It does not appear to be a coincidence that this information came to the board’s attention late last week – just days after Farrell’s legal team issued subpoenas to various parties compelling them to give evidence and produce documents.
These documents are due to be handed over next week.
‘Even though the allegations read like an episode of Married at First Sight, they raise important governance questions that the board must answer.’
Dean Paatsch, founder of governance advisory firm Ownership Matters
Former Super Retail Group chief legal officer Rebecca Farrell (left), former company secretary Amelia Berczelly (centre) and their lawyer, Michael Harmer, are locked in a legal battle with the retailer.Credit: James Brickwood
A crucial point is Berczelly and Farrell’s allegation that Heraghty and Kelly conducted a relationship while they worked together at Super Retail.
Super Retail’s statement did not clarify the board’s understanding of what actually happened, but Heraghty’s sacking points us in a direction that does not bode well for them or the legal battle – and it could prove costly for the group.
Loading
What we can say for sure is that many questions raised by the allegations – that Super Retail wanted to sweep under the carpet – must now be answered.
This includes allegations of inappropriate use of company funds by Heraghty and Kelly to further the alleged relationship, and how the alleged relationship allegedly led to bullying claims by senior executives.
There are also alleged breaches of the Corporations Act, and a questionable board response to whistleblowers who were revealing the corporate turmoil, as well as Kelly’s role with Super Retail following her departure.
“Even though the allegations read like an episode of Married at First Sight, they raise important governance questions that the board must answer,” Dean Paatsch, founder of governance advisory firm Ownership Matters, said last year when the matter became public.
“When did the board know of [an alleged] relationship between the CEO and the head of HR? Did the head of HR return as a consultant to advise the board on the selection of the new chair, non-executive directors or otherwise after the board had received whistleblower complaints about her relationship with the CEO?”
Sally Pitkin stepped down as chair of Super Retail Group.Credit: Janie Barrett
Pitkin has stepped down as chair, but five board members, including chair Judith Swales, have been on the board while these events played out and face shareholders at the group’s annual meeting in a month.
They will now have to contemplate an end to this legal battle with Berczelly and Farrell at a price that will almost certainly compound the financial pain for investors.
Farrell and Berczelly might finally get the settlement they wanted, but it will be at a significant price. Berczelly alleges the retailer pushed her to the verge of suicide and bankruptcy as punishment for bringing to light allegations of the alleged relationship.
No financial settlement could repair this damage.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
