Part 59 of 70 — Original Chapter: Chapter 17: Aborting an Election
This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.
On 21 March 2002, the Panthers Board voted to cancel an election for the Board.
Voting was already well underway. The action was unprecedented at Panthers, and almost certainly in most other clubs or businesses. The cancellation was the subject of extensive questioning and examination by Ian Temby at the Inquiry in 2004.
This was the first election at which members of amalgamating clubs could vote, and they were voting for a board that would oversee the entire Panthers organisation.
In January 2002, nominations opened for the new board, and it soon became obvious that there were a number of nominations coming in from other sites, in particular Newcastle and Port Macquarie.
Roger Cowan, Keith Rhind and John Wilson were on a business trip in New Zealand when the ClubNova amalgamation transformed from a simmering cauldron into an active volcano. A board meeting saw chairman Barry Walsh and Terry Heidtmann completely outnumbered. An argument was raging about Panthers pulling out of the amalgamation.
Walsh, the Chairman, was aghast that the board might be about to break promises that he knew had been made to Newcastle.1 He told the meeting,
You can’t pull out. Panthers does not break its word. We don’t do things like that. It’s against everything we stand for.
He was fighting a losing battle. But a breakthrough was about to come.
Observers who attended board meetings in those times remember that Craig Terry had a habit of suddenly jumping out of his seat and heading outside for a cigarette. One of them said,
He would seem nervous and jumpy, and act as though he had an urgent and desperate need.
On this occasion, Terry pushed back his chair and made to rise.
Walsh reacted. An important issue was on the table. He asked Terry to resume his seat until the discussions were over, but he was ignored. Walsh then angrily told Terry that he had no right to leave the meeting; if he did he could forget about coming back.
Terry ignored him and left the room.
It all became too much for Walsh. His values were being abused and now he was also being treated with contempt. He bounded after Terry with an uncharacteristic aggressiveness that induced some nervousness in those left in the boardroom, where stunned silence reigned. A short time later Terry returned and sat down. He was followed closely by the angry chairman.
Walsh said,
I am going to put this to the meeting now. We’ve had enough discussion. And I can tell you we are not breaking our word. Now who is in favour of continuing with the amalgamation?
The vote was unanimously in favour.
Terry Heidtmann quipped,
Mr Chairman, I don’t know what you did, but why couldn’t you have done it earlier? We could have saved ourselves hours of argument.
In early February, despite the promises made to the Newcastle club, the Board asked the club’s Group General Counsel, Steve Bowers, to have the club’s legal team investigate the eligibility of members of other clubs to vote.
Bateman told the inquiry that he still had concerns – in the first instance, that candidates from ClubNova were even standing, and secondly, that they may be elected. He acknowledged that all nine sitting directors at Penrith could be re-elected, but the ‘two directors from one club’ stipulation could still see some of them voted out.
There would still be a minimum of five Penrith directors on the Board, but which five?
Later in February the legal advice that the Board had sought from John Ralston, on the constitutional question, was received and tabled at a board meeting. It said members of amalgamating clubs had become Panthers members on 7 January, in accordance with the Board’s resolution of November.
It added that under the Corporations Act, the Club’s register of members was proof of membership, and that the Club could not disavow members of amalgamating clubs once their names had been entered in the register.
This was not what the Footy Five alliance wanted to hear. Cowan was astounded by their next strategy.
They decided that they would seek the support of the amalgamated clubs to help ensure their seats on the new group board. They approached the other clubs asking them to back the existing Panthers directors in the election. The understanding was that each club would – obviously – canvas votes for their own candidates, but not for those from any other club.
For anyone who could apply simple logic, this meant that the Board of Panthers was saying to the members of those clubs: “Yes, you can run people, but we will be also asking the other clubs in the group not to vote for your candidates”. Such a strategy would give candidates from other sites no chance whatsoever of being elected.
To me, it was an unbelievably bad strategy. I saw it as a clear signal that some directors were far more interested in their own seats than in the big picture.
The Newcastle and Port Macquarie clubs were interested in having a say in the future of the club, and each had stood two candidates. Now here was Penrith asking Newcastle not to vote for Port Macquarie candidates, and Port Macquarie not to vote for Newcastle candidates. After some discussion about the ramifications of the Penrith approaches, the two clubs decided to combine resources and create a joint voting ticket. It was distributed at the clubs in their areas. In Newcastle, a supporting letter from union headquarters accompanied the ticket.
In mid-March, Craig Terry obtained a copy of the ticket and the letter. The news created great consternation among the Five. The ticket featured only one of their number – John Bateman.
The fact that Panthers’ constitution banned the distribution of electioneering material on club premises also became part of the strategy.
It appears that although Terry had the ticket on 15 March, the day before voting was to start, he did nothing until the following Monday18 March when the election was already in progress. Voting at other clubs closed on 21 March but was not scheduled to end at Penrith until 23 March. By 18 March, it was clear that people were voting in fairly large numbers at other sites.
The same day, Terry decided to obtain his own legal advice. He contacted ClubsNSW and was given the name of a law firm. The company, Acuiti Legal, was a specialist in club law, and the representative that Terry spoke to was Brett Boon.
Terry told the Temby Inquiry,
I would have got into that discussion because we were talking about ClubNova, and an election ticket that was mostly related to the Newcastle area. It was probably just a natural progression that I started to talk about issues concerning the administrative processes behind the amalgamation activity. The dialogue progressed from there, and it seemed that the more that I discussed this issue the more that Brett thought there were some grave or serious issues in respect to the way that the club had been administering the amalgamation process.
Boon’s initial opinion could only have been based on the information provided to him by Craig Terry. The completeness of that information was therefore important to any assessment he could make at that stage — if that information were incomplete, it would have been virtually impossible for Boon to analyse the situation properly.
Terry’s action prompted counsel at the Inquiry to ask why he went outside Panthers to seek legal advice. He answered,
At that point I was not completely happy in respect to the completeness or veracity of the advice we were getting at board level on amalgamations.
Terry’s evidence indicates that the discussion began with the ClubNova election ticket and then broadened into questions about the administration of the amalgamation. How a concern about election material developed so quickly into fundamental questions about the membership status of the amalgamating clubs became an important issue at the Inquiry.
However it happened, the advice he received, going beyond the ticket issue, was – in the words of Ian Temby – ‘timely’ and ‘convenient’.
At a scheduled board meeting on 19 March, there was a phone hook-up with Boon. He reiterated his opinion that Port Macquarie and ClubNova were still separate clubs, and thus not eligible to either stand for the Board, or vote. This opinion was the opposite of that of John Ralston, delivered to the Board three weeks earlier. Boon told the board that he was ‘nervous about the consequences of having the elections.’
At the meeting Roger Cowan and Steve Bowers cited the Ralston opinion and warned of the ramifications from the DGR. But the group of four, as it then was, argued that there was a real threat. The evidence indicates that John Bateman spoke strongly on the subject and, because of his legal background, his opinion helped sway other directors in the direction they ultimately took.
Bateman summed up the mood of directors in his testimony.
The reaction of the board was to say: “Hey, these people are electioneering. That is not permitted under the constitution. Do we still wish to be associated or involved with these people”?2
Cowan sees such statements as a bit unrealistic to say the least.
There is always some electioneering and I doubt if any nominee, including Bateman, has not asked someone to vote in a certain way. For years there has been controversy about the retiring3 directors being denoted by asterisk on ballot papers and election material. The asterisks make it an effective how to vote ticket, especially when all the directors are in harmony and can advise their friends to tick the boxes with the asterisks.
The rules barring electioneering on the premises could never prevent electioneering off the premises.
The 19 March board meeting resolved to seek urgent legal advice from Acuiti on whether Panthers could withdraw from its amalgamation with ClubNova. The Board requested that management provide information on the consequences from the financial, public relations and marketing, and political perspectives? How would Westpac, the group’s banker, react?
Management was disturbed. From its perspective, withdrawing would mean breaking the promises made to Newcastle and potentially throwing away $26 million. Cowan and his management team regarded such a course as dishonourable and dishonest, as well as extremely costly — through the loss of assets and reputation, and the possibility of a damages claim by the Newcastle club.
Bateman acknowledged to the Inquiry that calling for cancellation of the amalgamation with ClubNova may have been a ‘knee-jerk reaction’ because they were well into the process. Coincidentally, Craig Terry used exactly the same words – ‘knee-jerk reaction’ – when describing his feelings about pulling out of the ClubNova agreement.
A further meeting on 21 March was attended by senior managers including Roger Cowan, and solicitors Boon and Johnston from Acuiti Legal.
There is some variation on who said what at this meeting. All board members agree that Brett Boon did not actually advise them to cancel the election. However, most said that they felt that his advice left them little choice but to do so.
The 21 March meeting dropped any thought of cancelling the Newcastle amalgamation after legal advice on the consequences of pulling out, and particularly after the tabling of a letter from Westpac spelling out the club’s obligations from the bank’s perspective.
Brett Boon agreed with Ian Temby’s suggestion that it was his [Boon’s] preferred position to carry the voting through to its conclusion, at the same time making an urgent approach to the Supreme Court for a declaration as to the membership of the two clubs in question. Boon also told the Board he was prepared to leave the board meeting and immediately start to get those processes in motion.
Neither of the legal teams saw a problem with still holding the AGM scheduled for 24 March, and just not declaring the ballot.
Terry continues to maintain that he and other directors saw it as their duty as directors to cancel the election, saying they had been given ‘concrete advice’ about the legality of the memberships. Ian Temby reminded him that there was another legal opinion – from a source just as reliable – that was completely opposite.
In fact, in his final report, Temby referred to advice given by John Ralston, saying he is ‘a solicitor with a high reputation for work involving clubs, and on the evidence is perhaps the most eminent in the field in Sydney’.
At one time in his questioning, Temby asked Terry if he saw himself as ‘the guardian of the constitution’. Terry agreed that this was how he saw his role, missing the irony.
Temby asked,
Why shouldn’t I conclude that another factor driving the directors who wished to seriously examine the pull-the-plug option was the information which had been received as to voting figures to that stage?
While the majority of the directors at the meeting maintain that they aborted the election because of legal advice, Boon says it was never one of the options he offered.
Barry Walsh says that he spoke against aborting the election.
But there were three solicitors in that room, Mr Boon and his associate – and John Bateman, who is my own solicitor. They all said that it looked like the club had got it wrong. Then somebody got up and moved that the election be aborted. This really concerned me, but at that time I didn’t have any information to disagree and say, “no, we shouldn’t do this”.
Other directors agreed that Bateman’s position as a solicitor and his opinions on the issue reinforced their resolve to take the action they did, even though all acknowledge in their evidence that Boon did not specifically advise it. Craig Terry said in evidence that Bateman recommended to his fellow directors that they cancel the election.
Bateman told the inquiry,
Whether they listened to what I had to say or my view, I can’t comment on. I’m not an expert in club law. I accepted the advice that was given by Mr Boon. I believed the other board members accepted it as well, because they voted in favour of it.
Eventually, the executive staff and solicitors were asked to leave, leaving the directors alone to deliberate.. Former Panthers operations manager, Tony Lackey says they waited outside for around 45 minutes. Boon said he was nervous at the idea that they would cancel the election when he was out of the room, but was still surprised when they actually did it.
The directors then considered the matter behind closed doors, without the executive staff or solicitors present. They already knew that Cowan was vehemently opposed to stopping the election. There had also been a previous occasion when James had initially supported a resolution opposed by four of the Five, before changing his vote after staff had been asked to leave.
Whatever the reason for excluding the others on this occasion, the decision that emerged from the closed session was to stop the election.
We were brought back into the room and they dumped, they just dumped.
The Board resolved to stop the current election,
… having regard to legal advice received in relation to the issue of the validity of the persons listed on the Register of Members of Penrith Rugby League Club Limited in relation to such persons eligibility to stand for election as a Group Director and, to vote …
The Board also instructed Acuiti, through Brett Boon, to obtain advice on the legal status of the members of Port Macquarie and ClubNova Panthers members.
Early on the morning of Friday 22 March, voting was stopped at Penrith, two days early. The ballot boxes were removed and stored, the other clubs in the group were notified and a media release was issued.
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- Walsh lived by the same ethos as Cowan and the management team. Once his word had been given, he believed in sticking to it ‘come hell or high water’.
↩︎ - Remember, the Board approached the Port Macquarie and Newcastle clubs requesting them to vote only for their own candidates (and not each other’s) ensuring the existing Board would all be returned. This was undoubtedly electioneering and it encouraged those clubs to electioneer on behalf of the Penrith directors. Against that background, Bateman’s criticism of electioneering by the other clubs appears difficult to reconcile with the earlier approach made on behalf of the Penrith directors.
↩︎ - I am certain this was meant to say, “sitting directors”. Retiring directors don’t appear on ballot papers at all. ↩︎
