Corporate Australia has not grown an ethical spine


Every serious listed company now has a board risk committee that deals with all major financial and non-financial risks, from behaviour of management and staff to related party transactions and climate.

It is arguable executives could have gotten away with their indiscretions twenty years ago.

Last week’s Four Corners expose on Canberra’s ethical free-for-all shone a harsh light on the what goes on between politicians and their staffers in what has become known as the Canberra bubble.

The relationship at the centre of that program was between two consenting adults, and took place before the introduction of the infamous “bonk ban” preventing ministers having sexual relationships with anyone on their team.

And yet the public broadcaster’s flagship current affairs program considered it in the public interest. Thus the nature of the game has changed.

Former prime minister Malcolm Turnbull correctly likened Canberra’s highly charged culture to corporate Australia forty years ago – a time when he worked as an investment banker.

The difference is that corporations have become accountable to their large institutional shareholders, who in turn are accountable to the people whose money they invest.

Behaviour has become a part of the social licence under which businesses now have to operate.

Shareholders are not concerned about whether these behaviours constitute a breach of an official corporate policy about relationships in the workplace. Many companies including Nine had not enshrined workplace relationships into official corporate policy.

It is hard to understand why those who have reached the top echelons of corporate Australia need a set of rules to alert them to the perils of mixing work and romance, but we have reached a point where the rules, as inconsistent as they are, are lagging behind the standards demanded by investors and the public.

You don’t have to break the rules to break the trust.

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The AMP was savaged by its shareholders earlier this year after one of its most senior executives, Boe Pahari, was the subject of a sexual harassment claim from a more junior staffer. Another of AMP’s divisional head’s Alex Wade made a swifrt exit after he allegedly sent a female employee explicit photos.

Pahari was ultimately demoted and the episode led to the resignation of AMP chairman, David Murray and senior director John Fraser over their handling of the scandal.

Insurance giant QBE avoided a similar fate by when its chief executive Pat Regan quickly left after he allegedly breached the company’s internal code of conduct while corresponding to a female employee.

QBE chairman Mike Wilkins had previously been a director (and for a short time chairman) of AMP in the months before its harassment scandals were unearthed.

In 2017 Wilkins had docked the pay of Regan’s predecessor, John Neal, for not disclosing a romantic relationship with his executive assistant.

It is arguable that all these executives could have gotten away with their indiscretions twenty years ago.

In 2016 Seven West Media’s chief executive, Tim Worner, was the subject of a complaint by former lover Amber Harrison. It was a sordid media sensation fuelled by allegations from each side of everything from drugs to misuse of corporate credit card expenses.

He survived the episode thanks to the tutelage of Kerry Stokes who ultimately controls the media group. Worner departed several years later in response to the company’s poor financial performance.

Despite the heightened focus on the conduct of executives, affairs and sexual harassment will be impossible to eradicate entirely.

But if it comes to light, the consequences will only get harsher.

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Gladys Berejiklian has governed well but she failed an ethical test


If any other Australian leader had given the sort of evidence Gladys Berejiklian did to the Independent Commission Against Corruption on Monday, they’d probably have been out of their position by the end of the day.

The NSW Premier was protected, in the immediate term, in part because the disclosures about her five-year secret relationship with disgraced former Liberal MP Daryl Maguire seemed so bizarrely out of character with her unsullied past and apparent conservatism in her private life.

Also, she has been a highly competent Premier, especially during COVID. The pandemic fireproofed her.

Her political performance this year is certainly one reason why the Prime Minister is standing with her. As Scott Morrison has said repeatedly, NSW has set the “gold standard” during the coronavirus crisis.

But Berejiklian’s personal and political reputation should not obscure the seriousness of her actions, or rather her inactions, in relation to Maguire.

She didn’t just make a bad judgement about a sub-optimal boyfriend which can be written off as having “stuffed up” her personal life. She made a series of decisions that were inappropriate.

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NSW Premier admits she had a close personal relationship with Daryl Maguire

Secrets from colleagues

When in 2015 she changed the nature of her relationship with the then member for Wagga Wagga from friendship to a “close personal” one, she failed to disclose this to colleagues.

Her supporters say her private life was no one else’s business. If her relationship had been with the plumber down the street who was unconnected with government, that would be absolutely correct. It’s another matter when those involved are a senior minister, who then became premier, and one of her party’s MPs.

The Premier could affect the fortunes of the MP; the MP could use the relationship, even if undeclared, to further his own interests by suggesting he could deliver access.

As Berejiklian has said, there is nothing wrong per se with two Members of Parliament having a personal relationship. But, given the position of one of them, in this case it should have been put on the record — at least to cabinet colleagues.

When Maguire fell foul of ICAC in 2018, Berejiklian should have belatedly admitted to the relationship, informing senior colleagues, so there would be no time bombs. Certainly she should have broken off the connection with Maguire immediately, rather than continue it until this year, when he was back in ICAC’s sights.

Most compromising however, is the material captured by phone taps of Maguire’s conversations with Berejiklian.

Maguire told her of his lobbying for developers. The activities referred to might not have been illegal — Berejiklian makes the point MPs are allowed to engage in business — but for any premier they would be very uncomfortable.

Berejiklian certainly seemed uncomfortable and on two occasions said “I don’t need to know”.

She explains her apparent dismissiveness of what Maguire was saying as boredom with his big-noting. It sounded, however, more like she did not want him to give her information she preferred not to receive. She had a deaf ear to clues she should have picked up.

Imagine the reaction if Morrison had given such evidence, or been embarrassed by such tapes. People would not be looking for reasons to excuse him.

The line that everyone makes mistakes in their private life — “people have all made personal decisions I’m sure they regret, that’s human,” Morrison says — won’t wash.

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Daryl Maguire says he discussed his debts with Gladys Berejiklian

Is she being given a softer run?

Berejiklian can be forgiven for initially being taken in by Maguire. But persisting with the relationship after he was found out is surely harder, if not impossible, to justify, regardless of her explanation he was in a “very dark place”. After all, she removed him from the Liberal party and pushed for his resignation from Parliament in 2018.

To maintain that different, tougher standards are applied to women leaders may often be true, but it doesn’t fit this instance. If anything she is being given a softer run.

Morrison has said “it would be a bit of a numpty of a decision” to replace her.

Former prime minister Malcolm Turnbull praised her integrity and also said, “Her leadership of this state has been tried and tested in the toughest circumstances this year, from the bushfires to now the pandemic and she has excelled.” And, he pointed out, “Let’s be frank — leaders of her calibre are not easily found.”

If the point is that the alternatives on offer — and it is not clear who would become leader if she went — wouldn’t do as good a job, that might be a valid argument on strictly utilitarian grounds (although if she survives, this scandal will make it much more difficult for her to govern effectively).

When you compare the way the NSW and Victorian Governments have handled the pandemic, NSW has been way ahead (the Ruby Princess debacle notwithstanding).

Yes, she would be hard to replace. But this should not be confused with a clear-eyed view about the ethical shortcomings in her behaviour over Maguire.

Trust has risen, but will it last?

In recent decades we’ve seen declining trust in political institutions. The pandemic has led people to reattach to these institutions and all Australian leaders — Morrison and the premiers — saw their ratings rise.

What we don’t yet know is whether trust in general will again plummet when the pandemic subsides.

If politicians seem to be holding their noses when there’s the whiff of impropriety or corruption in the air, they are trifling with the public’s trust in them and in the political system. They are treating the electorate with disdain.

The ICAC hearings this week have reinforced the case for a federal integrity body. But the reactions of Liberal politicians show why they want it to be relatively toothless.

It is not being suggested Berejiklian, whose leadership hangs by a thread, has personally engaged in wrongdoing; her appearance at ICAC was as a witness in an investigation into Maguire’s alleged wrongdoing.

But on what we have heard this week, she has fallen short of the standards that should be expected of a premier. Federal and state colleagues who are defending her are being tribal or expedient or both.

Michelle Grattan is a professorial fellow at the University of Canberra and chief political correspondent at The Conversation, where this article first appeared.



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Liberman family ethical fund in property row


Ms Liberman is part of a family regarded as one of Australia’s richest clans. Impact, which invests in range of sectors including green buildings, social housing, renewable energy, is currently seeking backing for a new $70 million impact investment fund.

Despite its admirable ideals Impact has sometimes run into criticism. Roy Morgan Research owner Gary Morgan accused the group of acting unethically in 2015, when it evicted the pollster from its Collins Street office in the week before Christmas over unpaid rents. The dispute was later resolved between the parties.

In the Central Park office tower case, the investors put in millions to fund the development of the green office tower and allege the agreement included a future ownership stake through an equity raising. However, the building was sold ahead of schedule after it secured a top tier tenant, the University of Technology Sydney. Superannuation fund MTAA purchased the building for $70 million in 2018.

Artist’s impression of the Impact building, Duo, in Central Park, Chippendale

“Impact Investment Group on its own behalf and on behalf of IFM dishonestly stated that the reason for the decision to not proceed with the transactions contemplated by the funding agreements was “due to receiving, over the past months, a number of compelling unsolicited offers from third parties to purchase the property” when, in fact, IIG and IFM had solicited offers from third parties through Capital Transactions Australia and Colliers, alternatively CBRE,” court documents allege.

Impact said in its defence that the contract between the investors made it clear it was a loan arrangement that gave it the choice of returning the deposit or granting the investors equity in the project, through an equity raising.

“This is a contractual dispute about a guaranteed loan that paid back the lenders in full, with a 23 per cent return on top. That’s a great return but they want more than that. They want more than was in the contract they signed,” Mr Madhavan explained.

“We have maintained the same position throughout, and that won’t change whether these lenders settle, or proceed to court.”

The investors declined to comment.

The case continues.



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Q&A: A new frontier for ethical pet food


This week we chat to Diana Scott, founder of Frontier Pets, a business
that sells ethically-produced pet foods. Starting out in 2017 with 85 customers,
Diana now has more than 8000, but a successful business is not her only goal –
Diana is on a mission to put an end to factory farming.

ISB: What inspired you to take on the pet food market with Frontier
Pets?

DS: My personal and business vision is to end factory farming. I
realised that the pet food industry actually props up factory farming by using
the off-cuts of industrialised animals. The pet food industry is worth $8
billion in Australia alone…that’s lots of factory-farmed animals. Frontier Pets
uses only 100 per cent high-welfare ingredients including free-range meat and
offal, eggs and organic fruit & veg.

ISB: What was the biggest challenge you faced in getting the enterprise
off the ground?

DS: The biggest challenge was developing the “process”. I have not been
in manufacturing in the past, so this was all new to me. I started by
contracting a vet/animal nutritionist to develop the recipe, so that it was not
just an ethical brand, but a biologically appropriate one as well. Then I
developed a business case around my requirements and worked my way to the end
production goal.

ISB: How did your experience working advertising agencies help in
growing the brand?

DS: My background is in marketing and advertising so I understand how to
get the right message to the right people. I contracted a video producer to
create video content for me (which I used to launch the brand) and then
garnered support from pet industry experts. I did seek the expertise of social
media experts as this is not my strength. Social media now makes up most of my marketing
spend.

ISB: I understand ethical farming is very important to you – please tell
us why, and how that manifests itself in your day-to-day operations.

DS: I cannot abide the thought of animals being kept in cramped conditions and living their very short lives in absolute misery. Factory-farmed animals are pumped full of growth hormones and antibiotics. It’s not just cruel to the animal, the whole process contributes to the destruction of the environment. We have notices throughout our two buildings that say end factory farming. Everyone knows that is why we are here and there is no compromise on the product we buy. Every few weeks I also add up our financial contribution to ethical farming and publish it.

ISB: What is your vision for the venture in the next couple of years?

DS: Our target is to contribute $2.5 million toward
ethical farming in this financial year. Double that for FY 21/22 and double it again
for FY 22/23. We’re also in conversations with like-minded organisations in
Australia and around the world, looking for ways we can change labelling laws –
so that people know exactly what they’re buying – and “converting” factory farmers
into free-range farmers. That is our big dream.

ISB: Finally, what is the number one lesson you’ve learnt on this
journey you’d share with others looking to start their own business?

DS: When I completed my business case I figured it would cost me $50,000
and three months to pull it off. It took three years, all of my superannuation
and my house – about $700,000 in total. The passion and desire I had to do this
blinded me to the reality of the sheer amount of work and money that I had to
put into its success. I don’t regret it at all, but with hindsight I would have
sought more industry expertise.





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Oxford University coronavirus vaccine has ‘ethical concerns’, Sydney Archbishops warn followers


The Federal Government has reassured religious communities there are no “ethical concerns” surrounding the coronavirus vaccine it has struck a deal to purchase 25 million doses of.

On Thursday, three of Australia’s most senior archbishops wrote to Prime Minister Scott Morrison, criticising the vaccine being developed at Oxford University, which they said made use of “a cell line cultured from an electively aborted human foetus”.

The vaccine, which is considered among the frontrunners in the global race to combat COVID-19, has been developed from a kidney cell line (HEK-293) taken from an aborted foetus, a common practice in medical research.

The Australian Government last week signed an agreement with UK-based drug company AstraZeneca to secure 25 million doses of the potential COVID-19 vaccine if it clears trials.

In a letter signed by Anglican Archbishop Glenn Davies, Catholic Archbishop of Sydney Anthony Fisher and Greek Orthodox Archdiocese of Australia Archbishop Makarios, the Prime Minister was urged to reconsider the deal.

The archbishops said they supported a COVID-19 vaccine in principle but harvesting “foetal tissue was deeply immoral”.

While they did not explicitly call for a boycott of the vaccine, they said members of their congregations might consider their “individual conscience” and refuse a vaccine even if no other alternative was available to them.

Archbishop Fisher also wrote on Facebook that the Oxford University vaccine created an “ethical dilemma”.

Deputy Chief Health Officer Nick Coatsworth has moved to ease moral concerns.

“I think we can have every faith that the way they have manufactured the vaccine has been against the highest of ethical standards internationally,” he said.

Shadow Federal Treasurer Jim Chalmers said people were “jumping the gun”, as the vaccine was still in the trial stage.

“My personal view is if and when a vaccine is available and its rolled out, then as many people as possible should get vaccinated,” he told the ABC.

“I say that as a Catholic that that’s the best outcome for Australia because the vaccine is really what will get us to the other side.”

Nobel laureate and immunologist Peter Doherty said in his view, the process was ethical.

“It’s an established cell line being used in lots of applications,” he said.

Mr Morrison has previously said the Government is not confining its search for a vaccine to just the Oxford University candidate.

Professor Colin Pouton, from the Monash Institute of Pharmaceutical Sciences, said the HEK-293 cell was regularly used in medical research “to make viral vector products” because there are advantages to using mammalian cells.

“They’re using the cell line as a packaging system to make the virus,” he said.

“It’s a cell line you can use to produce proteins or produce viral products.”

Professor Pouton said the cell line was developed decades ago and had been widely used around the world.

“It’s not like people are using a new cell line,” he said.

“It’s already there, so in many respects the ethical issue is in history.”

Other vaccines in Australia use the “human diploid cell lines” of WI-38 and MRC-5, which are originally derived from human foetal tissue.

These include the rubella, hepatitis A and rabies vaccines among others.

AstraZeneca was approached for comment.



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