QF Executive Jailed

[rammel]

http://business.theage.com.au/jail-for-qantas-executive/20080509-2ci6.html

If QF has admitted to price fixing, it seems this guy is a fall guy. If the probe is being conducted into so many different airlines all over the world, it doesn't seem to me that one person could be responsible for it all.

The people senior to him would have had to know, seeing it seems to be such a large scheme. At the very least I think it should be the head of QF Freight in jail. GD and co may say they didn't know what was happening, but it seems too convienient that he knows and takes credit for all the good things. But runs a mile from the bad saying I didn't know.

With the APA buyout, this and other things, it seems that money making is the first order of business for GD and QF. And they're not too concerned about how they make it, so long as they don't get caught.

[Capt Wally]

Look large corporations would never be as large if there wasn't some sort of 'shifty' business being conducted along the way. You don't get rich by earning just wages & not flouting the laws along the way! We`workers ALL know that! All too often we hear of some large Co. being targeted for being disshonest. The likes of GD always have 'fall' guys somewhere down the chain, a 'link' in that chain to the top that's 'weak' & breakable/expendable! Welcome to the world of commecial business!
QF are just another shifty Co. they ain't too special!
Personal opinion only of course:)

CW

[wanty]

Pity it ain't GD heading to jail and getting ready to bend down and hold his

ankles.

[QFinsider]

There are always gross error checks...Why not with respect to earnings from a particular arm of the business?.After all the exeuctive sign off on the accounts as do the auditors representing a "true and fair picture" of the standing of the business....

[Datum]

The extraordinarily poor corporate culture manifested and promoted by senior QF management is largely responsible for this debacle.:yuk:

Profit is king!! In general, managers are far too focused on the short term and in some cases their self focused greed driven desires have resulted in illegal activity.

If this situation was treated as an aircraft accident or incident and comprehensively investigated by both internal and external agencies, it would be highly likely that 'cultural issues' would be identified as a significant causal factor!!

Corporate culture is driven from the top down. Corporate management are responsible for this, just as much if not more than any individual within the freight division. Significantly, it will take siginificant personnel changeover and much time to positively alter the current culture at QF..

[Short_Circuit]

Corporate Greed

No good will come of this! :=

[blow.n.gasket]

What ever happened to the Fiduciary duty of a Company Director?
Saying you were not aware is just not good enough!

[max autobrakes]

FIDUCIARY DUTY - An obligation to act in the best interest of another party. For instance, a corporation's board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust's beneficiaries.


Of course, the mere fact that a business relationship comes into being between two persons does not mean that either owes a fiduciary obligation to the other. If one person engages or employs another and thereafter directs or supervises or approves his actions, the person so employed is not a fiduciary. Rather, as previously stated, it is only when one party reposes, and the other accepts, a special trust and confidence involving the exercise of professional expertise and discretion that a fiduciary relationship comes into being.

When one person does undertake to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter. The client is entitled to the best efforts of the fiduciary on his behalf and the fiduciary must exercise all of the skill, care and diligence at his disposal when acting on behalf of the client.

A person acting in a fiduciary capacity is required to make truthful and complete disclosures to those placing trust in him, and he is forbidden to obtain an unreasonable advantage at the latter's expense.

How much did Geoff gain to make out of the APA deal again?
No wonder he gets annoyed whenever journos start asking questions!

[Shot Nancy]

"Out there he is CEO of Qantas, in here he is just another bare bum in the shower"

Apologies to Eric Bana.

[jakethemuss]

Frozo,

What position do you think Qantas would be in now if the APA bid had gone through?

Jake




Cash and crash: how the flying kangaroo sale failed

Author: Ian Verrender
Publication: Sydney Morning Herald (44,Sat 10 May 2008)
Edition: First
Section: Business

Opinion

THEY hugged, they kissed, they smiled for the cameras.

It was a wonderful day for Qantas, Australia's national carrier, as it prepared to fly off into the bold new world of private equity ownership, and the board and management - especially the management - couldn't have been happier

For those of us observing from the sidelines, it all seemed a little odd. Aren't the board and management supposed to fight for the company, to extract the maximum possible from the bidder? After all, aren't they the employees, hired to work on behalf of the shareholders, the owners of the company?

Normally, yes. But this wasn't normal. Qantas management was being dealt into the future spoils. And the board seemed more than happy to let them go along for the ride. It all ended in tears a year ago this week, when Macquarie Bank failed to secure the minimum number of shares by the deadline.

Margaret Jackson, the chairman, quit the board, her reputation shredded, while chief executive Geoff Dixon and his management team went back to work and pretended that nothing had happened.

Jackson had made a series of blunders during the takeover. Rather than stand up for the owners - as she was employed to do - she became ever more shrill in her condemnation of those who were refusing to sell, with a final outburst that labelled those holding out as "mental".

In the past few months, as the anniversary of the collapse has drawn ever closer, the wounds have been reopened.

Jackson got it right, her supporters have claimed. The Qantas share price is now well below the takeover bid price, so shareholders would have been better off selling. Tut, tut. tut.

Wrong, wrong, wrong.

It's a convenient argument for the Margaret Jackson cheer-squad but one with more holes than a sponge.

To begin with, when the bid collapsed, Qantas's share price went through the roof. In fact, it traded well above the offer price for more than six months. And it has taken a global sharemarket meltdown, the worst credit squeeze in history and fuel prices surging way above $US120 a barrel, to bring it down.

Qantas shares now trade around $3.50, well below the $5.45 offer price from the consortium. But after the bid collapsed last May, the share price immediately tracked higher, peaking at $6.06 a fortnight before Christmas. So if shareholders had accepted the offer, they would have denied themselves the opportunity to earn another 50c profit per share.

But there are more serious issues. I'm not sure if anyone has noticed, but Allco Finance, the major partner in the bidding consortium, has all but collapsed.

Even before its high-stakes Qantas gamble, Allco was overloaded with debt and was a disaster waiting to happen. It was bidding $11.5 billion for Qantas: money it didn't have. Allco and its partners were going to borrow the cash and then dump a vast portion of that debt into the flying kangaroo.

Just take a second to think about what has happened in recent months.

There has been a global credit crisis the likes of which hasn't been seen before. Debt is a dirty word and private equity groups have disappeared from the radar. Most are desperately trying to figure out how to survive in a world where banks aren't begging them to take their money.

Allco's collapse would have been more severe if it had pulled off the Qantas deal because of the extra billions it planned to borrow. And the national carrier either would have gone down with it or been severely crippled.

Airlines have a curious place in the national psyche of most countries, especially smaller nations like Australia - and particularly when those airlines are flag-carriers.

There is no way the nation would have stood by and let Qantas collapse. The Government would have been forced to step in with a rescue package, just as the New Zealand Government rescued Air New Zealand a decade ago when Ansett collapsed. As ever, it would have been taxpayers who would have been forced to foot the bill.

The aborted Qantas takeover represented a low point in corporate governance in Australia and the behaviour of boards and management.

The private equity takeover frenzy was nothing but a con. It was a slicker version of the 1980s entrepreneurs boom - which flourished in a similarly easy credit environment - with a twist.

It was slicker because the private equity players, unlike the '80s entrepreneurs, made sure the huge debt they raised didn't bounce back to them. It was all loaded into the companies they were buying.

And the twist was that they made sure they succeeded with low-ball offers for companies by roping in the senior executives, dangling the prospect of huge riches before them.

In the case of Qantas, Geoff Dixon and his senior executives were hopelessly compromised. Qantas's management was involved in a hostile bid for their own company and the board backed them all the way, right to the bitter end.

It's interesting that since the bid collapsed, management has come up with a range of strategies, such as hiving off the frequent-flyer scheme, which will deliver huge profits to Qantas shareholders in the future.

Margaret Jackson should count herself lucky the bid failed.

She may still be smarting from the stinging rebuke she received last May. But better that than be pilloried as the chairman that sent Qantas to the undertaker.

Copyright © Fairfax

____________________________________________________________ _____

So that is Fairfax's opinion.

Coincidentally the same opinion seems to exist amongst the Corporate Governance community. The Qantas Board and Executives will be the subject of many corporate governance case studies for years to come. Over the years who knows what relationships that were in play prior to the "bid" will get looked at.

[Front Pit]

Article in the Australian.


Qantas deserts price-fix executive

David Nason and Steve Creedy | May 10, 2008

COLLEAGUES of a former Qantas executive facing an eight-month jail term for his part in an international freight cartel have accused the airline of leaving him "like a shag on a rock" to face the US Justice Department.

US-based former Qantas freight vice-president Bruce McCaffrey, who was also fined $US20,000 ($21,250) after pleading guilty this week to fixing international air cargo rates, is believed to be the first player in the global scam to face jail.

But in the Los Angeles air cargo community where McCaffrey has been an aloof but respected fixture for the best part of 20 years, there is stunned disbelief at the turn of events.

There the US-born McCaffrey, 65, is known as a determined, hard-working man who carries himself with the solemnity of a funeral director and who has a sense of humour to match.

Never married, McCaffrey is without extravagant tastes, has few if any close friends and suffers from poor health, the result of a severe stroke in the mid-1990s that left him with a limp, an arm that doesn't function properly, a hand that can't grip anything and a face paralysed down one side.

Adding to his woes, his mother died recently.

These misfortunes, along with a realisation that McCaffrey may end being up one of the few jailed over the price-fixing scam, are feeding hostility towards Qantas and its most senior executives over the company's decision not to fund legal representation for the six Qantas employees being investigated by US authorities.

"I say shame on Qantas," says Julian Keeling, proprietor of Consolidated International, a Los Angeles-based freight forwarding company specialising in the South Pacific and Australasia, and editor of a popular industry newsletter.

"You've got a guy like Bruce who's suffered a major stroke, who is not a well guy, who was at the office at 7am every morning and the last to leave at night, and who now, at age 65 and after 40 years in the cargo business, is going to jail. It's just disgusting. Qantas owes Bruce a debt."

According to Mr Keeling and Peter Burn, a former head of Air New Zealand's US cargo business, McCaffrey took the Justice Department plea bargain offer because he didn't have the resources to fight Uncle Sam.

McCaffrey, who lives in the Los Angeles suburb of Redondo Beach, did not return calls yesterday.

Qantas was yesterday keeping a low profile about its former employee, saying it could not comment while the case was before the courts. But a lawyer involved in a class action against Qantas and other airlines said McCaffrey's jailing showed how seriously authorities were taking the case and the Australian carrier's illegal actions.

"To date, Qantas has made no offer to pay back the overcharges paid by the thousands of businesses in Australia that use international air freight," Maurice Blackburn lawyer Kim Parker said yesterday. "We will hope this will send a signal to Qantas that it is time to talk to their customers and to make good the widespread damage from this price-fixing cartel."

It also seems unlikely that five other executives exempted from a $US61 million plea agreement between Qantas and the Justice Department will be forced back to the US to face jail. Because there is no jail term for cartel conduct in Australia, experts believe extradition is unlikely.

[DutchRoll]

His legal responsibility was (and is) to the Shareholder.
I'm assuming you don't seriously believe that a CEO's only legal responsibility is to the shareholders. I suspect the Tax Office, the Attorney-General's Department, the ACCC, and several other departments and authorities might disagree! However, from Dixon's (and Jackson's) rhetoric, one could be forgiven for thinking that has always been their only responsibility.

Also I would think that the current share price has no bearing on the merits or otherwise of the takeover recommendation, coming after the fact and due to other factors beyond the control of Qantas. One could just as easily speculate about the position Qantas might be in now if the takeover had gone ahead, with the financial exposure and position of various parties in the US.

None of that changes the shenannigans people like Jackson got up to during the whole affair, and the opinion pieces do ask some legitimate questions which I'm confident will never be answered.

[Jango Fett]

http://upload.wikimedia.org/wikipedia/en/1/1a/1Gordon-gekko.jpg

GREED IS GOOD :E

[ferris]

Easy. His legal responsibility was (and is) to the Shareholder.
Yes, very easy. Explain how conducting illegal activities, or presiding over their conduct, is acting in the interest of shareholders? Surely, exposing the company to legal redress, fines, destruction of reputation etc etc would be a fairly good example of breach of fiduciary duty. Easy.

It makes one look very stupid to imply that because the shareprice is now lower than the bid-price, that GD was right: Isn't GD responsible for the price, now?

If the "service to shareholders" is going to be the only performence indicator for GD, then he should be gone any minute.

[Flugbegleiter]

Article in the Australian.

"You've got a guy like Bruce who's suffered a major stroke, who is not a well guy, who was at the office at 7am every morning and the last to leave at night, and who now, at age 65 and after 40 years in the cargo business, is going to jail. It's just disgusting. Qantas owes Bruce a debt."

Poor bloke; I thought everyone knew that the more you put into this company, the harder you will get screwed in the end. It happens far too often.

[jakethemuss]

Frozo,

You still here? Simple question.

Where do you think Qantas would be now had the APA deal gone through?

With your enormous pool of knowledge this one should be a no brainer. Or are you really just a troll?

[rudderless1]

The PAF can't answer that one. Poor PAF. Gone all quiet. Better change the subject again eh PAF.