The Distillery: Exit the King

The Washington debacle aside, the biggest news this week has been the fresh — if partially repackaged — corruption allegations levelled at construction giant Leighton. Business commentators were quick to dissect the shadowy governance issues that reportedly go right to the top.

With the company’s share price taking a 10 per cent hammering, shareholders are looking for answers and the statements delivered yesterday are not enough, according to the commentariat. 

“Investors are calling for blood and their gaze has understandably fallen on former chief executive Wal King’s $30 million severance package,” The Australian Financial Review Chanticleer columnist Michael Smith says.

“However, there are wider implications from the Leighton case than the reputations of King, current chairman Bob Humphris, and other high-profile directors. While the global construction group will become a poster child for mishandling the complex issue of kickbacks and bribery ­payments, it is not alone. The practice of Australian companies paying kickbacks and bribes to win contracts is widespread.”

The Australian’s John Durie agrees that bribes are a common issue, but largely focuses attention on why Leighton has ended up in this position of public condemnation. It can be traced back, he explains, to the messy departure of former chief executive Wal King.

“King, whose last few years at the company saw him collect more than $100 million in cash, stayed too long and in the process the botched succession plans and created more havoc… In short, there are plenty of folk who were none too impressed with the way events unfolded at Leighton. What was once a hard-working, hard-driving, hard-drinking culture was visibly cracking and recent revelations appear to be part of the fallout.”

Fairfax’s Malcolm Maiden looks further afield in the Leighton case — and that of the recently reported RBA affair — to ask who is watching and why have they been so slow to act?

“A pattern of behaviour is emerging with ASIC. In these cases and others, including its tardy response to whistleblower information it received about serious misconduct inside the Commonwealth Bank's financial planning division, ASIC has shown itself to be a reactive agency when action was required. It tends to follow events and actions by other agencies and bodies, and it is doing so again in the case of Leighton.”

Elsewhere, the AFR’s Laura Tingle spotlights the issue of red tape for the business community, noting “the tide of red tape is not easy to turn back.” Beyond the carbon and mining taxes, the new government has a complicated challenge on its hands.

Sticking with challenges for the new government, and Fairfax’s Michael Pascoe mulls the Coalition’s zest for new infrastructure projects. But are they really new and are we risking using 20^th century ideas to tackle 21^st century transport problems? Time will tell, but the window for infrastructure stimulus is closing.

The Australian’s Adam Creighton, meanwhile, takes a different slant on the US government shutdown. Does the minimal impact on the economy of 800,000 public service jobs being furloughed show how pervasive “bullshit jobs” have become?

Back home, the AFR’s Angela Macdonald-Smith hints at the urgency for decisions to be made on CSG regulation in New South Wales, while Business Spectator’s Robert Gottliebsen discusses the wealth management roadblocks that big investment banks have run into in Australia.