governor did not know that, in the meantime, waiting passengers had apparently been kept from boarding. Had she known this, she would have insisted that the boarding process commence as normal.”

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Indentured labour

What a poisoned chalice the share purchase plan at the Hamish McLennan-chaired Magellan Financial Group has turned out to be, with the steep decline in the group’s share price putting hundreds of employees underwater on loans that still need to be repaid.

Despite suspending and then re-engineering the controversial SPP earlier this year, the MFG annual report reveals the extent to which the incentive plan has gone awry and who has been left carrying the can.

Magellan Financial chairman Hamish McLennan. Picture: Britta Campion

As of June 30, MFG had $33.5m in loans outstanding to staff against shares that at balance date were worth $17.8m, when MFG shares were trading at a paltry $12.92. Twelve months earlier the share price was holding around $53.86, with the share plan worth $64.4m.

The scheme itself was introduced by Hamish Douglass, the company’s former chair-turned-consultant. It was intended, apparently, to tether its employees’ interests to those of its shareholders, but what’s transpired has been a death spiral of uncrystallised losses which are only growing in magnitude as MFG shares continue their slide.

Usually, companies provide non-recourse loans to staff so they can buy the shares, providing substantial wriggle room in cases where the share price falls well below that of their purchase. But MFG’s full-recourse loans come with all the strings and caveats, meaning they have to be paid back in full regardless of which way the share price goes – in this case towards the earth’s core.

Former chief executive Brett Cairns, who left abruptly last year for “personal reasons’’, is down roughly $358,000 on his SPP loan of about $4m.

Board chair McLennan is down $75,000, while non-executive directors John Eales and Colette Garnsey are short $142,000 and $180,000, respectively.

Given the drop in MFG shares, the board suspended the SPP in February and then tweaked its terms one month later because its participants had been so thoroughly done over.

The loans have since been extended by five years, staff are no longer required to make repayments from cash bonuses, and repayments are voluntary. But that’s where the generosity seems to end.

“All SPP loans remain on foot and are required to be repaid,” the annual report reminds staff.

We can’t imagine morale is all that healthy at Magellan, given staff are basically stuck at the firm – to leave would be to realise an enormous financial loss. To stay, while funds under management are haemorrhaging, is to effectively remain exploited.

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Unfortunate timing

Nothing to see over at gambling powerhouse Entain, where the meetings with institutional investors have been taking place all week.

According to the company these have been led by its Australian CEO, Dean Shannon, and Entain’s global head of investor relations, David Lloyd-Seed.

The timing isn’t ideal, of course. It’s not easy to shore up investors one week after the nation’s financial intelligence agency, Austrac, announced a compliance investigation into one’s operations.

And that was revealed mere weeks after the UK Gambling Commission handed a $29m fine to Entain for anti-money laundering and social responsibility failures.

Margin Call understands the investor meetings were held with AustralianSuper and Airlie Funds Management, among others, although these were described by an official as standard engagements. It’s unclear if Shannon attended each of these briefings; we’re told he didn’t, but the company disputed that.

We’re also hearing that there was some assuaging of investor anxiety over the Austrac matter during these sessions. Nothing to worry about, no big deal; that sort of thing.

Perhaps a little premature but, to be fair, it’s not such an outlandish take on the financial watchdog given Austrac’s past ineptitude with its audit of The Star casino, back in 2017, and its woefully skewed enforcement action, most recently in relation to National Australia Bank.