Harold Mitchell hit with $90,000 fine in Tennis Australia case

Harold Mitchell has been hit with a $90,000 fine for failing to discharge his director’s duties properly at Tennis Australia.

ASIC took legal action against Harold Mitchell relating to broadcast deals done by channel Seven and Tennis Australia when he was a Tennis vice-president. Picture: Stefan Postles

Businessman Harold Mitchell has been hit with a $90,000 fine for failing to discharge his director’s duties properly while on the board of Tennis Australia, as it undertook intense negotiations over television rights eight years ago.

The relatively light fine imposed by the Federal Court came after a controversial case brought by the Australian Securities Investments Commission, which was only partially successful, and drew criticism of the regulator’s “litigate first” strategy.

The court in July was critical of the ASIC case for its reliance on “various cover-up and conspiracy theories” to bring the case, dismissing most of the civil charges.

But it was found that Mr Mitchell failed to exercise his powers with a sufficient degree of care and due diligence and Federal Court Justice Jonathan Beach found he had contravened the Corporations Act while on Tennis Australia’s board.

The breaches came during high-octane negotiations about TV rights. Mr Mitchell in December 2012 forwarded to Seven Network’s Bruce McWilliam his own emails with the tennis body’s chief Steven Wood. These disclosed TA’s internal deliberations, although this was not Mr Mitchell’s aim.

That month Mr Mitchell told Mr McWilliam he had “jumped on” Mr Wood for appointing IMG Media to sell TA’s domestic broadcast rights, which again gave rise to “reasonably foreseeable” harm to TA, although this was also held not to have been Mr Mitchell’s purpose.

Mr Mitchell later told Mr McWilliam by email to hold off on sending points relating to Seven’s negotiating position to Mr Wood in advance of a planned meeting.

Justice Beach said each of the contraventions were “serious” but found they had not “materially” prejudiced the interests of TA.

Mr Mitchell was ordered to pay a pecuniary penalty of $90,000 but there was no order as to the hefty costs of the proceeding between the ASIC and Mr Mitchell.

A statement released by Mr Mitchell said he would “accept the modest fine” and dubbed the ASIC’s investigation a “fishing expedition”.

The defeat of ASIC’s primary claims drew fire from boards and legal advisers and Mr Mitchell claimed the laying of civil charges had proved to be a waste of taxpayer funds.

He claimed ASIC had “no understanding” of TV rights negotiations and was reliant on hearsay from former Tennis Australia executives and board members “with an axe to grind”.

Mr Mitchell said he co-operated throughout ASIC’s six-year investigation into the awarding to Seven West Media of the tennis television rights in 2013, for $195m from 2015 to 2019.

Mr Mitchell’s statement said he decided to not appeal as he did not want “any more taxpayer funds wasted by ASIC”.

The veteran ad man is on the board of Crown Resorts and has been permitted to remain acting as a director. But he is seen as likely to exit the casino company’s board as it fights to keep its licence.

Mr Mitchell last month acknowledged Crown’s high-powered board did not ask enough questions of management as a spate of scandals engulfed the James Packer-backed group.