Stokes breaks silence on Seven’s sex scandal

Kerry Stokes has broken his silence on Amber Harrison to defend Seven West’s corporate governance record.

Seven Network chairman Kerry Stokes with CEO Tim Worner. Picture: John Feder/The Australian.

Seven West Media chairman Kerry Stokes has emphatically backed his embattled chief executive Tim Worner, and defended the company’s corporate governance record, in a tense call with media this morning.

The media mogul this morning broke his silence on the alleged sex and drug scandal that has engulfed Mr Worner, saying that of the company’s 24,256 shareholders, just five had written or called him to complain about the affair.

“We are 24,256 shareholders and I’ve had four letters and one phone call. I think most of our shareholders see it for what it is and they accept that the board is taking appropriate action,” Mr Stokes said on a call with media after Seven revealed its financial results this morning.

“The matter relating to Tim Worner with Amber Harrison has been the subject of an independent investigation and various releases by the company which we stand behind.

“Tim Worner himself continues to enjoy the full confidence of the board as our CEO because he is doing an outstanding job.”

Mr Stokes revealed that Mr Worner had been completely isolated from any discussions or reviews into his affair with former Seven executive assistant Amber Harrison, which occurred between 2012 and 2014.

“First of all the matter is two-and-a-half years old. At the time it arose I said to Mr Worner he must have nothing whatsoever to do with this issue. He has been totally isolated form this activity since that point in time.

“That’s why he has been able to focus on what he has done, and done so very successfully. I’m very proud of where he has taken Seven in the last couple of years under his direction and the strategies he has employed. At the end of the day it has been stressful for him and his family, of course it has, and we recognise that and appreciate a great deal the diligence he has put in in the circumstances.”

Mr Worner also addressed his tryst with Ms Harrison, again apologising and saying he did not want to give any more oxygen to the issue.

“It was very poor judgement what I did, something that I continue to regret and attempt to repair. It’s hurt a lot of innocent people but as I said … I apologised at the time and again in December. I am very much owning my decision and for us we need to get on with the transformation of Seven West Media,” he said.

Mr Stokes would not be drawn on whether Mr Worner ever attempted to resign over the affair, but said “he offered to do whatever was in the best interest of the company.”

“The board was resolved at the time that the best interests of the company was for Mr Worner to stay,” Mr Stokes said.

Mr Stokes lost his cool only once during the call, when he was asked if Seven’s recently departed board member Sheila McGregor was instructed by the chairman or board not to comment on the reasons for her sudden resignation. Ms McGregor resigned from Seven West Media board the same day it received an independent review from law firm Allens that found allegations of misconduct against Mr Worner - including alleged drug-taking on company time, unauthorised credit­ card expenditure and claims management tried to sil­ence Ms Harrison to protect the Seven boss - could not be substantiated.

“That’s outrageous. Are you seriously suggesting I or my board could tell a director what they can or can’t do? How dare you,” Mr Stokes said.

“The facts are that Sheila McGregor is a very forthright person who will make comments she deems appropriate when she thinks their appropriate. Thank you.”

“The reason for Sheila’s resignation remains between her and I, and I respect her enough to let her enough to answer herself the reasons why she resigned.”

Mr Stokes and Mr Worner said the circumstances that led to Seven’s CEO having an affair with Ms Harrison were not signs of a rotten culture within the organisation and that the board would trigger no further reviews into the corporate governance of the company.

“There is no governance issue. The facts are that this is something that happened two-and-half years ago. There have been no governance issues, just disputes on her part,” Mr Stokes said.

“The board will have no further inquiries. We are disappointed that we were forced to make such a serious investigation into such irrelevant allegations, which had no substance at all.”

Mr Worner defended the culture of Seven, saying the company could not achieve its results with a culture that was “no good”.

“There would at least have to be some boxes ticked in terms of our culture to actually perform to the level that we do. Can we have a better culture? Absolutely. Is that something that we are focused on going forward? Absolutely,” he said.

Mr Stokes also addressed ongoing issues within the company, including the unfolding embezzlement case against Seven’s former commercial director of programming, John Fitzgerald.

Mr Fitzgerald had assets, totalling more than $1 million, frozen in April last year after admitting to falsifying invoices.

Another case is also unfolding in Seven’s Los Angeles office, where an internal investigation has been conducted over financial irregularities discovered at the outpost.

“I can assure you that I watch the till. The facts of the matter are, is that if we didn’t have these actions you would be concerned,” Mr Stokes said.

“We have had some changes in systems and some new approaches that caught some of these issues. I think shareholders should be satisfied that we are on top of it all.”

Seven chief financial officer Warwick Lynch said increases in internal audit resources, reviews and improved systems controls put in place over the last few years had helped alert the company to fraudulent activity.