The Daily Telegraph - Monday 14 March 2005
The final judgment on NRMA plotters
ON Friday, Justice Clifford Einstein of the Supreme Court's Equity Division will wrap up the bulk of one of the nastiest and most divisive cases of public vilification in the state's legal history.
He will give his orders as to the final amount of money, including interest, that the Insurance Australia Group, the insurance spin-off of the iconic NRMA, owes Nicholas Whitlam, son of the former Labor prime minister.
Justice Einstein has already found that the IAG board acted unconscionably and continued to act unconscionably toward Mr Whitlam in denying him his rightful contracted retirement benefits upon his resignation from the IAG board on April 9, 2001.
He has already determined the amount owed Mr Whitlam – $207,000 – and will rule on the interest, some $150,000, and he'll hear argument on costs, which are most likely to also go Mr Whitlam's way.
If he were minded, he might also offer some thoughts about those formerly on the NRMA Insurance board, and their allies in the media, whose wrongful and vindictive pursuit of Mr Whitlam have cost IAG shareholders millions.
In August, 2000, the successful demutualisation of the NRMA, driven by Mr Whitlam, freed up about $4.5 billion for its shareholders, now worth about double to those who held on to their shares.
However, that huge success did not deter his boardroom detractors within the newly-created insurance group or his media critics, and he was faced with bitter guerilla tactics which crippled the board.
His most active opponent, Anne Keating, sister of another Labor prime minister, was asked for her resignation three times by the board but ignored their appeal. Her principal ally on the board was then chief executive Eric Dodd.
Seeking board harmony, three other directors approached Mr Whitlam and asked whether he would resign. He agreed to go after they guaranteed he would receive the benefits detailed in the prospectus that he was entitled to.
The chronology is simple. Mr Whitlam resigned as chairman of NRMA Insurance before the board meeting on April 4, 2001, and didn't take part in the later meeting which finalised the terms of the retirement benefits as in the prospectus.
Three days later, Anne Lampe of The Sydney Morning Herald said Ms Keating was opposed to the amount of the retirement payments and flagged shareholder concerns.
Mr Whitlam resigned his board position on April 9, 2001, and the following day the board resolved to pay him his benefits, when they were calculated. The board also took the opportunity to sack Mr Dodd.
A fortnight later, on April 23, 2001, Ms Lampe reported shareholders were preparing a resolution to challenge the insurance group's retirement benefits.
On May 2, 2001, that shareholder action was revealed in the form of a requisition for a special general meeting at which a call was to be made for a change to the constitution which would deny any retirement benefits without prior approval of shareholders.
One of the requisitionists was Roger Parks, Ms Lampe's partner. Ms Lampe continued to cover the case for The Sydney Morning Herald.
Though her connection and the obvious conflict of interest were well known to many in the media it was not, and apparently until today has not been made public, though it would appear to be in contravention of the Sydney Morning Herald's own code of ethics.
On May 3 the insurance company board said it had deferred making the payments due to Mr Whitlam because of the requisitioners.
Mr Parks and his co-requisitonists had effectively intimidated the board into repudiating its agreement with Mr Whitlam on his benefits.
In September, ASIC began what was nothing more than a show trial, giving succour to Mr Whitlam's opponents, and in November, the insurance company's public meeting turned into farce as dissidents attacked Mr Whitlam's legitimate payout.
After 2½ years stalling, the board in September, 2003, paid Mr Whitlam a $313,000 retirement benefit net of tax.
It was too little and too late. That delay was what Justice Einstein found unconscionable and what he considered continued to be unconscionable as it strung-out under both interim board chairman Rowan Ross, and his successor James Strong.
Mr Whitlam's stand has now been vindicated to a degree.
He has accepted $100,000 from Robert Dempsey, one of Ms Keating's allies, in settlement of a defamation suit. Last year the High Court rejected the outcome of the ludicrous ASIC trial and cleared the way for him to accept company directorships.
But his trials – and knock-out victories – should serve as an object lesson to the damage that can be caused when company directors, journalists and media organisations abandon their ethics.
Lesser figures may well have been driven to desperate acts under such pressure and some, no doubt, would not have found the will to continue the fight to clear their names.
Those who plotted so assiduously to destroy Mr Whitlam's sound business reputation, those who burdened the shareholders of the former NRMA Insurance, and its successor IAG, with the costs of their vindictive campaigns should not be forgiven for pursuing their fruitless vendettas.
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