dirty deeds done dirt cheap

Big payout as forestry group Great Southern teeteredFont Size: Decrease Increase Print Page: Print Anthony Klan | May 19, 2009
Article from: The Australian
THE former managing director of failed agribusiness investment empire Great Southern was paid a $2 million "retirement benefit" when he stood down from the top job in February last year, ahead of a major restructure.

Key executives of the failed Great Southern agribusiness empire also received large increases in base salary just months before the group collapsed owing investors up to $4billion.

Former Great Southern managing director John Young last year received a $2.013 million retirement payout when he stood down from the top job as the group launched a "comprehensive strategic review ... to provide a more robust and sustainable business model".

According to the group's annual report, Great Southern managing director Cameron Rhodes was given a $250,000 pay rise to $760,000 in the year to September after being appointed managing director in February last year. During the same period, deputy managing director - and former Macquarie banker - Phillip Butlin received a $140,000 boost to $650,000.

Late yesterday, the group said in a statement: "The total remuneration for Messrs Rhodes and Butlin had in fact declined during 2008 despite both of them taking on additional responsibilities (as managing director and deputy managing director)."

Although both men received a salary increase, they did not receive a $225,000 cash bonus that had been paid the previous year. Both men also had a significant exposure to the group's market performance as part of their remuneration packages. The company said some remuneration in past years had been recorded in notes to the financial statements.

In the year those pay rates were altered, Great Southern reported a $63.8 million net loss, a 15 per cent drop in revenue and a 24 per cent fall in managed investment sales to $444 million.

In the group's September annual report, which details the salary changes, the company revealed it would struggle to repay a $100 million debt due to be paid within months and that there was "uncertainty whether the group will continue as a going concern".

The "remuneration committee" that signed off on the executive pay arrangements included University of South Australia deputy chancellor Alice McCleary and former West Australian Newspapers chairman and current OZ Minerals director Peter Mansell. Mr Mansell and Ms McCleary did not return calls yesterday.

Great Southern was swept into administration on Saturday owing 43,000 investors up to $4 billion. The collapse of the scheme followed that of its closest rival Timbercorp, which was placed in administration late last month.

Both schemes were structured to exploit agricultural tax breaks for investors.
Great Southern administrator Martin Jones, of Ferrier Hodgson, said the group had called in the corporate doctors because it was in danger of being unable to repay investors.

"It's not a space you'd want to be in at the moment," Mr Jones said.

A consortium of banks led by ANZ, which Great Southern owes about $400 million, is understood to be preparing to appoint a receiver to the group as early as today.

ANZ declined to comment on Great Southern yesterday, other than to say its exposure to the forestry giant was not "material".

It can also be revealed a financial planning giant being sued by the corporate watchdog for steering clients into the failed Westpoint property group was one of Great Southern's major fundraisers.

Professional Investment Services, the nation's largest financial planning network with about 1000 members, was a Great Southern "strategic partner" and received commissions of up to 10per cent for each dollar it raised for the group.

PIS spokeswoman Anna Gardiner said the group was unable to comment yesterday.

In the two years to June last year, Great Southern paid $134million on "commissions, marketing and promotion", with the vast majority of that money paid to financial planners for selling Great Southern products to clients.

According to Great Southern's annual report, Mr Young was paid a retirement benefit in February last year of $2.013 million, which had been provided for under the "service agreement" that he had entered into in 2004.

No other managers were entitled to retirement benefits, according to the report.

In September last year, Mr Young owned 49.5 million Great Southern shares, understood to have been paid to him during his 17 years with the company.

Any of those shares not sold by Mr Young between September and early this month, when the group was placed in administration, were likely to be worthless.

Mr Young could not be contacted yesterday.

Other members of the Great Southern remuneration committee - drawn from the group's directors - included non-executive director Mervyn Peacock, a former chief investment officer at AMP Capital Investors, and chairman David Griffiths.