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Ex-TA Director ‘overstepped the line’

Harold Mitchell was found by the Federal Court to have breached his duties as a Director of Tennis Australia on 3 occasions ahead of the Australian Open, for passing on information to Seven West Media executive Bruce McWilliam, who was described as a ‘colourful character’ by the presiding judge.

Mr Mitchell stepped over the line in his dealings with Mr McWilliam. And his overall conduct had the tendency to undermine the stance and approach of Mr Steven Wood, the CEO. None of this ultimately caused damage to Tennis Australia and none of this was motivated by anything other than Mr Mitchell's perception that it was in the interest of Tennis Australia that the deal with Seven was stitched up sooner and rather than later. Justice Jonathan Beach

Mr Mitchell and former Tennis Australia President Steven Healy were accused by the Australian Securities and Investments Commission (ASIC) of breaching their duties as directors and other offences under the Corporations Act by favouring Seven during the negotiations in 2012 and 2013 for the 5-year rights deal to broadcast the Australian Open.

The corporate watchdog alleged Mr Mitchell and Mr Healy withheld material from the TA board during the negotiations; did not tell the board of the value of the rights; and failed to highlight the interest of other bidders, notably Network 10 and US group IMG.

The trial, which ran over 3 weeks late last year, saw a who’s who of the media world take to the witness box as they were quizzed about the rights negotiations, including Mr McWilliam as well as former Nine Entertainment boss David Gyngell and former Network Ten boss Hamish McLennan.

On Friday Justice Jonathan Beach threw out the bulk of the financial regulator’s allegations against Mr Mitchell, although he may levy a modest fine on him, and also threw out the entire case against Mr Healy.

“In my view, he did so contravene s 180(1) on three occasions … but his contraventions are far narrower in scope than ASIC would have it,” Justice Beach noted, referencing that ‘a director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise’.

Justice Beach did find Mr Mitchell acted improperly when forwarding internal TA emails to Mr McWilliam and disclosing elements of internal deliberations including that he had ‘stamped on’ TA Chief Executive Steve Wood when he suggested the possibility of awarding the rights to another network.

“Mr Mitchell stepped over the line in his dealings with Mr McWilliam,” Justice Beach said.

“And his overall conduct had the tendency to undermine the stance and approach of Mr Steven Wood, the CEO.

“There were some things that he communicated with Mr McWilliam that he ought not to have done particularly in the latter part of 2012,” Justice Beach added.

“None of this ultimately caused damage to Tennis Australia and none of this was motivated by anything other than Mr Mitchell’s perception that it was in the interest of Tennis Australia that the deal with Seven was stitched up sooner and rather than later.”

“His contraventions are far narrower in scope than ASIC would have it.”

Justice Beach criticised ASIC over how it managed the case, saying: “Much of ASIC’s construction of its evidence displayed confirmatory bias.

“The various cover-up and conspiracy theories that it floated turned out to lack substance.”

The corporate watchdog said it would still push for a banning order despite Justice Beach throwing out most of its case and indicating that he would only likely fine Mr Mitchell.

ASIC has also declined to comment on whether it will appeal the case.

A hearing will be held in August to determine his penalty when Justice Beach said he would hear further arguments from the regulator and Mr Mitchell about the penalties.


Former TA President Steven Healy had all charges against him thrown out

© Tennis Australia

The controversy broke publicly when 3 TA Board members sensationally quit on the eve of the 2016 Australian Open and had been simmering since 2013, but the rancour became clear in 2018 when ASIC issued the proceedings against Mr Mitchell.

ASIC was seeking ‘pecuniary penalties’, or fines, and orders that would see both Mr Mitchell and Mr Healy bundled out from corporate life by being disqualified from managing corporations.

The epic legal battle over a $300 million deal to broadcast one of Australia’s most prestigious sporting events, however, has not ended the corporate career of one of the most powerful men in Australia, who is both a media mogul and a philanthropist.

For a long period, Mr Mitchell was the nation’s most powerful media buyer, running the company that books advertisements into TV, print, radio and online schedules.

The AFR Rich List estimated his wealth at $370 million in 2018, and the noted arts philanthropist was a confidant of Australia’s top media moguls, including the late Kerry Packer, his son James Packer, the Murdoch family and Kerry Stokes, as well as top politicians.

Mr Mitchell is now calling for an investigation into ASIC’s handling of the case saying it cost taxpayers millions of dollars.

In a statement, Mr Mitchell’s publicist Tim Allerton called the decision a ‘humiliating defeat’ for the corporate regulator, with the vast majority, 41 out of 44, of the charges thrown out.

“These allegations were clearly without any basis whatsoever from the outset of its investigation, yet ASIC chose to continue its misguided case,” the statement read.

Mr Allerton continued that ‘ASIC completely misunderstood the TV rights negotiations’ and brought the case ‘relying on allegations from former Tennis Australia board members with an axe to grind’.

Mr Healy said he was still proud of the rights deal he inked for Tennis Australia with Seven.

“I have always been confident of vindication in the case brought by ASIC against me and so am happy today to have received the judgment of the court.”

The Tennis Australia broadcast rights were awarded to Channel Seven for five years in 2013, but there was never a competitive tender process.

Channel Nine finally won the rights to broadcast the Australian Open from 2020 in a new five-year, $300 million deal sealed with Tennis Australia in 2018, ending a 35-year partnership with Channel Seven.





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