Fairfax Media

Australian listed media company warned on credit cards amid CEO sex scandal

Investigators say inadequate management oversight allowed ‘significant employee fraud to be perpetrated’

PUBLISHED : Wednesday, 11 January, 2017, 2:52pm
UPDATED : Wednesday, 11 January, 2017, 2:54pm

Perth-based media company Seven West Media was warned it had “inadequate management oversight” of corporate credit card use which posed an ongoing risk to the company, as it dug through the expenses of former employee Amber Harrison amid a bitter workplace dispute.

Ms Harrison, 35, had been having an affair with chief executive Timothy Worner and claims Seven launched an investigation into her credit card use after she tried to end the relationship in 2014. The company later accused her of making A$262,000 (US$193,321) in unauthorised transactions and made her redundant.

A confidential report completed by Deloitte in September 2014 has emerged detailing how Seven executives and their assistants used company cards at the time, and raising questions about corporate governance and oversight.

The report shows Mr Worner racked up over A$600,000 (US$442,722) on his company card over three years, spending A$310,000 (US$228,739)in the 2012 financial year, A$160,000 (US$118,059) in 2013 and A$150,000 (US$110,680) the year after. Excluding travel expenses, his bill in those years was A$160,000, A$35,000 (US$25,825) and A$40,000 (US$29,515).

Ms Harrison meanwhile spent A$400,000 (US$295,148)over the three year period, including almost A$120,000 (US$88,544) on non-travel expenses in 2013. She agreed in July 2014 to pay back A$14,000 (US$10,330) of unauthorised transactions.

Deloitte partner Neil Gary’s forensic investigation of Ms Harrison’s credit card expenses found that “inadequate management oversight have permitted a significant employee fraud to be perpetrated and remain undetected over a number of years.”

“Our investigation has also highlighted a number of other contributory behaviours and control deficiencies, which represent an ongoing risk to the organisation,” the report says.

The report though is not critical of the credit card expenditure of other staff mentioned in the report and Fairfax Media is not suggesting such expenditure was inappropriate.

Seven commercial director Bruce McWilliam commissioned the report on August 1, the same day he and Ms Harrison agreed to a deed of release which would see her paid A$100,000 (US$73,787) and employed elsewhere at Seven in return for her silence about the affair with Mr Worner.

Mr McWilliam on Wednesday defended the size of his executives’ credit card bills, which he said were used to pay suppliers.

“The figures are not just for what are loosely termed ‘expenses’ like entertainment, even though travel and other expenses are regularly incurred given the nature of the business,” Mr McWilliam said in a statement.

”People who are heads of departments such as Tim Worner for production or the executive producer of a program would have a whole host of department expenditure on their card.”

In 2012, Mr Worner’s spending was more that twice that of the next biggest spender, an executive assistant. In 2013 Ms Harrison out-spent all executives and assistants.

On Wednesday Ms Harrison, who was executive assistant to the CEO of Seven publishing devision Pacific Magazines, defended the size of her spending, saying her company credit cards were often used for expenses like redecorating rooms and hosting staff parties.

“Bruce [McWilliam’s] comments that Tim [Worner’s] card and other department heads’ cards are used widely by different people was exactly my defence - mine was used as the ‘master card’ at Pacific [Magazines],” Ms Harrison told Fairfax Media.

Her card was used to pay for a L’Oreal conference, Christmas parties, and large events, she said.

“I have folders of evidence that I had to retrieve myself from Deloitte that speak to the legitimacy of expenses under investigation - including emails from Kerry Stokes ordering work - [but] Seven still wouldn’t accept those expenses were valid”.

Mr McWilliam said Seven had tightened its controls on credit card use after it discovered fraud had taken place.

“Seven is constantly revising and testing its financial controls to keep up with best practice,” he said.

Deloitte’s report shows Seven’s workforce spent a total of A$3.2 million (US$2.36 million) in August 2014, with travel accounting for A$1.7 million (US$1.25 million).

The biggest spender that month across the company was the My Kitchen Rules travel coordinator (A$234,527 or US$173,050) followed by the Sunday Night unit manager (A$116,854 or US$86,223) and its Network Sport general manager (A$67,640 or US$49,909).

Seven warned on credit cards amid CEO sex scandal