A recent wave of scandals among major Australian companies has raised concerns about corporate governance and board oversight, as reported by Financial Times journalist Nic Fildes.
Over the summer, for example, Mineral Resources founder Chris Ellison was fined and forced to step down after a review found he used company resources for personal benefit, including assigning employees to work on his private boat. Ellison expressed regret, saying he was "deeply sorry" for the impact on the company's reputation. In another case, Wisetech founder Richard White stepped down following salacious reports about his romantic relationships and allegations of a "bullying culture" within the company.
University of Wollongong Professor Andy Schmulow told the FT that these cases show that some boards have "bent to the will of powerful executives" and are "too timid" in holding them accountable. He argued that Australia's governance model has enabled a “directorial class...accountable to no one.”
The scandals, which have led to sharp share price declines for Wisetech and Mineral Resources, are prompting Australian pension funds to pressure boards for stronger oversight and more attention to culture. "Australian investors are known for backing a founder or leader with a vision capable of conjuring up a success story through hard graft and determination," Fildes writes. "But boards have surely now been put on notice to take corporate governance very seriously indeed."
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