“ A jury's
guilty decision this week of former Primary Health Care boss Peter Gregg in his criminal case has raised questions over the judgment of the healthcare company's board – including four current directors.
On Tuesday Mr Gregg was found guilty of falsifying the books while he was chief financial officer at Leighton Holdings in 2011. He is now staring at a possible prison sentence and/or fines.
The corporate regulator's investigation into Mr Gregg began in 2014 and was known by the Primary board, which was led by then chairman Rob Ferguson. Mr Gregg was hired as Primary chief executive in 2015.
Former Leighton Holdings executive Peter Gregg was found guilty by a jury of falsifying the books. Peter Braig
Mr Ferguson stepped aside earlier this year from Primary,
now called Healius, but new chairman Robert Hubbard and current non-executive directors Arlene Tansey, Dr Errol Katz and Dr Paul Jones were all part of the board that conducted due diligence on Mr Gregg and gave him the green light to the top job.
The case at minimum should generate discussion about the role of risk management and compliance in Australian boardrooms.
The biggest question outstanding is, why was he considered for the role in the first place with a pending criminal investigation, especially when there were other possible CEO candidates?
John Price, commissioner of the Australian Securities and Investments Commission, which brought the charges against Mr Gregg, said the jury's decision was "a significant win" for the regulator, and breaches are "matters that go to the heart of being able to have trust and confidence in business".
Cosy relationshipThe board's number one job is selecting the CEO. It is the most important job of a board, picking who will be the trusted person to run a public company and set the strategy.
Questions must also be raised about the hiring of current Healius chief financial officer Mal Ashcroft, who previously acted as interim CEO of Primary before Malcolm Parmenter joined the group.
The Australian Financial Review is not accusing Mr Ashcroft of any wrongdoing, but there is something to be said about the very cosy relationship with Mr Gregg that dates back years and talks to the tightly held executive positions which are offered to very few around corporate Australia.
Mr Ashcroft was a senior member of the KPMG audit team of Leighton. He was a partner at the firm and KPMG signed off the December 2011 accounts in question, when he was part of this team.
Mr Ashcroft, with Tony Young, was identified by name at the Leighton AGM in 2012 by the chairman as the "current external auditor".
Mr Ashcroft then joined Leighton as acting deputy CFO in 2013, working with Mr Gregg. He followed Mr Gregg to Primary as CFO in July 2016.
This is a little too close for comfort, and raises issues about how an auditor can join an audit client. It also raises questions about the independence of the audit that was conducted before their departure.
Primary/Healius did not respond to a series of questions by the time of publication.”
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