There are a lot of parallels between Tabcorp and Telstra. Both start with “t”, both are constructed company names, both are monolithic structures, both make a cartload of profit from huge revenue bases, both are too big, both are certainly not agile organisations, both have share prices hovering around $4.50 - $4.60 which are far too low for the organisations size and stature – and both, in my opinion are managed abysmally with corporate cultures that demonstrate arrogance and ignorance.
Find me a satisfied Telstra customer and you will have probably found the first one, and they will probably only have a landline and live in a big city. It’s different in the Regions and the bush, let me tell you!
But not even Telstra can top Tabcorp’s latest coup.
Just imagine the pride in the Chairman’s eyes when she stands in front of the next AGM to announce the achievement of being hit with the largest civil penalty in corporate Australia’s history. $45 million penalty topped off with another $45 million in legal fees, if the legal talk around town is to be believed. That’s $90 million off the bottom line in one hit!
It all came about because AUSTRAC, that’s the Australian Transaction Reports and Analysis Centre, which is Australia’s financial intelligence agency, alleged over 200 breaches of the AUSTRAC Anti-Money Laundering and Counter Terrorism Financing Act (AML/CTF Act) over a period of five years by Tabcorp, and eventually gained convictions in court for 108 separate breaches.
So, of what kind of transgressions was Tabcorp found guilty?
Under the AML/CTF Act, gambling companies must:
· enroll with AUSTRAC – that’s a tick for Tabcorp;
· establish and maintain an effective Anti-Money Laundering and Counter Terrorism Financing program – definitely not a tick for Tabcorp;
· identify customers collecting large winnings – definitely not a tick for Tabcorp;
· report suspicious matters, including credit card fraud and suspected money laundering, to AUSTRAC – certainly not a tick AUSTRAC seems to be willing to give Tabcorp.
The breathtaking thing is the number of breaches and also the five-year period. Whatever happened to corporate governance at Tabcorp?
Equally breathtaking was the comments by the AUSTRAC CEO, Paul Jevtovic. Let’s just list a few:
· “Failing to uphold a robust AML/CTF Program creates opportunities for serious and organised crime and terrorist groups to conceal the movement and use of illicit funds for attacks and crimes against Australian citizens. In our view, Tabcorp had a corporate culture indifferent to meaningful AML/CTF compliance and risk mitigation until we intervened”.
· “This was a serious failure in the corporate governance and the size of the penalty reflects a significant and extensive non-compliance”.
· “In my view, the non-compliance arises from a corporate culture that is indifferent to money laundering and terrorism finance requirements”.
· “It’s money laundering and terrorism financing function was at times under-resourced and Tabcorp senior management didn’t regularly receive reports in relation to the money laundering and terrorism financing compliance”.
That’s not mincing words, especially when it came out that Tabcorp cannot - to this day – identify a punter who took out $100,000 in winnings!
And what was Tabcorp’s CEO’s response to all of this? “We remain firmly committed to continuing to work co-operatively with AUSTRAC into the future”. What a wimp!
Now let’s look at Tabcorp’s website. Here’s a screenshot:
It takes a whole bunch of absolute integrity and operational excellence to commit 108 breaches of a Federal Act and burn $90 million in one go!
The real issue is that, as with all monster corporations, it will be the shareholders who cop it in the neck. The CEO, and the idiots who caused the breaches, will probably survive.
That’s just what it is like when the big end of town gets this big. “Absolute integrity” and “operational excellence” are just words. Nobody in Tabcorp’s senior hierarchy seems ready to “walk the walk”.