Rebel Sport owner Super Retail Group says the corporate regulator does not plan to take any further action over the alleged illicit executive relationship that will see its former chief executive, Anthony Heraghty, face court this week.
But the group behind well-known brands also including Supercheap Auto, MacPac and BCF, says it will face further legal bills funding his defence against the legal action by the Australian Securities and Investments Commission.
“Following the conclusion of its investigation, ASIC has confirmed that it is not taking enforcement action against Super Retail Group, its related entities, or any current or former director, officer, employee, agent or representative of Super Retail Group, other than Mr Heraghty,” a spokesman said.
ASIC declined to comment.
Super Retail sacked Heraghty in September last year and stripped him of multimillion-dollar bonuses after he admitted providing misleading information to fellow board members about his alleged relationship with HR boss Jane Kelly.
“In light of this new information, the board has concluded Mr Heraghty’s prior disclosures were not satisfactory,” the company told the ASX in the statement announcing his sacking last year.
ASIC instigated an investigation into Super Retail after Heraghty’s sacking and sued him last month for allegedly breaching his directors’ duties and providing misleading information to the board and financial market about his alleged relationship with Kelly.
Super Retail had already spent more than $40 million in a bitter legal battle with its two former top lawyers, who claimed they were bullied and harassed over a matter centred on Heraghty’s alleged relationship.
The confirmation is timely for Super Retail’s current board, which faces shareholders on Thursday morning. ASIC’s case against Heraghty goes before the Federal Court as the meeting commences.
The case is expected to raise fresh questions at the AGM about Heraghty, the board’s response, and just how much it will have to pay to defend the former CEO in this legal battle with ASIC. The retailer will have to fund his legal defence on the basis that he was a director of the group at the time the alleged conduct is said to have occurred.
“As you would expect of a listed entity, Mr Heraghty is the beneficiary of a deed of indemnity, insurance and access,” the Super Retail spokesman said.
The potential issue for Heraghty is that this indemnity drops if he is found in contravention of the law, and Super Retail can force him to repay these legal expenses.
“Under this deed, Mr Heraghty will be required to repay any costs within 90 days if it is found and determined that he was not entitled to be indemnified,” the spokesman said.
In its legal action, ASIC alleges Heraghty – who was recently hired by appliance group Winnings for an expected billion-dollar float on the ASX – failed to disclose and manage conflicts of interest arising from the alleged undisclosed relationship.
ASIC alleges Heraghty continued to supervise Kelly and took part in decisions affecting her employment, remuneration, incentives, rewards and redundancy package.
He also allegedly participated in board and committee discussions of complaints and anticipated legal proceedings concerning the alleged relationship.
“This case is not about private relationships, but whether a director properly disclosed and managed conflicts of interest and met their duties to the company and shareholders,” ASIC chair Sarah Court said.
Heraghty faces a potential ban from managing companies if found in contravention of the law, and fines for breaches of the Corporations Act that can attract a penalty of up to $1.56 million per breach.
Heraghty was approached for comment via his new employer, Winnings. He will have the opportunity to file a defence to ASIC’s allegations in due course.
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.From our partners
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