NewTel bosses to face lawsuit - 14 Jul 2003

PricewaterhouseCoopers (PWC) will launch legal action against the directors
of failed telecommunications company NewTel. The suit alleges that the
directors allowed NewTel to trade while insolvent for at least six months.
Phil Carter, a PWC partner, is aiming to recover some of the $A50m owed to
NewTel creditors. If the action is successful, it is likely that the
Australian Securities & Investments Commission, which is already
investigating the collapse, will also launch action against the directors
and seek to ban them from acting as company directors.

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----- Original Message -----
From: "nick4mony" <no_reply@...>
To: <otmushrooms@...>
Sent: Thursday, January 30, 2003 8:18 PM
Subject: [otmushrooms] Age: Deloitte chief quits over links to New Tel


> Typed in from the Dead Tree Edition. There is NO need for Steve G to
> act unsurprised 8-)
>
> Age Business p3, Tuesday January 21, 2003
> Deloitte chief quits over links to New Tel: by Tom Ravlic
>
> The chief executive of one of Australia's top four accounting firms,
> Domenic Martino, has resigned following public scrutiny of his past
> invovement as a director of the troubled telecommunications company,
> New Tel.
>
> Deloitte Touche Tohmatsu announced that Lynn Odland, a past chief
> executive of the Australian firm, is again the firm's chief executive
> for at least the next six months while another chief executive is
> appointed.
>
> Mr Odland was the firm's chief executive from 1997 to 2001. Once Mr
> Martino had been anointed as chief executive, he moved from the post
> of chief executive to that of the firm's national chairman - a role
> he will now relinquish to deputy chairman Harley McHutchison.
>
> "I will probably see the firm out until at least the end of the
> fiscal year - being May 31 - but we may even get a chief executive
> even sooner," Mr Odland told The Age.
>
> A media statement issued yesterday by Deloitte quotes Mr Martino as
> saying he "believes firmly that any future investigation of New Tel
> will demonstrate that he properly fulfilled his duties as a director
> until he resigned in February 2002, 11 months before New Tel went
> into liquidation".
>
> Controversy over Mr Martino's involvement as a director of New Tel is
> due to media reports linking the former executive director's New Tel
> board membership and fees Deloitte was receiving for services
> provided to the telco.
>
> The Martino resignation has accelerated the release of a revised
> policy for directorships that has been approved in principle by
> Deloitte's board of directors.
>
> Most accounting firms, including Deloitte, prohibit partners from
> holding directorships in audit clients, but the revised policy will
> prohibit the holding of directoships in proprietary companies, except
> in rare circumstances.
>
> Those rare circumstances will typically have to be subject to the
> approval of the management of the accounting firm, too (sic) ensure
> there is no potential conflict.
>
> PricewaterhouseCoopers' policy, for example, requires partners and
> staff to seek clearance from the firm for membership of a board.
> Approval may be withheld if circumstances that might create a
> conflict of interest for the firm are identified.
>
> Mr McHutchison said Deloitte believed it was critical to ensure the
> community had confidence in the work of auditors. One way of doing
> this was to limit the circumstances where a conflict of interest,
> real or perceived, could arise from a partner or senior staff member
> being a director of a company.
>
> "We don't want to be in a position of a potential conflct of interest.
>
> "We think the community at large has a heighened concerned (sic)
> about conflicts of interest," Mr McHutchison said.
>
> Mr Odland said he expected no major difficulties with the
> implementation of the revised policy, because only four or five
> partners in a partnership of about 250 partners would be affected by
> the move.