Title : Former AFL boss Demetriou grilled in court about $145m corporate collapse
link : Former AFL boss Demetriou grilled in court about $145m corporate collapse
Former AFL boss Demetriou grilled in court about $145m corporate collapse
Crown Resorts director and former AFL chief executive Andrew Demetriou has been grilled in court over the $145 million collapse of education group Acquire Learning.
Key points:
- Andrew Demetriou was paid $75,100 a month and $1.6m in shares for chairing an advisory board for Acquire Learning
- Acquire Learning went into administration in May 2017
- Mr Demetriou told the court that "decisions about the financials were left to the directors"
Mr Demetriou was never a director of the company but was executive chairman of an advisory board and paid $75,100 a month and $1.6 million in shares for three days a week of work in an office downstairs from the directors.
The court heard that about a week before Acquire received a letter from law firm Clayton Utz suggesting the company was teetering on the edge of trading while insolvent, Mr Demetriou asked the company to approve a $150,000 bonus payment for "professional services as agreed".
"Thank you very much for your very generous consideration. Best, Andrew," the email read. The payment to Mr Demetriou's private company was made that day.
Asked by counsel for the liquidator, Damien McAloon, what the basis for seeking the $150,000 bonus was, the former North Melbourne Aussie Rules player told the Commercial Court of the Supreme Court of Victoria he could not remember.
"No, I can't recall specifically … I can't recall," he said.
The legal letter about the risk of insolvency was received by the company's lawyers on June 22, 2016. Despite Acquire Learning's counsel asking one of the directors to circulate the news, Mr Demetriou said he was unaware of the advice.
Three months later, in September 2016, the letter was attached to an email but Mr Demetriou did not open it.
Mr McAloon: "You had the opportunity, had you been so inclined, to read that advice?"
Mr Demetriou: "Possibly, but I can't recall."
Evidence presented at the hearings demonstrated Mr Demetriou was aware of the company's rapidly deteriorating financial position in the months before he was paid the bonus. However, in testimony he frequently sought to downplay his involvement in decision-making.
"The advisory board was not involved, nor sought (input) … on how financial decisions were made or how decisions were applied," he said.
Struggling firm plunged millions into horse racing business
As the company's finances worsened, a particularly contentious investment was in G1X, an online horse racing content business.
Mr Demetriou said he first became aware of the venture around March 2016 and advised against it.
"(Director) Mr Wall, in one of our discussions, told me of an idea he had of a platform for race horses, G1X. He was going to produce content," he said.
"I thought it was odd because it wasn't the core business. I told him at the time I thought it was odd … and a very difficult space."
Mr Demetriou said he was not aware of $8 million spent on G1X, or that Acquire's shareholding was transferred to a different company for what the liquidator said was "no consideration".
Mr McAloon: "Were you aware of that?"
Mr Demetriou: "No."
Mr McAloon: "Were you aware that Acquire advanced a further $2 million?"
Mr Demetriou: "No. I knew they were advancing funds, I just didn't know the level. I didn't think it was good practice, I said stick to your core business."
Mr Demetriou frequently spoke of being in the "bottom box" — included as a carbon copy (cc) recipient — in emails, rather than being the person they were directly sent to, the "top box". The court heard that many times in group emails sent to staff and directors he was the only member of the company's advisory board that correspondence was sent to.
"Ultimately, the decisions about the financials were left to the directors to make," he told the court.
"We were there to advise. They could take our advice or not take our advice.
"We didn't tell them to stop doing G1X or cut costs."
The company, which employed 600 people at its peak, ranged across registered training organisations (RTOs) and other educational institutions.
In this public examination, the proceedings are led by counsel for the liquidators of Acquire Learning Pty Ltd and Acquire Learning & Careers Pty Ltd, in front of the Judicial Registrar of the Commercial Court, Julian Hetyey.
The case continues tomorrow.
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