‘Extraordinary manoeuvres’: ASIC probes WiseTech over Corporations Act

The Australian Securities Investment Commission is ‘very interested’ in whether WiseTech has broken the Corporations Act after Richard White’s dramatic appointment as executive chair.

WiseTech executive chair Richard White.

The Australian Securities & Investments Commission is “very interested” in whether WiseTech has broken the Corporations Act amid Richard White’s dramatic appointment as executive chair, following “extraordinary manoeuvres at board level” and the sudden exit of four ­directors.

ASIC chair Joe Longo told Senate estimates on Thursday the regulator would act if any breach was found.

He said the company provided yet another example of the danger of things going wrong in the boardroom and the consequences of “personal misbehaviour” and “conduct that’s unattractive”.

“We’re seeing a bit of that at the moment,” Mr Longo said. “It’s really important we maintain the standards of what we expect of directors in terms of values and standards.”

But he it was still undecided whether preliminary investigations – which would exercise compulsory interview and information gathering powers – would culminate in a formal probe or enforcement action.

WiseTech’s dramatic boardroom ructions have shaved more than $9bn off the company’s market value this week, after it closed down 2.6 per cent on Thursday at a fresh six-month low of $93.99 – valuing the company at $31.43bn. Some investors and analysts see the company as undervalued at that price, despite holding concerns about its leadership strategy.

From left: WiseTech founder Richard White, former chair Richard Dammery and interim chief executive Andrew Cartledge at WiseTech Global’s investor day in December.

Jun Bei Liu, the founder and portfolio manager of WiseTech investor TenCap, said the company would not struggle to find replacements for its departed ­directors.

But she did share concerns for the future of the company and WiseTech’s failure to tell investors what would happen if Mr White left.

“One of the reasons investors love founder-led businesses is because they have the vision and they have that willingness to make things happen and he was very much like that,” she said.

“When he does go, it will be very disappointing for the business because we haven’t really seen the next generation coming through.

“He’s trying to demonstrate to investors that he’s fully back at the helm.

“On a risk-reward basis, I do think there’s more upside relative to downside given how well the company is travelling, but I am a little bit worried.”

Morningstar analyst Roy Van Keulen said WiseTech shares “now screen as undervalued” and acknowledged market concerns about Mr White’s behaviour. But Mr Van Keulen upgraded his fair value estimate for “narrow-moat” WiseTech by 10 per cent to $115 on the back of its first-half results.

“Our upgrade comes from the appointment of founder Richard White to the board as executive chairman, which reduces lingering uncertainty around chain of command, compared with the previously discussed consultant role,” he said. “As we have discussed previously, we believe White has been instrumental in many of the company’s key innovations and strategic decisions critical to the company’s success. As executive chairman, White will continue driving the company’s product and growth strategies.”

TenCap’s Ms Bei Liu is one of several investors pushing for an independent review into Mr White’s behaviour to be made public.

WiseTech Executive director and co-founder Maree Isaacs.

The review was commissioned after Mr White suddenly resigned from his role as chief executive in October following a series of sensational allegations – including that he exchanged business advice for sex. He moved into the consulting role weeks later, keeping the same salary he received while chief executive.

In November, WiseTech told investors that lawyers conducting the review into Mr White’s behaviour had so far found “no evidence” of misconduct.

But this week, WiseTech delayed the report for another month, with it now expected to be handed down in late March.

On Wednesday, independent directors Fiona Pak-Poy, Lisa Brock, Michael Malone and independent chairman Richard Dammery departed WiseTech with two days’ notice.

The company was quick to scrub their names from its website and add a bio for returned director Michael Gregg, a 16-year WiseTech board veteran and its sixth largest shareholder, with 4.7 million shares, a 1.41 per cent stake.

WiseTech is yet to update the position of Mr White, who is still a consultant reporting to the board, according to its website. The Australian Shareholders Association and governance experts have raised concerns about the board exodus. The company currently does not meet listing rule 12.7 which requires ASX300 companies to have a majority of independent board members. Its board consists of co-founder and executive director Maree Isaacs, independent non-executive director Charles Gibbon, independent non-executive director Mr Gregg and executive chair Mr White.