The corporate world is indeed a jungle with its own ecosystems. The predators in it use at least as many tactics to catch their prey as nature provides, including camouflage and the strategy of scanning the herd for perceived weaker members who make easy targets.
One of the functions of a Board of Directors, perhaps its most important function, is to provide the company with that Sixth sense that can warn Management when danger is approaching. This is in part why grey hair and membership of the right clubs is an indispensable asset sometimes.
To put that another way, the old bull, or the old mother for that matter, has seen it all before. The highly complex merger and acquisition proposals that sound too good to be true. The fast talking fascinator that ensnares management in consultant driven "business transformation". The almost but maybe not quite perfectly legal deal that relies on a questionable legal "opinion". The foreigner who comes to Management with tales about his golden overseas connections. It is the function of the leaders of the herd to sniff out these predators and take action, directing the herds path away from the predator.
Now little Sunfish learned about this the hard way but lived to tell the tale. I spent $15,000 of good money on a worthless consulting assignment called a database scam, Thirty years later I saved our company $100,000 when someone tried the same scam on one of our hapless managers. I learned that when you invite a merchant banker to find companies you might want to acquire, that the first thing he does behind your back is evaluate
you as prey for a larger animal. I learned that some so called "reputable" institutions aren't. I found that dealing with an honest but tough guy like Joe Gutnick was delightful. I watched a company spend Two million dollars on developing a system specification for someone who told them he was related to the President of Indonesia. I watched a State Government barely avoid giving a million dollar grant to a Turkish "businessman" with fake credentials. I learned that there are plenty of Hyenas and snake oil salesmen out there, and that most of them are beautifully dressed, softly spoken folk who will even laugh at my bad jokes. To this day, I will not deal with, invest in or have any connections with any business associated with a certain merchant bank because one of their teams of lying, thieving, dishonest Hyenas once caused me to lose a lot of sleep.
To put that another way, i learned to check if people were kosher, if I couldn't find out, I asked my Board of Directors to find out for me.
The question I have is what were the Board of Qantas thinking at the time of the APA bid? Didn't they do any due diligence at all? My old Board of Directors would probably have fired me for merely talking to the likes of Allco.
FORMER Allco directors David Coe and Gordon Fell will return to the witness box next week to face another round of questioning over the events leading up to the $1.1 billion collapse of the financial services company.
The focus of the interrogation in the Federal Court in Sydney is likely to be the controversial 2007 Rubicon deal.
Allco collapsed in late 2008. A consortium of banks owed about $660 million appointed Ferrier Hodgson as receiver and manager.
Last year an initial round of questioning yielded information on the inner workings of Allco in the lead-up to its collapse.
Others that had been expected to be questioned -- David Clarke, Michael Stefanovski and Thomas Lennox -- were yesterday excused from further attendance.
The second round of questioning will start next Thursday, when Dr Fell will be examined. He will be followed by Mr Coe.
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The Australian Securities & Investments Commission obtained documents from Rubicon Asset Management, now in liquidation, which it also gave to Ferrier Hodgson, as a result of Federal Court orders.
The Rubicon transaction was not covered in detail during last year's examinations, although it was revealed Allco deputy chairman Bob Mansfield had queried whether Rubicon was "a pile of ****". The Rubicon deal resulted in three of its shareholders sharing in $63m cash and $132m worth of Allco stock.
Two of those shareholders, Mr Coe and Dr Fell, were also directors of Allco. Dr Fell owned 45 per cent of Rubicon.
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The Rubicon deal angered shareholders and came at a time when the Allco share price was suffering. It was later renegotiated before proceeding.
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This would "make the investors rabid" Mr Stefanovski wrote, and the company would end up "smack bang in the middle of a perfect storm into an uncontrollable meltdown scenario".
About 100 unsecured creditors received just 1c in the dollar.
Allco's David Coe and Gordon Fell face new questions in court | The Australian