Seven West Media chief executive Tim Worner

Seven West Media chief executive Tim Worner

 

The Australian

Australian Business Review

Seven’s credit card warning during Worner-Harrison crisis

January 11, 2017

BEN BUTLER
Business reporter Melbourne

Forensic investigators warned Seven West Media that lack of control over credit card spending was an “ongoing risk to the ­organisation” as it battled former employee Amber Harrison, who had been having an affair with chief executive Tim Worner, over her separation from the ­company.

In a September 2014 report to Seven’s commercial director and chief legal troubleshooter, Bruce McWilliam, Deloitte partner Neil Gray laid out credit card spending by top executives and their assistants that included $600,000 spent by Mr Worner over the 2012, 2013 and 2014 fin­ancial years.

Mr Worner, who is married, has admitted to an “inappropriate consensual sexual relationship” with Ms Harrison that she claims ran between December 2012 and June 2014 and included trysts at a company conference and at the Seven-sponsored Australian Open tennis tournament.

 

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The Deloitte report, prepared on Mr McWilliam’s orders, was used as ammunition in a legal stoush with Ms Harrison, who spent $400,000 using her credit card over the three years covered by the investigation.

Mr Gray found that “breaches of SWM (Seven West Media) policies and procedures together with inadequate management oversight have permitted a ­significant employee fraud to be perpetrated and remain un­detected over a number of years”.

However, he admitted Deloitte had not undertaken analysis of the transactions identified and classified by Seven West Media as “likely unauthorised personal expenditure”.

He warned that the investi­gation “has also highlighted a number of other contributory behaviours and control deficiencies, which represent an ongoing risk to the organisation”.

Mr McWilliam said the report was commissioned after Seven “uncovered a fraud involving a former employee”.

“Corporate credit card use is regularly monitored and re­ported, and audited; the employee unfortunately circum­vented ­approval processes and reporting processes,” Mr McWilliam said.

“Of course, the controls were tightened to prevent recurrence.”

He defended Seven’s use of corporate cards, saying they were used to pay suppliers because they provided immediate records of spending and gave managers control over expenses, many incurred at short notice.

“So the figures are not just for what are loosely termed ‘ex­penses’ like entertainment, even though travel and other expenses are regularly incurred, given the nature of the business,” he said.

“People who are heads of departments such as Tim Worner for production or the executive producer of a program would have a whole host of departmental expenditure on their card.”

Mr McWilliam commissioned the investigation on August 1, 2014 — the same day he and Ms Harrison signed a deal under which she was to be paid $100,000 in return for her silence about her affair with Mr Worner and her dispute with the company. She also agreed to pay the company $14,000 in credit card expenses that the company had identified as personal.

The Deloitte report was used by Seven to raise further alle­gations she had misused her corporate card to the tune of about $186,000, although the company later reduced this to about $130,000 after Ms Harrison produced documents that backed her version of events.

Deloitte initially examined spending on travel and other expenses by top-level executives and their executive assistants, including Nick Chan and his assistant, Ms Harrison.

The probe was then extended to take in direct reports to Mr Chan, who over the three years under investigation was head of Seven West’s magazine division, Pacific Magazines, and then chief operating officer of the entire company. He left Seven last year to run rival magazine publisher Bauer Media.

Mr Gray’s report shows Mr Chan had credit card expenses of at least $130,000 over the three years covered by the investi­gation. It shows Mr Worner’s biggest yearly spend, $300,000 in 2012, included $160,000 in non-travel expenses. And it reveals that in 2014 Mr McWilliam spent about $100,000 using the Seven card while head of human resources Melanie Allibon racked up close to $200,000 in expenses.

Sunrise executive producer Michael Pell flexed the plastic to the tune of about $440,000 during the three-year period covered by the report. Head of news Rob Raschke and current affairs supremo Mark Llewellyn were more modest spenders, ticking over bills of about $175,000 and $200,000 respectively.

At the magazine division, Marie Claire publisher Jackie Frank ran up more than $50,000 a year on the corporate card.

New Idea editor-in-chief Kim Wilson spent more than $160,000, with the bulk falling in the 2013 financial year, while the then-head of Pacific Magazines, Peter Zavecz, now at News Corp, publisher of The Australian, spent about $450,000 over the three-year period.

Mr Gray did not identify any Seven executives or their assistants as having done anything wrong and The Australian is not suggesting any of the staff named in his report has engaged in any wrongdoing.

After Ms Harrison was made redundant in November 2014, she and Seven entered a second round of negotiations through their lawyers: Harmers Workplace Lawyers for Ms Harrison and Johnson Winter & Slattery for the company. Ms Harrison continued to dispute the amount Seven alleged she owed, so the two sides agreed a final number would be determined by senior barrister Peter Kite. That process ground to a halt after Ms Harrison refused to allow Seven ­access to her computer.

Ms Harrison went public with her story just before Christmas after last-ditch negotiations between Seven and her new lawyer, Sam Macedone, ended without agreement. She is no longer represented by Mr Macedone.

On the Thursday before Christmas, Seven commissioned law firm Allens to conduct another investigation into the scandal, which is expected to be delivered to the board within weeks. The company has refused to release the terms of reference of the new inquiry, but has promised it will “establish all of the facts so as to confirm that all necessary matters have been and were taken into account”.

Mr Worner is expected to represent Seven at the Australian Open, which begins in Melbourne next week.”