Welcome to the best, worst and just downright embarrassing of Australia’s business world in 2017.
Trade of the year
While plenty of people made a fortune speculating on Bitcoin and Amazon, our trade of the year goes to Sydney-based investing guru John Hempton. Hempton took a repeated, very public position against US drug-maker Valeant Pharmaceuticals. Hempton held the position for three years while Valeant’s price continued to rise and US hedge fund figure, Bill Ackman (who was supporting Valeant) described him as “certifiably crazy”.
Valeant’s share price would eventually fall from US$257 to only US$11 — costing Ackman’s investors more than US$4 billion.
Independent report of the year
To Deloitte, for its thorough investigation of systematic fraud and misconduct in Commonwealth Bank’s treatment of insurance policy holders. Deloitte, which was paid by CBA to write the report, found that there had been no systematic issues. To which Labor MP Matt Thistlethwaite noted, “You’ve got a report based on victims, that’s arisen because the victims have been denied claims, but don’t interview anyone covered by the policies.”
The whistle was blown on CBA by the former chief medical officer of CommInsure itself, who one would have thought is fairly qualified to comment on the matter. Outgoing CBA boss, Ian Narev, labelled the report “independent and robust”.
Award recipient of the year
To the CEO of airline United, Oscar Munoz, who in March was named the US communicator of the year by PR Week. That award proved about as justified as a Rolf Harris knighthood, when barely a month later, United was embroiled in an international scandal after a doctor, David Dao, who had a valid ticket for a flight to Louisville, was forcibly dragged off a United plane.
Images of the bloodied and injured doctor quickly went viral, leading to billions of dollars being wiped off United’s share price. In United’s annual report released a few months after images of Dao being beaten and dragged of a plane were viewed by hundreds of millions of people, Munoz told shareholders that the Airline “continues to find new and better ways to service [customers] and make them more comfortable on our airline”.
Tweet of the year
To Carter Wilkinson, the US teenager who asked Wendy’s, by tweet, how many retweets would be required to get a year’s worth of chicken nuggets. Anyway, 3.8 million tweets later (a world record), including retweets by Microsoft and Google, and Carter got his free year’s supply of nuggets.
Donation of the year
To Origin Energy, who, under former CEO (and now head of the Business Council), Grant King, set up a charitable foundation in 2010 with a $50 million grant. The struggling energy company noted that the grant would generously pay for two scholarships a year for Indigenous students to attend UNSW. No doubt the grant is a worthy gesture, but what is perhaps less worthy was Origin’s decision to name the grant the Grant King Indigenous Scholarship.
King commented that “It’s quite humbling that the foundation has decided to add these scholarships to its program.” Origin shareholders of course are quite used to be humbled by King, who, as Origin’s former CEO, lost billions after a foolhardy investment in overpriced Queensland shale oil projects.
Chairperson of the year (good)
It’s rare you see a chairperson take any action to curb executive largesse so credit must be given to CBA chairperson, the Lady of Steel, Catherine Livingstone. After the CBA money-laundering scandal (which came hot on the heels of CBA’s insurance scandal and CBA’s financial-planning scandal), Livingstone not only took an axe to CEO Ian Narev, but also smashed the CBA executive team’s generous bonuses.
Chairperson of the year (bad)
To Australia Post chairman and former Telstra CEO John Stanhope. Poor old Stanhope had the unenviable task of dealing with Ahmed Fahour’s legacy. Fahour’s legendary ego is as hefty as his bank balance, which increased considerably this year. After everyone from the Prime Minister down criticised Fahour’s $5.6 million annual salary, the former investment banker resigned in a huff, only to be paid a further $4 million in bonuses.
When questioned on the generosity of Fahour’s parting gift, Stanhope quickly passed the buck to former AusPost chairman David Mortimer, who agreed to Fahour’s original contract, noting “back when the contract for the former CEO was entered into, before my time, community expectations were different. And contracts were very different.”
But the AFR revealed that the AusPost board renegotiated Fahour’s contract in 2014, which allowed for his world beating salary. Moreover, the 2016 AusPost annual report very clearly noted that the board had “absolute discretion” of long-term incentives (of which, Ahmed collected more than $4 million).
The ‘we thought it was bad then but it’s even worse now’ award
Back in Crikey’s 2013 business awards, we noted: “British IT expert James Howells, who inadvertently threw out a hard drive that contained almost $8 million worth of bitcoins. Howells mined the bitcoins in 2009 (when they were virtually worthless), and their price increased during that time from $20 to more than $1000 this year (the current price is around US$900).”
Howell’s error has been compounded by Bitcoin’s staggering price rise this year. The value of bitcoin today? Almost US$18,000. That means Howell’s accidental hard drive disposal cost him almost $150 million.
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