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Primarily dilemma for Primary Health

Former Leighton executive Stephen Sasse (centre) talks with Senator Nick Xenophon (left) and Senator Sam Dastyari at last week’s Senate hearing. Photo: Ben RushtonThe directors of Primary Health Care would have been robbed of a relaxed Anzac Day long weekend following its chief executive Peter Gregg being placed more squarely in the frame for alleged illegal behaviour during Senate committee hearings on Friday.
Nanjing Night Net

It is hard to imagine that Primary Health Care’s board is not investigating contingency plans for succession in the event Gregg is charged with offences for which is he is currently allegedly being investigated.

Friday’s statement by a former Leighton executive, Stephen Sasse, to the Senate supported earlier speculation that the Australian Securities and Investments Commission was going to charge Gregg with false accounting offences committed when he was the chief financial officer of Leighton.

The move intensifies the pressure on Gregg and the board of Primary Health Care, who can only be waiting for the axe to fall. Due process?

It is a difficult for Gregg, who protested his innocence again on Friday. While he hasn’t actually been charged with anything, he is being found guilty in a court of public opinion.

It is a predicament amplified by the fact that Leighton is being investigated from a number of different angles  and deals – all but one do not involve Gregg. But there is a strong public relations smell around Leighton regarding bribery and corruption.

As far as the Gregg involvement is concerned, ASIC is looking into an alleged $15 million payment from Leighton (which has since been renamed CIMIC) to a corrupt Dubai consultant to facilitate a steel sourcing contract. The steel was never delivered but the payment was never recovered.

Gregg is now sitting at the centre of a storm made all the more treacherous thanks to the government’s electioneering move to jump on the anti-corruption bandwagon and boost funding to the Australian Federal Police in the wake of a series of leaks involving Australian companies. ASX precendent

Former Tabcorp chief executive Elmer Funke Kupper resigned last month from running the ASX following allegations Tabcorp was being investigated for bribing the family of the Cambodian Prime Minister in order to gain a gaming licence.

ASX did not have to sweat too long on Funke Kupper – within a week the board accepted his resignation.

ASX’s rationale in doing so involved its governance obligation to have a chief executive that is fully focused on the company and not distracted by investigations by the Federal Police or the corporate regulator.

The Primary Health Care board hasn’t changed its tune since the Gregg allegations became public.

For the time being it will support him – if for no other reason than it knew at the time it appointed Gregg as chief executive of an ASIC investigation into the affairs of Leighton, and of Gregg’s participation in that investigation relating to the time when he was chief financial officer of Leighton Holdings. Plan B needed

But like all companies, Primary Health Care will need to be working on a Plan B. It will have been consulting its own lawyers on its governance obligations and whether Gregg should be let go if charges are laid.

It would most likely be at that point the board would decide Gregg couldn’t commit his full attention to running Primary Health Care. It would certainly be the point at which the public relations ramifications would weigh too heavily on the board.

But unlike Funke Kupper, Gregg is not about to fall on his sword. Rather he sees himself as the victim of a character assassination and is up for a fight.

Following the Senate hearing on Friday Gregg’s lawyers put out a statement saying: “Today, several baseless allegations were made in connection with Mr Peter Gregg to a Senate Committee with the benefit of parliamentary privilege. No regulatory authority has stated to Mr Gregg that they have any suspicions that he may have acted in breach of any domestic or foreign law relating to bribery or corruption. No regulatory authority has stated to Mr Gregg that they have formed the view that he has acted in breach of any other civil or criminal law. No regulatory authority has stated to Mr Gregg that they propose to proceed with a civil or criminal action.”

There is no frame on or guarantees around when or if public prosecutors might lay any charges – even if, as has been suggested, there a brief is being worked on by  ASIC.

With the value of hindsight, though, the decision by the board of Primary Health Care to appoint Gregg – knowing his former employer was under the regulatory spotlight – was exposing itself to too much risk.

This story Administrator ready to work first appeared on Nanjing Night Net.